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How to max local bank 401k
Old 03-22-2012, 07:39 PM   #1
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How to max local bank 401k

I am part of a small business group and max out my 401k. Long before I arrived on the scene, the group had decided to use a local bank for the 401k plan, a fairly large regional bank with a decent size trust and retirement dpt. Even so, these jokers look like/act like bush leaguers c/w Vanguard (which I am very familiar with). It would be a Herculean act to get my group to change to Vanguard, so I'm looking for advice on how to work within this limited system. They offer "model" allocations which include Hancock funds and some TRowe Price funds, and you can apparently call the administrator and he will purchase individual equities in brokerage account which seems VERY archaic compared with online transactions that I'm used to. Should I buy Vanguard ETF's via this "brokerage" option?? Will they let me send monies to a Vanguard brokerage acct and then I can buy and sell ETFs myself? I have been so frustrated with their limited options that I have 100k in a 0.5 percent CD. Any input welcome. Thanks in advance.
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Old 03-22-2012, 07:56 PM   #2
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I suggest you read the 401k summary plan descripton very carefully. See if they permit IRA rollovers, ideally an outside IRA. Some plans permit rollovers and others do not. It's up to the employer, but many plan administrators pressure employers to prohibit rollovers while still employed. If they do you can do a rollover from the 401k to an IRA and buy anything you like.
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Old 03-22-2012, 10:35 PM   #3
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Quote:
Originally Posted by BigE View Post
Should I buy Vanguard ETF's via this "brokerage" option?? Will they let me send monies to a Vanguard brokerage acct and then I can buy and sell ETFs myself? I have been so frustrated with their limited options that I have 100k in a 0.5 percent CD. Any input welcome. Thanks in advance.
What do they charge for commission with their brokerage account? It could be worth it to pay their commission to buy rock-bottom Vanguard ETFs outside of a typical highway robbery corporate 401k...consider the alternative that poor w*rking schmucks like me have to deal with, where my work 401k's BEST (lowest cost) offering is 0.94% (Vanguard Target 2050), compared to a direct-purchase expense ratio of 0.19% for the same fund! Or the Vanguard Small Cap Index of 1.12% in my plan, versus buying it directly and having a 0.17% expense ratio! So you could pay a commission of a whopping 1.5% to buy either of those funds, and still break-even (or come out ahead) after just 2 years compared to what my 401k plan offers!

Now that I think of it, my thread I started about that other employer that's courting me with an initial salary reference that's lower could be worth as I would finally be able to move my $70k 401k funds to Vanguard and have a 0.75%+ cut in expenses each year! (j/k - not THAT serious about it. If that 401k had $300k in it, it'd be a different story...)
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Old 03-24-2012, 04:27 AM   #4
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Thanks for the advice. I'm not going to consider an IRA rollover for later Roth conversion plans, but I think I'm going to find out the brokerage fees and buy some Vanguard ETF's (total stock mkt and total international stock) thru the existing 401k plan.
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Old 03-28-2012, 12:28 PM   #5
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update

Update for anyone reading this. Brokerage fees at 401k are moderate to high IMHO (I pay nothing at Vanguard, literally zero dollars to buy or sell), about $300 for every 100k purchase, but I bit the bullet and purchased VIG and VXUS today. Hopefully the 0.18% fees for the Vguard ETF's will help over time.
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