Am I crazy, or is this 'Financial Advisor' crazy?

[LOL!]

My spouse's plan is worse, but she contributes the maximum possible as always.

The tax-deferred investments are the way to go until the fees are above 3% or so. You also have to look to the future when you rollover the assets into a low-cost plan. If you don't have the assets you will not have that low-cost tax-advantaged space in the future.

Another trick that my spouse uses is to borrow the maximum possible from her 401(k) and put the money in a low-expense-ratio 529 plan instead. She can be in the same investment category, but pay 2% less in fees AND the gains are tax-free instead of merely tax-deferred. She likes the way she stiffs the 401(k) provider out of the 2% in fees they would normally get. This also keeps her tax-advantaged 'space' open for the future when she repays the loan.

[MooreBonds]

Quote:

Originally Posted by growing_older I have been employed by companies which offered only poor choices in the 401k plan. If there isn't even a single reasonable low cost fund that I would want, it can still sometimes be advantageous to pick the least worst of the available choices, get the tax deduction, get a match if there is one, and plan to roll it over to an IRA when you leave the company. If you don't stay too many years, the deduction alone can still be worth putting up with a mediocre fund for a while.

I second this sentiment - the choices in my fund aren't stellar (though aren't quite as bad as 1.5%-1.71% expense ratios)....but I still max out between the 401k and 401kROTH, with the present benefit of some taxable income lowering, and that I'll be able to roll them into better choices 10 years from now when ERing...

[jayc]

I would sign up because of the tax savings. Nothing is better than getting 100% of your earned income to start working for you, even if the cons are a crappy plan. Usually for every $100 you put in, your take home pay only goes down about $75. Pick the least overpriced fund/option to use. I usually pick a 'stable' type.

Sometimes the 401k/403b will let you rollover once a year to an IRA without termination. This can be a work around.

[Cassius King]

Quote:

Originally Posted by jayc Sometimes the 401k/403b will let you rollover once a year to an IRA without termination. This can be a work around.

I learn something new everyday.

[52andout]

Quote:

Originally Posted by intent He sounds crazy, but I think the 401k guy who my DW met with recently is even crazier. My wife tells him we want to retire as early as possible. He says something along the lines of, "It really isn't possible to retire prior to age 59, so that's what I'll calculate for." He then begins to gather our financial info and upon doing so praises her for being well ahead of most. At the end of the meeting, he suggests to her that we are easily on track and, in fact, he would recommend we *spend more* and have some fun. So, in his professional opinion, a couple who wants to retire as early as possible should keep the nose to the grindstone until 59, but be sure and spend more of what they make along the way. To be fair, the guy she met with could only allot 30 minutes for each employee, so the meeting was hurried - but that is C-R-A-Z-Y.

we once had an adviser from DH's company tell us that. When actually saw him after the recent mortage/market meltdown/mess he was quite sheepish. If we hadn't saved more than we should have we would have been very nervous early retirees.

[FinanceDude]

Quote:

Originally Posted by Webzter I believe FinanceDude is in your area.... bonus points, if he has anything mockable, you have ammo for the forum. I don't know if he's fee-based and/or too expensive for the likes of you or me, but might be a place to start

I'd review his plan for free, and give him objective advice. He can PM me or email.........

[slazenger]

Quote:

Originally Posted by Coderguy Just had the 401k meeting at my new job. He said, and I quote: "We don't believe in index funds, they are the only way to guarantee you under perform the market". The fees on the plans are 15.00 quarterly, 25.00 annually plus a range of 1.10% to 1.71% fees&charges. I am not participating in the plan. Thoughts?

Max individual IRAs first, $5000/year, and $5000 for your spouse (if you are married) in a low cost mutual fund company like Vanguard or T-Rowe, then go to these maxing them to the limit. Sure, 1.1-1.7% management fees are horrible, but even those aren't high enough to justify using a taxable, but low-cost investment as an alternative.

If they were matching, I'd say get the match first, but you already said they are not.

If you're married, have your spouse start a business of some kind, then open up a SEP and invest crazy amounts in that in a low-cost investment as opposed to your employer plan.