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No Match 401K Question

Posted: Fri Jan 08, 2021 1:25 pm
by wbarabas
MY company just implemented large pay cuts and got rid of the match in our 401K. I was getting 1.5% from the company for putting in 3% to my traditional. I also put 4% into my Roth 401K. The 401 company is Empower Retirement and they charge a .79% fee for management. Would I be better taking my 7% out and investing with a brokerage acct in low cost index funds or just let it ride? The 401k are all iShares low cost index funds through Empower currently. I also max out my Roth yearly. I'm still new to all this. Any help would be appreciated.

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 1:27 pm
by nsherman2006
.79% seems outrageous to me. I would move the money unless you have high confidence that the match will return in the near-term.

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 1:29 pm
by FelixTheCat
Here's a post on investing order https://www.bogleheads.org/wiki/Priorit ... nvestments

Have you read the post on the three fund portfolio?

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 1:31 pm
by arcticpineapplecorp.
by "taking out" do you mean withdrawing your contributions?

if you do that, you'll have tax and penalties if under 59 1/2.

the question is, should you stop making contributions to tax deferred and instead use brokerage?

is the .79% management fee in addition to the expense ratio of the funds you invest in, in the 401k?

what's your marginal tax rate now?

what might be your marginal tax rate in the future?

will you get a substantial pension in retirement or no?

we need to know a little more:
viewtopic.php?t=6212

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 2:03 pm
by tashnewbie
Agree with poster immediately above me that we need more info to be able to offer the most-informed advice.

See this link which that user posted: Asking Portfolio Questions

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 2:26 pm
by wbarabas
arcticpineapplecorp. wrote: Fri Jan 08, 2021 1:31 pm by "taking out" do you mean withdrawing your contributions?

if you do that, you'll have tax and penalties if under 59 1/2.

the question is, should you stop making contributions to tax deferred and instead use brokerage?

is the .79% management fee in addition to the expense ratio of the funds you invest in, in the 401k?

what's your marginal tax rate now?

what might be your marginal tax rate in the future?

will you get a substantial pension in retirement or no?

we need to know a little more:
viewtopic.php?t=6212
yes, the management fee is in addition., .79 plus The iShares range from .03 to .08.

24% tax bracket now, no pension. Probably in higher tax bracket at retirement

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 3:25 pm
by nolesrule
wbarabas wrote: Fri Jan 08, 2021 2:26 pm
yes, the management fee is in addition., .79 plus The iShares range from .03 to .08.
I've seen worse. I've seen a lot worse. It's about the same as my 401k. No match. No fees, but ERs around 0.80. I use it. When I leave I'll roll it into an account with no fees and low ERs.
24% tax bracket now, no pension. Probably in higher tax bracket at retirement
What makes you say that?


grabiner has a rule of thumb to to consider taxable investing if the extra costs, times the number of years you will be stuck with the plan, exceeds twice your tax rate on qualified dividends and long-term gains.

So 0.75 x number of years you expect to be in that plan would need to be greater than 30 (or 37.6 if you pay NIIT). That means you'd need to be in the plan for 40 years (50 if you pay NIIT)

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 3:29 pm
by wbarabas
I'm assuming the gov't ups tax brackets closer to 2000 ranges to pay off debt

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 3:39 pm
by nolesrule
wbarabas wrote: Fri Jan 08, 2021 3:29 pm I'm assuming the gov't ups tax brackets closer to 2000 ranges to pay off debt
Okay, I was wondering, because saving 3% in Traditional (4.5% with match) in the 24% tax bracket won't get you near the taxable income you have now. Do you have substantial pre-tax balances?

Re: No Match 401K Question

Posted: Fri Jan 08, 2021 3:55 pm
by wbarabas
I don't think so