Hi all. I've been lurking for a number of months and I've appreciated all I've learned on the forums and Wiki. I expected my first post to be a portfolio analysis in a few months, after I make more progress on simplifying my portfolio (based on what I've already learned), but my wife recently found out her company is changing 401k providers. Unfortunately, the company is moving to Principal and the fund choices aren't great. I'd greatly appreciate some commentary on her 401k.
Here's a (slightly) abbreviated portfolio overview, in order to keep the focus on the (less that stellar) options in Her 401k
Ages: 33/29 (first kid on the way in late Aug, wife does plan to return to work after)
Emergency Funds: 9-12 mos. earning ~3% APY in local Community Bank High Interest Checking (Kasasa
Debt: 112k @ 3.85% (mortgage, pay $250 extra each month), 13k @ 1.99% (1 vehicle)
Desired AA: 80/20 (Int'l 20% of total portfolio, 25% of stocks)
Tax Rate: 25% Fed, 7% MNTaxable
4% Vanguard Total Int'l
4% Vanguard Total Stock
6% Ameriprise Floating Rate Bond (tax inefficient, I know; likely converting to VTSAX/VTIAX in the coming months)
10% Misc stocks (likely converting to VTSAX/VTIAX in the coming months)His 401k
20% Vanguard Target 2040His Roth (in flux)
32% Ameriprise Active Diversified Aggressive (transferring to Vanguard over the coming months)Her Roth
6% Vanguard Total Stock
3% Vanguard Total BondHer 401k
15% Vanguard Target 2030 (Current holding, but not available in new 401k provider)
Her new 401k options (ER):
PLFMX - Principal LargeCap S&P500 R3 (.73) <--- Most likely choice; see below #1
PMFMX - Principal MidCap S&P400 R3 (.74) <--- Would a combo of Large & Mid be better? see below #2
FVITX - Fidelity Advisor Gov't Income T (.75)
PIOOX - Principal Income R3 (1.07)
PLSMX - Principal LifeTime Strategic Income R3 (1.19)
Principal LifeTime 20XX R3 Funds (1.26 - 1.40) <--- Not likely, so I didn't detail all 10 of the options
RWMCX - American Funds Washington Mutual R3 (.97)
PEIOX - Principal Equity Income R3 (1.08)
LAVRX - Lord Abbett Fundamental Equity R3 (1.24)
PPUMX - Principal Large Cap Growth I R3 (1.18)
GETGX - Victory Established Value R (1.25)
FSMRX - Franklin Small-Mid Cap Growth R (1.25)
GSQRX - Goldman Sachs Small Cap Value R (1.69)
FSCTX - Fidelity Advisor Small Cap T (1.51)
JSCRX - Prudential Jennison Small Company R (1.36)
RERCX - American Funds EuroPacific Growth R3 (1.13)
RNPCX - American Funds New Perspective R3 (1.11)
Max ($17k) to his 401k plus ~$8k company match
Max ($5k ea.) to his & her Roth IRA
~$13k to her 401k plus ~$2k company match
- I recognize I'm below my target AA for Bonds and Int'l. I'll be moving in that direction over the next 6 months as I migrate my Roth IRA from Ameriprise to Vanguard and adjust my taxable holdings. Since I have a plan in progress to address that, I'd really like to keep the focus for this post on her 401k choices.
#1. Is it best to just put 100% of her 401k contributions into that (terribly overpriced) S&P500 index? If so, I would use the Roths (either his or hers) to match Total Market (based on the Wiki
, using VEXMX or VIMSX+NAESX)
#2. Or would I be better off splitting her 401 contributions between the S&P500 and S&P400 (in Total Market appropriate percentages)? Again, I would use the Roths (either his or hers) to supply the Small Cap part of the Total Market Approximation.
#3. Are there any other funds in her 401k even worth considering? Based on the ERs, I've pretty much already eliminated the Principal Target Date funds.
#4. Random thought that just popped into my head - Because the company is changing 401k programs, does that mean we could rollover her 401k into an IRA at Vanguard? As opposed to rolling it into the new 401k program. Apologies in advance if that question doesn't make sense.
#5. Any other feedback anyone is willing to share?
Thanks in advance for any responses!
Edit: Clarified wife does plan to return to work after the baby