Roth IRA- 401K-Brokerage Account Prioritization

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cam240
Posts: 74
Joined: Tue Jun 27, 2017 1:16 pm

Roth IRA- 401K-Brokerage Account Prioritization

Post by cam240 » Sat Jan 20, 2018 7:07 pm

Hello Community,

My wife and I sat down for our initial 2018 year review of financial goals. This what we came up with: we have our 6 months emergency fund funded. The only debt we have is 10K on a car loan (which we are planning to have pay off by Nov of this year, although we could pay it all now if we wanted). We are both currently contributing up the employer matching contribution on our 401Ks (6%). We decided on opening a ROTH IRA (in the new week or so, looking at Fidelity currently but that will a question for another thread) and contributing the maximum amount (5,500 in the next week or so as well). Since we will not be available to contribute any more to our Roth IRA we have talked about just increasing our 401K contribution beyond the employer's match (say maybe 8%-10% but we will have to determine and fine tune how much is too much before we are not taking enough home).We figured out also we will have roughly around 5K to invest (cannot go to the Roth, nor to the savings account) so where should it go? We also have a brokerage account with ETrade so I said maybe there. Is this a good contribution prioritization strategy? If I am missing anything all opinions-suggestions are welcome.

Thanks,

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Roth IRA- 401K-Brokerage Account Prioritization

Post by BL » Sat Jan 20, 2018 7:32 pm

If you list the name, ticker, and ER (expense ratio) of the funds available in your 401ks, you can get suggestions on the best ones to use. There is no magic about stopping contributions at the match (except taking care of Roth contributions); in fact aiming at increasing contributions to 18.5k as soon as you are able, is a good goal.

So if you have 5k extra, consider using that to live on while saving an extra 5k in your or her 401k (or even more as you will defer federal tax on your contribution as well as your state tax.

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FiveK
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Joined: Sun Mar 16, 2014 2:43 pm

Re: Roth IRA- 401K-Brokerage Account Prioritization

Post by FiveK » Sat Jan 20, 2018 7:35 pm

BL wrote:
Sat Jan 20, 2018 7:32 pm
If you list the name, ticker, and ER (expense ratio) of the funds available in your 401ks, you can get suggestions on the best ones to use. There is no magic about stopping contributions at the match (except taking care of Roth contributions); in fact aiming at increasing contributions to 18.5k as soon as you are able, is a good goal.

So if you have 5k extra, consider using that to live on while saving an extra 5k in your or her 401k (or even more as you will defer federal tax on your contribution as well as your state tax.
+1 to all that.

cam240, see also Investment Order for some thoughts that may apply to your situation.

cam240
Posts: 74
Joined: Tue Jun 27, 2017 1:16 pm

Re: Roth IRA- 401K-Brokerage Account Prioritization

Post by cam240 » Sat Jan 20, 2018 8:28 pm

Below is a list of the funds offer on my 401K. I agree with the comments and I think that is what my wife and I will try to do (reach that 18,500K goal) (we are 21-22 so we have a long way to go)

Name/Inception Date Asset Class Category Gross Expense Ratio** Shareholder Fees
FID 500 INDEX PR (FUSVX)
02/17/1988
Stock Investments Large Cap 0.035% No additional fees apply
INVESCO DIVRS DIV R6 (LCEFX)
12/31/2001
Stock Investments Large Cap 0.44% No additional fees apply.
Investments you currently own MAINSTAY LG CAP GR I (MLAIX)
07/03/1995
Stock Investments Large Cap 0.75% No additional fees apply.
ARTISAN MD CP VAL IS (APHQX)
03/28/2001
Stock Investments Mid-Cap 0.96% No additional fees apply.
Investments you currently own FID EXT MKT IDX PR (FSEVX)
11/05/1997
Stock Investments Mid-Cap 0.07% No additional fees apply.
PRU/J MID CAP GRTH Q (PJGQX)
12/31/1996
Stock Investments Mid-Cap 0.58% No additional fees apply.
NORTHERN SM CAP VAL (NOSGX)
03/31/1994
Stock Investments Small Cap 1.14% No additional fees apply.
Investments you currently own TRP QM US SM-CP GR (PRDSX)
06/30/1997
Stock Investments Small Cap 0.81% Short term trading fees of 1% for fee eligible shares held less than 90 days.
FID INTL DISCOVERY K (FIDKX)
12/31/1986
Stock Investments International 0.82% No additional fees apply.
FID INTL INDEX PR (FSIVX)
11/05/1997
Stock Investments International 0.06% No additional fees apply.
C&S INST REALTY SHS (CSRIX)
02/14/2000
Stock Investments Specialty 0.76% No additional fees apply.
BLKRK LP IDX 2020 A (LIQAX)
05/31/2011
Blended Investment* N/A 0.47% No additional fees apply.
BLKRK LP IDX 2025 A (LILAX)
05/31/2011
Blended Investment* N/A 0.48% No additional fees apply.
BLKRK LP IDX 2030 A (LINAX)
05/31/2011
Blended Investment* N/A 0.48% No additional fees apply.
BLKRK LP IDX 2035 A (LIJAX)
05/31/2011
Blended Investment* N/A 0.49% No additional fees apply.
BLKRK LP IDX 2040 A (LIKAX)
05/31/2011
Blended Investment* N/A 0.51% No additional fees apply.
BLKRK LP IDX 2045 A (LIHAX)
05/31/2011
Blended Investment* N/A 0.52% No additional fees apply.
BLKRK LP IDX 2050 A (LIPAX)
05/31/2011
Blended Investment* N/A 0.53% No additional fees apply.
BLKRK LP IDX 2055 A (LIVAX)
05/31/2011
Blended Investment* N/A 0.59% No additional fees apply.
BLKRK LP IDX RTMT A (LIRAX)
05/31/2011
Blended Investment* N/A 0.48% No additional fees apply.
FID BALANCED K (FBAKX)
11/06/1986
Blended Investment* N/A 0.46% No additional fees apply.
FID CAPITAL & INCOME (FAGIX)
11/01/1977
Bond Investments Income 0.73% No additional fees apply.
FID US BOND IDX PR (FSITX)
03/08/1990
Bond Investments Income 0.045% No additional fees apply.
MELLON STABLE VAL M
01/07/2008
Bond Investments N/A 0.39% No additional fees apply.

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Duckie
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Re: Roth IRA- 401K-Brokerage Account Prioritization

Post by Duckie » Sat Jan 20, 2018 9:15 pm

cam240 wrote:Since we will not be available to contribute any more to our Roth IRA we have talked about just increasing our 401K contribution beyond the employer's match (say maybe 8%-10% but we will have to determine and fine tune how much is too much before we are not taking enough home).We figured out also we will have roughly around 5K to invest (cannot go to the Roth, nor to the savings account) so where should it go?
IRAs are individual. So if you just opened one for you, she can also open one for her.
Below is a list of the funds offer on my 401K.
The best options are:
  • FID 500 INDEX PR (FUSVX) 0.035% -- Large caps, 80% of US stocks
  • FID EXT MKT IDX PR (FSEVX) 0.07% -- Mid/small caps, 20% of US stocks
  • FID INTL INDEX PR (FSIVX) 0.06% -- Developed markets, 75% of international stocks
  • FID US BOND IDX PR (FSITX) 0.045% -- US bonds

Mors
Posts: 166
Joined: Wed Aug 16, 2017 10:06 am

Re: Roth IRA- 401K-Brokerage Account Prioritization

Post by Mors » Sat Jan 20, 2018 9:28 pm

Your employer 401k has all the necessary funds for a three fund (technically four) portfolio. If there is not management fee you do not need an IRA before maxing the 401k annual limit.

The funds along with sample allocations for 90/10 stocks/bonds. The int fund does not include emerging markets. You can open an IRA in order to invest in an international index funds that includes them. Otherwise the Discovery funds includes them but it is relatively expensive.

45% FID 500 INDEX PR (FUSVX)
10% FID EXT MKT IDX PR (FSEVX)
35% FID INTL INDEX PR (FSIVX)
10% FID US BOND IDX PR (FSITX)

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