jIM wrote:

- quote -

Then any references to rolling to IRA in that case is moot.

- quote -

jIM - My experience is similar, but I continue to read the 'high fee'
stories in Forbes/Fortune, etc., so feel compelled to run the math, and
keep the caveat. No harm in saying 'look at fees', those with low fees
have one less thing to worry about.

- quote -

As long as you are diversifying across all accounts, whatever works. My
advice was based on the assumption that the 401(k) may have a hole in
it, either a fund with a disproportionately high fee, or a missing
sector. That points to a chance to fill that gap with IRA/ Roth IRA
money. You and the Missus appear to have no such gaps and can keep the
Roth as core holding, not 'gap filler'.

I'm not concerned about the complete reallocating of Roths each time one
changes jobs. A no load/no fee fund will have no expense, an ETF will
have 2 or 4 commissions if there are one or two gaps to fill. My 401(k)
has great expenses for the S&P fund, .05% but lousy choices (both funds
and fees) for overseas. That's where I balance through the IRA. Again, I
don't think you're disagreeing with me, just that this advice doesn't
fit your situation at all. And as 401(k)s continue to improve, hopefully
this will apply to no one.

JOE

- quote -

Know that when buyouts occur, employees are not always given the
choice of rolling over, and yet are required to use the 401k of the
new entity.

My first 401k was with T Rowe. Bought out and given choice of rolling
over or not... my 401k was not that large, and I had a loan, so I
chose to use the new 401k and keep the loan intact.

Second sell off, no choice.
Third buy out, not sure. Ask me after deal closes...

The 401k choices in all cases was excellent. The only way I hear
about "nightmare" 401ks is on boards like this. First 401k was with T
Rowe, second was a Vanguard"ish" 401k, with a fee wrapper (I'm
assuming this covered employer expenses). Third 401k was with
Vanguard minus the extra expense fee. Even with the expense fee, the
costs of the funds was quite low.

My wife is in a similar situation... she is on 401k #4. Rolled two
over, and rolled one into current 401k (her choice, not mine).

8 401ks in 10 years between both spouses. If I followed the
conventional wisdom of using the Roth to compliment this, I would have
had to reallocate Roth EIGHT times. Consider that one fund in Roth is
closed (RPMGX) and two others have closed in the past (PRNHX and
PRIDX), to me it makes sense to use the Roth as the core if anything
is the core.

I agree the amount in the Roth will be "low" compared to a 401k. By
the time a Roth hits 10k, maintainance fees are waived (at T Rowe).
And even though my Roth is 25% the size of the 401k, it is my core,
and I use 401k choices to mirror the Roth allocation as best I can.

Not to mention a Roth is "denser", because the money has been taxes, a
person could have 100k in a 401=75k in a Roth (25% tax bracket). Roth
does not need to be the highest amount, but I know that a person will
have numerous 401ks in their life (average employment these days is
4.5 years, correct?). They have "one" Roth which they can allocate
correctly once and leave be, contributing yearly maxes and adjusting
moderately as needed.

"Will Trice" <wwtrice[at]paragondynamics.com> wrote in message
news:45E3689E.8070806[at]paragondynamics.com...

- quote -

Every place I've worked had a waiting period of 6-12 months to enroll in the
401k. Sometimes the waiting period was longer because you could enroll in
only January (or January and July). Additionally, the vesting period for
employer contributions was no better than 20% after 2 years. That 2 years
wasn't 2 years of employment, but 2 years participation in the plan. So, a 2
year term of employment might get you a year's worth of participation, but
no employer match. This is why I proferred anticipating less than 3 years
term of employment to consider skipping the 401k entirely. And, I might add,
this was as much a question to those who have researched fees as it was
offering an opinion.

Elizabeth Richardson

Will Trice wrote:

- quote -

From Culpepper Compensation & Benefits Survey, 12/11/06;

25% - immediately
5% - one year
0% - 2 years
20% - 3 years
8% - 4 years
27% - 5 years
15% - 6 or more

So if 'usually' is 70% (I think so), and 'slow' is longer than 3 years,
Elizabeth's statement is accurate.
Of course this opens up a different can of worms.
If;
A) you have a high fee 401(k), but
B) you put in the $15,000 at a 25-28% tax bracket
but
C) have periods of transition (read that 'unemployment') and you
D) convert to Roth during those periods

You would likely come out ahead. Save at 28%, pay 2-3 years fees of
1.5%, then Roth at 10 or 15%, never to pay tax again.

Is this too convoluted to be worthwhile, or does it apply to such a
small slice of the population that it's a distraction to subject?
JOE

Elizabeth Richardson wrote:

- quote -

How common are vested matches and initial waiting periods? I have
worked for one company that had a vesting period, but I've always been
able to participate in a 401(k) immediately (when available). Once
again, my industry may not be the standard when it comes to these items
(just as I found out that it is not with regard to 401(k) fees).

-Will

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:fqWdnTG9c5nvyH7YnZ2dnUVZ_segnZ2d[at]comcast.com...
- quote -

I'm not so sure that this isn't the scenario where one should be planning on
using a taxable account after the ROTH - maybe even forget the matching 401k
altogether. Usually matches have a slow vesting period. Also there is the
waiting period to be eligible to participate in the 401k at all. If the
anticipated term of employment is less than 3 years, this might not be worth
the 401k fees in the first place.

Elizabeth Richardson

wyu[at]talisys.com wrote:

- quote -

I appreciate the response. If one goes into this with the expectation
that employment is brief, than no fee will be high enough to make the
401(k) undesirable. You are correct.
But still, the order of funds should be Matched 401(k), then ROTH, then
back to 401(k), given that assumption.
JOE

On Feb 26, 5:02 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

Huh? Work for somebody for more than 2 years?

Ok, I guess my initial response was colored by the experiences of my
generation and industry. I've in tech for a little more than a decade
and job-hopping is the norm for the industry in this period. If you're
at an employer for more than 2 years and you didn't get in at the
ground floor, the thinking is you don't have the talent or drive to
find someplace better.

<wyu[at]talisys.com> wrote
- quote -

The alternative is to put these after-401(k) match funds
into a taxable account. As Joe points out, if the choices in
a 401(k) have high expenses attached to them, then there is
a time period beyond which a 401(k) does not make sense
compared to a taxable account.

If and when tax law changes, this too will change; nothing
is definite on these matters of course, and your way may
prove to be the better one. At present though, there are a
lot of arguments for not contributing to a 401(k) beyond the
match.

wyu[at]talisys.com wrote:

- quote -

Well, your belief has a graph. There are two variables, (more, perhaps
but two dominant ones) Length of employment at the 'high fee' 401(k)
employer, and actual annual expense. (yes, for this oversimplification,
I've skipped marginal tax rate. Let's assume 25%).

At the lower number of years employed, say 1-5, even a horrible set of
expenses may not be an issue, as you suggest, the IRA awaits. But as you
approach 10 years, a cost of 1.5% starts to take its toll, and as I
calculated on my site, over 20 years, even .80% in extra fees would have
you better off in the taxable account. Let's not forget, the 'magic' of
compounding hits you at withdrawal, you put away $10,000 with only $7500
out of pocket after taxes, but then add 40 years of growth and I hope
you have $200-$450K (that's the range with growth from 8-10%) that gets
taxed at withdrawal. Also, don't forget, the 401(k) withdrawals are
taxed at ordinary income, but the post tax account gains are taxed at
favorable cap gain/dividend rates along the way.

So there's a graph, or series of them, with large area where 401(k) is
the way to go, small dark area with high fees, but high chance of being
there long (such as where you are the son or daughter of the owner in a
small firm) and grey area where fees need to be tracked, but potential
for rollover makes sense.

Let's not forget the suggestion that if you're able to do the Roth IRA,
that the place to put money once you've passed the matching amount of
the employer. And for the 'average Joe' that $4000 is nearly 8% of income.
JOE

On Feb 25, 6:09 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

Regardless of how poor a 401(k) might be in terms of fees or matching
-- I'm still a firm believer in putting a big chunk away in a 401(k)
because sooner or later, you will be able to rollover it to your own
IRA. If you skip putting money in and wait until your next job (where
they may or may not have a good plan) several years into the future,
that's time you never get back. You can't decided later you wanted to
put money in the past so here's a 50K lumpsum IRA contribution to
cover that period.

"kastnna" <kastnna[at]auburnalum.org> wrote
- quote -

I posted thinking that 5% was not too far from the
historical MM average, such as this average may be for the
last 30 years or so when money markets have gained
"popularity." But I could be wrong.

http://www.smartmoney.com/onebond/in...ory=yieldcurve
, looking at the 3-month time period, seems to support such
an approximation.

- quote -

That's a somewhat different issue, IMO.

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote
- quote -

snip, for brevity, good figures

Joe, I re-examined your site and agree the numbers are
recent and so not promising (along of course with the
specific numbers you posted here). So indeed, a major caveat
emptor should continue, particularly for those considering
contributing to their 401(k) beyond the matching.

- quote -

Yes, true.

Elle wrote:
- quote -

Elle, I never find you so. And I'd agree that this forum doesn't reflect
that (such high fees), but I do cite data which seemed pretty recent,
the Forbes story I referenced with a link was from their 2007 investment
guide, the Business week article was from late 2004 and cited these costs;

PLAN SIZE AVERAGE COST*
50 participants 1.40%
100 participants 1.31
200 participants 1.26
500 participants 1.20
1,000 participants 1.17
5,000 participants 1.12
* These costs assume an average per participant balance of $40,000.
Data: 401k Averages Book

Even if we are to believe "things are improving", have expenses been
halved in the last two years? I doubt that. The latest revision of "
401k Averages Book" by HR Investment Consultants of Baltimore costs $95,
and having little to gain by more precise, more recent data, I'll pass
on the purchase. So, my own digging has me believe that Jack Bogle in
his Feb 06 interview was looking at the high end of fees when quoting
2.5% costs, I still think the numbers are higher than I'm comfortable
ignoring. If someone has better, more recent numbers, I'm happy to claim
victory for the consumer and chase a different cause.
JOE

- quote -

It is probably not wise to assume a 5% MM rate for any length of time.
We are in an inverted yield curve situation and these periods have not
historically lasted long.

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote
- quote -

Little aside, hopefully not too obnoxious: My impression
from reading here is that expense ratios of 401(k) mutual
fund offerings have improved a lot in just a few years.
Sure, employees should check the fees on their 401(k)
offerings, but I feel a lot more optimistic these days that
they'll find very low expense ratios and no loads offered.

Contrast this with the annuity reports we get here: What
people have actually bought continues to sound horrendous,
fee-wise. We get a lot of kvetching, and rightly so, about
them here. Not so with 401(k) offerings of late. So it seems
to me.

Again, just an impression. Joe's site above is a good read
and definitely continues to contain important caveats.

wyu[at]talisys.com wrote:

- quote -

Which prompted my suggestion that the OP first look at what his 401(k)
offers, and the total vale of the account, with an eye toward using the
outside money to balance the portfolio.

- quote -

This was the basis for for November article 401(k) ripoff
http://www.joetaxpayer.com/401rip.html
A number of good quotes are included there, as well as links to Jack
Bogle's interview, and a Forbes article.

Replying to Anoop's follow on to your post - "for plans of 5,000
participants, the average cost was 1.12%". If your plan is better,
that's great. The average plan isn't.

JOE

"Joe" <joe.goglia[at]comcast.net> wrote in message
news:wO-dnWt4vuybJn3YnZ2dnUVZ_sOknZ2d[at]comcast.com...
- quote -

Each of those funds has a $10,000 minimum investment... so you would need to
pick one. Based on that I would personally choose FSTMX. Get yourself
broader exposure for your money!

Just my 2 cents,
Shhhh

On Feb 24, 7:23 pm, "Joe" <joe.gog...[at]comcast.net> wrote:
- quote -

Have you done any of the financial planning tools on Fidelity's
website?

The funds you choose should be based on your tolerance for risk.

What is moderately aggressive for one might be too aggressive for
another and not aggressive enough for a third.

If you invested in something and it made 10% what would you do (leave
it be, buy more, or sell)?
If you invested in something and it made 25% what would you do (leave
it be, buy more, or sell)?
If you invested in something and it lost 10% what would you do (leave
it be, buy more, or sell)?
If you invested in something and it lost 25% what would you do (leave
it be, buy more, or sell)?

The tools will ask you around 10-20 questions like this. If you sell
when something drops... might be a sign you can't handle the risk you
though you could. If you buy more when something drops (because you
believe in your investment strategy) then that MIGHT be a sign you are
aggressive.

Most tools will suggest:
% large caps
% small caps
% international
% real estate
% bonds

Then identify funds from that company in each category. Some tools
will get even deeper- suggesting % large cap growth and % large cap
value.

It's tough for us to recomend something for you because we don't know
you.

I am 34 yo, my allocation is close to 100% stock. 75% domestic and
25% international. I am sure others here have a much different
allocation and that does not make one person right and another wrong.

as an FYI, know that Spartan Total Market Index Fund (5000 stocks)
=Spartan 500 Index Fund (500 stocks)+Spartan Extended Market Index
Fund (4500 stocks).

I am assuming Fidelity names their indexes similar to the index funds
available to me from Vanguard in my 401k. I made that assumption with
comment immediately above. Generalizations implied.

On Feb 24, 1:43 am, "Joe" <joe.gog...[at]comcast.net> wrote:
- quote -



Fidelity has online portfolio allocation tools. Try that one first.
You can specify your own risk tolerance.