Okay, I need some investment advice. DH's firm does a 5% match, so an automatic 100% return on your money. However, we have no control or choice in the investments and they aren't invested well. Last year we got a 3.6% return on your money. Alternatively, our Roth IRAs did 21% and we, of course, have control.
Is it worth foregoing the match to have control and choices? I'm trying to think long term here.
Also, is there any way to remove the 401k money over to an IRA while you're still employed there? That would solve the problem but I don't think its possible, right?
Post by whitepicketfence on Jul 1, 2015 10:15:34 GMT -5
Personally, I would only contribute enough to the employer's plan to get the match. I'd divert the rest of his contributions to the Roth IRA.
Unfortunately, there is no way to rollover the 401k funds to his IRA unless he would leave the company. As it is, the 401k contributions are pre-tax while the Roth contributions are post-tax.
Personally, I would only contribute enough to the employer's plan to get the match. I'd divert the rest of his contributions to the Roth IRA.
I agree with this. 103% is 5x better than 21%. It sucks that its not earning more, but the match definitely makes up for that. That said, no way would I put more than 5% in. I would also pull it the day after DH leaves that job.
I would factor in how the match affects the total return and adjust accordingly. Is a dollar-for-dollar match? And he's fully vested?
Your plan may allow for a non-hardship in-service distribution, but it's not very common and would only enable you with roll over certain types of $$ -- like money rolled into the plan and employer match, but not your pretax contributions. You'd have to find out from the 401k administrator if they allow this.