You're bringing in two different questions which may be mutually exclusive. If you are looking to take advantage of tax-deferred savings and possibly an employer match, then the 401(k) is your best option. While the internal expenses may be high or the fund choices limited, it does provide a way to save for retirement. And if there is a company match, you are getting a "bonus" benefit.
On the other hand, if you are looking to access these funds, then the question is "What is the priority or goal?" Are you looking to tap the funds for paying college tuition? Or is it for a down payment on a home?
The 401(k) is a retirement savings vehicle. It's not meant to be a piggy bank. Even if your employer plan offers the opportunity to borrow from it, it's not in your long-term best interests.
So without knowing your age or planned use of the funds, it's hard to provide a specific answer.
But in general, you could consider a traditional or Roth IRA separate from your employer plan. You'll certainly have more choice in investments although you may be giving up on the tax credit for participating in a company retirement plan as well as the company match.
Or maybe because of the time line you noted, then you may be better off in a non-IRA account. I'm partial to using a core of index funds for an allocation based on your age and risk tolerance. Such an allocation would have a US stock index plus an international stock index and a bond index fund. Then you can add some other "satellite" (non-core) positions such as small company stocks, real estate, international bonds and "alternatives" like natural resources, commodities or precious metals. There are other options as well. A good "go anywhere" world allocation fund may be a good way to get access to some of these areas. BlackRock and Ivy Funds have some good choices to consider for this more actively managed piece of the investment pot you're considering.
You can get more specific advice by contacting a professional (I recommend a CFP(R) or ChFC Professional). You can also get advice for accounts both within and outside a company plan at www.futureadvisor.com for a nominal fee if you are a DIY type investor.
To get a handle on your risk profile, consider the tools available at www.myrisktolerance.com.
This is a common type question in this forum. You may also want to refer to any of the guides or answers provided by many of the professionals found on this forum.
Robin, There are two things to consider here. 1] If you are trying to replace your tax deductible contributions [like your 401k], then consider a IRA or ROTH, but ask yourself these questions: a] Do I want a tax deductable or taxable account? b] Do I qualify under IRS guidelines to have a 401k and a IRA? c] What type of risk can I take?
2] If you are trying to just put money away to have access to in a 6-10 year period and have greater choices to allocate your funds at a lower cost, then there are many mutual fund companies to consider. Hope this helps your thought process. Good luck, Dan
Robin,
You may have some options here. It can be frustrating when you want to save, but your choices are limited and they don't meet your expectations.
1) Are you currently saving in a deductable IRA? If not, depending on your income and marital status, you may qualify to contribute to a deductible IRA. You can get information on limits based on age, marital status, and income at http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits. Essentially, how useful this option may be for you depends on if you are married and your spouse participates in a retirement plan, etc. However, $400/mo is within the IRA contribution limits, especially if you are over 50.
2) Based on your income, you may qualify for a ROTH. True, you won't get a deduction on the contributions, but you do get tax deferral on growth now and eventually tax free distributions when you retire. Furthermore, you won't have those pesky RMDs to consider when you are over 70-1/2. The question to ask is do you want to pay taxes on the harvest or only on the seeds?
3) Another choice is to show the information you collected and speak to your HR/Payroll department. If enough folks "discuss" (complain, kvetch, etc.) this with them, they may change to another company. With more transparency comeing to the 401(k) space, we should start seeing competition in smaller 401(k) plans, and potentially better options.
Stay tuned. I'm sure you'll get some additonal ideas posted pretty quickly.
