401k vs. Brokerage account

Investing
#1

I have been contributing to my 401k for many years, and recently started contributing yearly maximum. However, I just realized there is a 0.40% admin fee on top of the fund fees. I am in four Vanguard index funds, so those fees run .04-.11% (was in others that had higher fees).

I always assumed maxing out my 401k should come before opening up a brokerage account. But, after watching video you referenced in an earlier post (Jake Broe- why your 401k is a waste of time), I am rethinking my strategy, especially with the .40 admin fee. Also, sounds like tax savings in retirement on capital gains rate vs. marginal tax rate.

I am 58 years old, and also contribute max to my Roth IRA yearly. My income is around $140k, plus wife working part-time for another $15k. (she contributes max to traditional IRA)

Would you recommend stopping my 401k contributions due to the high fees and instead just use brokerage account to contribute to index funds? Or maybe do 50/50, and contribute half to each account? The high fees of the 401k are scaring me off.

#2

Excellent work maxing out IRA and 401k! That fee stinks, but could well be worth the tax benefit. For an exact mathematical answer, the Variables to consider are: your current tax bracket, your time horizon to retire, your annual withdrawals at retirement, and tax bracket at retirement. Personally this level of planning starts to get full of a lot of assumptions that may or may not hold. If it were me, Iā€™d stay in the 401k or split 50/50. The benefit of splitting is that would have various levers and buckets to play with when you start drawing (401k, IRA, brockerage - each with their own benefits). Cheers!

#3

Thank you for the reply!! I will do a split % between the two. Opening up a brokerage account, but still contribute some to my 401k, but not maxing out.

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