401K concerns

[Dogtor]

TLDR: I don't know what I'm doing with our 401(k)s.

Hi everyone. I want to preface this question with the info that I am actively reading the WCI book, I've also purchased the bootcamp, and I'm listening to the podcast, so I promise I am trying to do my homework and not just pepper you all with questions.

That being said, I'm also anxious to get our retirement accounts on the right track, and am hoping for some guidance.

Here is an overview of our current accounts:

Portfolio Size: $281K + kids $45K

• His 401(k) 28%
  • Mass Mutual
• Her 401(k)s: 37%
  • Fidelity 34%
  • Voya 3% - this is the current employer with a match, but was only able to contribute 4K ish due to high earner limits
• Her Roth: 4%
  • Northwestern Mutual
• His Roth: 4%
  • Northwestern Mutual
• Taxable account: 26%
  • Northwestern Mutual
• Kids 529s are with NY state (Vanguard) - we live in TX but this seemed like a better option

My Fidelity 401K is from my previous employer, I left almost 3 years ago. It has continued to have good returns despite being stagnant of contributions. My current employer uses Voya which I believe is an American Funds account, which to be honest seems to kind of suck. They also have high earner limits so I am only able to contribute a very small percentage of the 19,500 max, but they do match a very tiny amount (1/2 of up to 3%). It's also not vested for some obscene amount of time, like 5 years.

What should I do about these accounts? I contributed the full 19,500 this year and got approximately 15K kicked back, lost the match on that portion, and lost money on the investment, so I feel like I basically gave them a crummy loan of that money for the year. I do have some 1099 income (very small) but could increase this if it would be worth it to set up an individual 401K. My husband also had 6K kicked out of his 401K this year, so not as bad but also problematic. We did reinvest 12K back into the Roth IRAs, and the rest ideally would have gone into the mutual fund but ended up helping pay our gigantic tax bill this year. If it's relevant, I had a palliative care side gig for a while that lists both my husband and I as employees and we have an EIN, so I think setting up the individual 401K would likely be pretty easy.

I don't really understand well enough how to relate all of these accounts to each other and what the best strategy is here. I also don't trust our current financial advisor (NWM) but haven't broken up with them yet because I don't feel smart enough with all of this to even know the right direction to go. Can you guys help me? If you can even point me to a kind of quick-reference that would be great.

Thank you!

[spiritrider]

Get the heck out of these expensive Northwestern Mutual Roth IRA and taxable accounts. Move everything to a low cost brokerage such a E-Trade, Fidelity, Schwab, TD Ameritrade or Vanguard. Get the heck out of any Northwestern Mutual permanent insurance policies or annuities.

Lose and block the Northwestern Mutual advisor phone number, text, etc... Double down on this if it's family, friend, acquaintance or affinity relationship. Ok, maybe you can't ghost family and friends, but NWM con artists are parasites on you and your families financial future.

I leave it to the many knowledgeable WCI forum members to help with investment specifics.

P.S. Check with your employer and or plan administrators about what the typical ADP test failure percentage is. It makes no sense to knowingly make excess deferrals, have them returned and subject to ordinary income taxes. It is probably a good idea to minimize then by deferring less and investing that amount in taxable.

[artemis]

I second everything Spiritrider has said, and will add that it’s worth trying to see if your current employer can be convinced to switch from Voya to a better 401k provider. Employers are supposed to be acting as a fiduciary when it comes to providing retirement accounts, and in no way is using a provider that pushes high-cost funds acting in the best interest of the employees.

[zlandar]

529s looking good.

Methodically replace NWN.