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Comment by bcg1 | Hacker News Reader

You make a good point, I really was only considering major large cap indices. I assume this is what most people mean when they talk about "index funds".

I'm not really against index funds per se, I actually think they are a great way to invest if you identify a trend in a particular sector. And truthfully, I'm far from a trained financial expert, I'm just some dumb hacker that is rubbed the wrong way by the type of advice I outlined in my above comment.

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I'm rubbed wrong by the people who present at "Brown Bag Retirement Advice Lunch Talks" and want me to buy into their managed funds. The index funds have overhead in the range of .02-.5% for the most part. The managed funds are largely 1.5% and I've seen some that charge as much as 2.5%! I'll let you do the math, but it's very hard to choose a managed fund that will outperform after fees vs. S&P 500 from say Vanguard.

Most retirement accounts also don't allow individual stock purchases (at least mine doesn't), so the options are fairly limited for most people.

If you change jobs, one can always roll over 401k accounts to Individual Retirement Accounts instead of the next company's 401k program. At that point you can control your own retirement funds in the roll-over IRA. (As always check with your own tax advisers to see if that's a good idea for your specific situation).

401k rollovers have no tax implications.

There are indirect tax implications: Once you roll over your 401k into an IRA you can't use the Backdoor Roth IRA technique anymore (well, you still can, but then you would have to pay taxes).

Does it help to have a brokerage that has only 401k rollover IRAs and another brokerage that's used for backdoor roth? (I'm guessing not). I've been postponing a 401k rollover for the reason you state.

No. All of your pre-tax IRA accounts across all custodians are used when figuring out the taxes of the backdoor Roth. However, if you have a 401k at your current job that has good investments you may be able to roll your IRA into you 401k plan. That will clear out all the IRA assets to give you a $0 figure when performing the backdoor.

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