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How do you determine to which accounts I should contribute additional savings for my retirement goal?

For your retirement goal, we prioritize accounts for additional contributions according to their tax efficiency, fees, and the possibility of employer matching contributions. An account is “low fee” if its estimated annual fee rate is less than 1.00% and an account is “high fee” otherwise.Specifically, we recommend additional savings be contributed in the following order (observing contribution limits):

  1. Low Fee - Roth 401(k) with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  2. Low Fee - Traditional 401(k), 403(b) or Thrift Savings Plan with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  3. Low Fee - 457(b) with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  4. Low Fee - SIMPLE IRA
  5. Roth IRA
  6. Traditional IRA
  7. SEP IRA
  8. High Fee - Roth 401(k) with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  9. High Fee - Traditional 401(k), Roth 401(k), Thrift Savings Plan or  403(b) with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  10. High Fee - 457(b) with positive contributions in the last 12 months (otherwise Wealthfront assumes this account is not available for deposits)
  11. High Fee - SIMPLE IRA
  12. Personal Investment Taxable Account, Joint Investment Taxable Account

For more details on our methodology, please log into your account and review the Path disclosures.

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

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