How to Manage His and Hers 401(k) Plans

Make It a Priority

If a fund or category you want isn't available in either plan, you may want to investing in it through a taxable brokerage account. That said, 401(k) plans' tax benefits mean funding the plans to the maximum level allowed by the IRS ($15,500 each in 2008) should be a high priority for most investors.

Which brings us to one final issue: If you're unable to max out both plans, treating two plans as parts of a larger portfolio can help you decide which to fund more.

Generally, you should take the biggest employer match first. Then favor whichever plan offers you the best investment options -- including the funds with the most attractive risk-adjusted performance relative to their peer groups, the lowest costs and the investment strategies that make the most sense to you.

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