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Stout_Ace

403 B Vs Roth

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Stout

 

I would personally max out the Roth first and then put as much money as you can into your 403b .

 

One good think about a Roth is you can pick where you want to invest it with no restrictions The money is not taxed on withdrawal.

 

One good think about the 403b is its tax sheltered so it will grow tax free and will lower your current taxes.

 

Its a great combo. I'd have both.

 

 

I don't know what your choices are in your 403b. If all you have is high fee annuity products then its a no brainer to go first with a Roth from a company of your choosing.

 

Tony

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I would not take the advice of anyone on this site who would give you advice based on no information about you. What is your age, income, current holdings, tax filing status, etc...

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Stout Ace,

 

Yep 403Bagent is right. It might not be as simple as we've made it. Its much much more complex than that.

You are not qualified to search for information and then make your own decisions and we here are not capable of giving accurate answers. It can't possibly be as simple as we have made it .

 

Instead talk to an agent/expert/salesman. He will turn a simple concept into a complex mess and sell you high fee products you don't need .

 

 

Tony

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Stout Ace,

 

Yep 403Bagent is right. It might not be as simple as we've made it. Its much much more complex than that.

You are not qualified to search for information and then make your own decisions and we here are not capable of giving accurate answers. It can't possibly be as simple as we have made it .

 

Instead talk to an agent/expert/salesman. He will turn a simple concept into a complex mess and sell you high fee products you don't need .

 

 

Tony

 

Woah, Tony, fingers off the trigger. It is important to consider one's income/tax bracket, a projection of one's income in retirement, and time to retirement, at the very least. Roths aren't always the right answer.

 

 

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Vince,

I disagree, remember this is the corrupt 403b world and the Roth is an answer to 100% of the 403b problems (only option is high fee annuities or loaded mutual funds) for those do it yourselfers.

Steve

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Vince,

I disagree, remember this is the corrupt 403b world and the Roth is an answer to 100% of the 403b problems (only option is high fee annuities or loaded mutual funds) for those do it yourselfers.

Steve

 

So, you're saying a Traditional IRA, or a Traditional 403b (held in Vanguard) is never a better option than a Roth IRA?

 

 

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Vince,

Original poster asked about the Roth and 403b. Not everybody has traditional roth or roth 403b. But all have the Roth IRA and via the Roth IRA everybody has access to Vanguard. Am I missing something?

Steve

 

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Vince,

Original poster asked about the Roth and 403b. Not everybody has traditional roth or roth 403b. But all have the Roth IRA and via the Roth IRA everybody has access to Vanguard. Am I missing something?

Steve

 

Yes, a traditional 403b held within Vanguard can sometimes be a better choice than a Roth IRA held at vanguard. Not everyone benefits from paying their taxes now. That is my point.

 

 

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Vince,

Original poster asked about the Roth and 403b. Not everybody has traditional roth or roth 403b. But all have the Roth IRA and via the Roth IRA everybody has access to Vanguard. Am I missing something?

Steve

 

Yes, a traditional 403b held within Vanguard can sometimes be a better choice than a Roth IRA held at vanguard. Not everyone benefits from paying their taxes now. That is my point.

Traditional IRA, Roth IRA, 403b, 457, 401K, 401a ... the needless complexity driven home by this thread demonstrates the need to eliminate ALL of this stuff and simply institute a single federal retirement savings plan.

 

Yes, yes, I know there are all kinds of reasons why this is not going to happen now, and yes, yes, I know that Bush proposed this (unsuccessfully), but it sure is something to aim for down the line.

 

Can you imagine the benefits? The employer would be removed from the loop; no more burdensome IRS regulations imposed upon the employer. There would be no more "lists of approved vendors;" an investor could simply take his/her money to any investment company. And with tens of millions of workers no longer restricted to the employer's plan, can you imagine the competition for investor dollars that would result?

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Based on what I've read from various sources (this site, the IRS website, Jane Bryant Quinn, John Bogle) here's my 2 cents:

 

IF you are relatively new to teaching, and IF your income is relatively low, a traditional IRA might be an option IF your 403b choices are poor (notice all the ifs). As your income goes up the amount you can put in a traditional IRA decreases.

 

We can't predict what future tax rates are going to be like but IF they are higher in the future and IF your income in retirement is close to your preretirement income a Roth is a good choice. A lot of teachers, IF they have paid into their state pension plan for 30+ years and IF they have saved a good deal for retirement they may have income that is close to 100% of their preretirement income.

 

IF you think taxes are going to remain low and IF your retirement income is going to be less than your preretirement income a 403b is probably a better choice, as long as that 403b has good, low cost choices.

 

Because there are so many IFs I think a better strategy is to put money into both low cost, index-based Roth IRA's AND low cost, index-based 403b's. That way you get tax diversification too.

 

 

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Ok,

 

Well, I'm a 27 y/o teacher and have been contributing to a 403B for 4 years in primary growth mutual funds. Luckily enough a friend who was aware of the Ins. SCAMMS warned me and got me into No-Load mutual funds with less than 1% expense ratios. I am currently just started my fifth year with a 403B and have about $15,000 already saved. Next fall, I will begin to max my roth IRA and cut back on 403 B investments. Thanks all for responding..

 

mmcwenie- I do not believe teachers can utilize a traditional IRA??

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Ok,

 

Well, I'm a 27 y/o teacher and have been contributing to a 403B for 4 years in primary growth mutual funds. Luckily enough a friend who was aware of the Ins. SCAMMS warned me and got me into No-Load mutual funds with less than 1% expense ratios. I am currently just started my fifth year with a 403B and have about $15,000 already saved. Next fall, I will begin to max my roth IRA and cut back on 403 B investments. Thanks all for responding..

 

mmcwenie- I do not believe teachers can utilize a traditional IRA??

 

It sounds like you're in a position where a Roth definitely suits your profile. I'd maximize those earnings first, then work on the 403b (unless you have a Roth 403b available to you at your district.)

 

 

 

btw, teachers can utilize a traditional IRA, if they fall within the income limits applicable to their situation.

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