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Would a Roth 403b be better than Traditional 403b for Teachers?

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I'm a Teacher in California. If the Calstrs Pension is still around when I retire, I will receive one in the $50,000 range.

Would it make more sense to contribute a Roth 403b to not be taxed on withdrawals during retirement compared to a Traditional 403b?

If my district doesn't offer Roth 403b or Roth 457b, should I still look into contributing to traditional 403b or 457b accounts? Should I hold off and get my district to add Roth 403b and 457b accounts? If they don't add the Roth option, are traditional 403b and 457b still good retirement options considering the pension?

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Yes, Traditional 403b/457b accounts are a great retirement savings vehicle, if that is your option, don't hesitate.  

As to the Roth vs Trad question, please look in the 403b forum, somebody has recently asked the same question.

Bottom line: both are good options, but it is difficult to know which will ultimately be better because the future (including future tax rates) is unknown.

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Calteacher, welcome to the forum! $50,000 seems like a lot of money, but in terms of retirement savings, which needs to last over decades of retirement, it's not likely to be a big tax burden. You don't have to withdraw it all once. A rough rule for a safe withdrawal rate is around 4% plus a correction for inflation. That assumes a stock/bond ratio of around 60/40. A taxable income of a $2000/yr distribution, added to your pension, is not something to worry about. 

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To decide between Roth and Traditional you have to understand the progressive nature of our tax code. Let's use the 2020 tax code for a hypothetical single person who has the most simplistic tax situation imaginable...

  • The first $12,400 they earn is taxed at 0% due to the standard deduction.
  • The next $9,875 they earn is taxed at 10%
  • The next $30,250 they earn is taxed at 12%
  • The next $45,400 they earn is taxed at 22%
  • ...and so on until they reach the 37% tax bracket where every additional dollar is taxed at 37%.
A lot of people incorrectly believe that if they're in the 22% bracket then all of their income is taxed at 22%. In reality, every dollar you earn has its own tax rate. Your effective tax rate is equal to your total tax paid divided by your total income. Your highest tax bracket is called your marginal tax rate.
Traditional vs Roth Qualitative Explanation
When you contribute to a Roth account those dollars are taxed first, which is based on your (high) marginal tax rate. When you eventually withdraw that money, no taxes will be owed since they were already paid.
When you contribute to a Traditional account those dollars go into the account tax-free, which means you get to avoid that (high) marginal tax rate. When you eventually withdraw that money, it will be taxed, but it'll fill up your lower tax brackets before you get to your highest tax bracket. This is why the Traditional account is very likely to be superior for most folks in most situations.
Traditional vs Roth Quantitative Explanation
Just for fun let's put this into mathematical terms. Suppose you invest P dollars in each type of account for N years and you get an annualized 7% return:
Traditional Value = $P * (1.07)^N * (1 - TaxRateInRetirement)
Roth Value = $P * (1 - TaxRateWhileWorking) * (1.07)^N
You can see there are common terms in those equations so let's get rid of them:
Traditional Value = 1 - TaxRateInRetirement
Roth Value = 1 - TaxRateWhileWorking
We know the TaxRateWhileWorking is equal to your (high) marginal tax rate while you were working. We know your TaxRateInRetirement will be based on that money filling up the lower tax brackets during retirement. So if TaxRateInRetirement is less than your TaxRateWhileWorking then the traditional account will generate more value.
What if my retirement income is greater than my income while working?
First of all, if you fall into this case then you've got nothing to worry about in retirement, but it is true that a Roth may become more appealing since you'll find yourself in higher tax brackets in retirement. However, even in this case a 100% Traditional may still be better than 100% Roth because you'll get to fill up the lower tax brackets even if your marginal tax bracket is higher, which may make your effective tax rate lower with a Traditional than it is with a Roth.
The most important thing to say about this case is that you made a big mistake while planning for retirement because you oversaved significantly. You would have been better of retiring earlier or spending more money during your working years.
What if other income fills up my lower brackets during retirement?
If you have social security income or income from a pension then that'll fill up your lower brackets first, making a Traditional less appealing. Notice that I didn't say it makes a Roth superior. The odds are the effective tax rate associated with your Traditional withdrawals will still be appreciably less than your marginal tax rate while working because you will likely still take advantage of some of the smaller tax brackets and your marginal tax rate in retirement likely won't be higher than your marginal tax rate while working anyways. This scenario just reduces the appeal of Traditional, it doesn't eliminate it.
What about Roth conversions?
Suppose you saved a bunch of money in a Traditional and when you retire you aren't taking social security or any other forced income like pensions. Well you can convert that traditional money to a Roth account, which means the first group of dollars won't be taxed at all, the next group of dollars will be taxed at the lowest rate, and so on. This is a best of both worlds scenario where you can avoid your (high) marginal tax rate while working and pay rock bottom tax rates to convert it to a Roth later in life. This increases the appeal of using Traditional accounts.
What if tax rates change?
I commonly see people destroy their portfolios by making decisions based on their personal politics. My advice to you is to simply not engage with this thought pattern at all. Taxes may go up when you retire or they may not. If you indulge in this scenario it is often the Liberals who are most apt to increase tax rates, but remember their philosophy is about raising taxes disproportionately for the wealthy. If you're wealthy you'll be fine regardless. If you're not wealthy, then even in this scenario (which may or may not come to pass) your taxes may not increase too much. Again, just don't even engage in this line of thinking. Nobody knows nothing as they say.
My Thoughts
I view this Traditional vs Roth discussion as an optimization that ultimately won't have a huge impact on you. If you haven't already figured out how to minimize your spending, maximize your saving, and reduce costs to as close to 0 as possible then you shouldn't even be thinking about Traditional vs Roth. However, if you begin to think about Traditional vs Roth just know that nobody can give you a definitive answer because it depends on future tax rates, market performance, when you'll die, when you'll take SS, if you have a pension, if your pension will be cut due to poor funding, and so on.
Most people in most scenarios are probably better off using a Traditional account for the reasons described above. In an ideal world you'd invest exactly enough in a Traditional account such that every dollar you withdraw is taxed less than or equal to your marginal tax rate while earning that initial investment and every other dollar should go to a Roth account. Again, nobody can tell you that magical number because we can't see the future. Another rule of thumb, if you're in the beginning of your career and making almost nothing, but you'll quickly climb the income tax brackets (like a young doctor for instance) then a Roth is your friend early on...or if you're temporarily in a low income situation (maybe you got fired, maybe you took a couple years off to raise a kid, whatever) then a Roth may also be great for you. But generally, I think Traditional is best. If you want to address these unknowns by investing in both, that sounds reasonable to me too.

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