401k v. 403b

[wannabefree]

ok here is my problem. I work for a not for profit hospital and I am only allowed to contribute 5% of my income into my 401k (this is more than enough to get my maximum match of 3%). Because I work for a not for profit I am able to contribute above 5% to a 403b plan. Why does it matter to me which plan I contribute to? Do 403b plans typically have higher expenses? Any thoughts?

[LuxLiving]

I'd go with the 403b myself where you can put more back tax-deferred.

Have you read David Bach's Automatic Millionaire? There is a good section in it explaining how the tax benefits are SO GOOD FOR YOU financially and they don't actually eat into your bottom line like you might think. Taking home less pay is in reality a much better deal for you...hard to wrap the old bean around but he explains it where it makes sense. Check it out at your library for free.

disneysteve I believe it was pointed me to a good source for the scoop on 403b's the other day. My FrugalSon is investing thru one at one of his jobs. Here's the link:

http://403bwise.com/

[sweeps]

Every plan is different so you can't really say a 401k is better than a 403b or vice versa. One 401k plan could be awful whereas another one could be a dream.

The main things you need to look for are the amount of matching contributions, the quality of the investments available to you, and what fees or expenses you'll be charged by the plan.

In many cases funding a Roth IRA is a better choice after you've maxed out your 401k/403b company match.