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Roth IRA vs 403b

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    Roth IRA vs 403b

    I used to be self employed and was maxing out my Roth IRA for a few years. Now I took a position that offers a 6% match in the company's 403b retirement plan. (From what I understand, a 403b is basically the same as a 401k, just used for non-profit companies.)

    I plan on contributing 10% and getting the 6% match too. But I was wondering if I should roll my Roth IRA into the 403b? Or continue to fund them both separately?

    #2
    Fund them separately for two reasons which come to mind immediately...

    1) the Roth is post tax and the 403b is probably pre-tax, so keep that money separate

    2) the 403b plan rules might not allow this, even if #1 was a wrong (stated wrong by me, I misinterpreted your question wrong, or there are other factors I do not know about)

    **in general, its a good idea to have some money pre-tax and some money post tax because the rules to withdraw (take distributions) in retirement are different from each account**

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      #3
      There are lots of reasons why a Roth is generally better than a 401k/403b. I would definitely keep both as Jim suggested. Fund the 403b to get the full match, then fund the Roth up to the max. If you still have money available after that, go back to the 403b.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
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        #4
        You will not be able to roll a roth into a 403b, simply because those are funds contributed with after tax dollars.

        Only Rollover IRA funds can be rolled into a 401K or 403B. In the industry, these are referred to as qualified funds because they were originally contributed to a "qualified" plan, such as a 401K or 403b. Even a traditional IRA cannot be rolled into a qualified plan. (Ah...knowledge from former jobs stays with you! I worked for a mutual fund company in the retirement plans division).

        I agree with Steve's suggestion above to only contribute to the match and only go above if you have maxed out your Roth for the year.
        My other blog is Your Organized Friend.

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          #5
          Would it be best to try and max out the Roth for the year as quickly as possible rather than smaller monthly contributions?

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            #6
            Originally posted by pikey412 View Post
            Would it be best to try and max out the Roth for the year as quickly as possible rather than smaller monthly contributions?
            If you can, that's great. The sooner you get it in the Roth, the sooner you take advantage of the tax-free growth. So yes, if you are able to do it that way, I would. That's what I do. Our Roth's should be maxed for the year by the end of May.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

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              #7
              Originally posted by pikey412 View Post
              Would it be best to try and max out the Roth for the year as quickly as possible rather than smaller monthly contributions?
              It depends what you're investing in within the Roth account. Dollar cost averaging by making monthly contributions may be better than making a lump sum contribution.
              Brian

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                #8
                Originally posted by disneysteve View Post
                If you can, that's great. The sooner you get it in the Roth, the sooner you take advantage of the tax-free growth. So yes, if you are able to do it that way, I would. That's what I do. Our Roth's should be maxed for the year by the end of May.
                Do you have more than one Roth? How do you do that?



                ^ It's just a Fidelity Freedom Fund 2045.

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                  #9
                  Originally posted by pikey412 View Post
                  Do you have more than one Roth? How do you do that?
                  One for me. One for my wife.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

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