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I have a 403(b) through my employer (403(b)s are basically 401(k)s for the education and non-profit sector). I was planning on saving up to open a Vanguard Target Retirement Fund ($3000 to open), but my husband suggested that I might want to max out my 403(b) first. I have no idea about which is the better idea. What are the benefits of maxing out the 403(b)? I'm clueless.
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What's your age? If young, RothIRA could be a good idea.
According to S.Orman, invest in 401k up to an employer's match, so you don't leave FREE money on the table. Then invest in RothIRA up to the max. And if you still have money, go back and contribute more to 401k. -
I'm 25. Right now, I don't contribute anything to my 403(b); my employer contributes without me having to add anything at all (sweet, isn't it?).Comment
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I think more info is needed. I would recomend using 403(b) to reduce taxes paid now. I would consider putting 10% of income into 403b, then funding roth.
The 10% contributions lowers your tax bill now, and I believe deferring taxes to the future is a prudent move for the beginning investor. You should see the immediate benefit from the tax savings.
The Roth withdraws would be tax free. The 403b can be converted to a roth IRA if you switch jobs and convert it to an IRA.Comment
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Sure, it's great for youOriginally posted by southernsara View Post
. If you contributed, would the match increase at all or not?
OK, so now it also depends on the choices in your 401k, their track records, and expense ratios? Does you co. pay for fund expenses? My co. does, but DH's doesn't (not a big deal, since most are Vanguard funds).Comment
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