403b or 401k

[bhigh8]

So I have a 401k that I put about 15k in a year. My wife is a teacher and has never put anything in her 403b. We both max our Roth IRAs every year. I am wondering should I just keep contributing to my 401k or should she put money in her 403b? Is there one that is better? I could just put more in my 401k for the both of us. I make more than my wife so is it a bad idea to put more into mine as it will be taxed higher since I make more?

Any help/ advice would be great. Thanks.

[Bob B.]

Is there an employer match for the 403b? If so, your wife should be contributing enough to max out the employer match.

[bhigh8]

Is there an employer match for the 403b? If so, your wife should be contributing enough to max out the employer match.

No there isn't.

[autoxer]

I make more than my wife so is it a bad idea to put more into mine as it will be taxed higher since I make more?

Do you file your taxes separate from your wife?

Does one plan offer better investment options? or lower fees?

The best option is to use both of them.

[bhigh8]

Do you file your taxes separate from your wife?

Does one plan offer better investment options? or lower fees?

The best option is to use both of them.

Mine is through my employer and they have lots of options and low fees. My wife would have to go through investment company. So she too would have lots of options. But fees may be more.

We file joint married. So would it just be taxed together?

[Petunia 100]

Mine is through my employer and they have lots of options and low fees. My wife would have to go through investment company. So she too would have lots of options. But fees may be more.

We file joint married. So would it just be taxed together?

Yes, when you file jointly, all of your income is added together. Withholding is just a rough estimate as to what you might owe. The withholding tables are made for everyone, but tax situations vary greatly. You can always adjust your withholding if it is too high/low.

[kv968]

I could just put more in my 401k for the both of us.

Any help/ advice would be great. Thanks.

The maximum contribution allowed in a 401k is $17,500/yr unless you're over 50 then you get a can put in an extra "catch-up" of $5500. So if you're under 50 you can only put in another $2500. Then you could either put the rest in her 403(b) or in a taxable account.

[bhigh8]

So it sounds like there is not much of a difference between the two. My main concern was me making more than my wife and putting it in my account. Thinking it may be better to be in the account of the lower income.

[witchkizzle]

So it sounds like there is not much of a difference between the two. My main concern was me making more than my wife and putting it in my account. Thinking it may be better to be in the account of the lower income.

The difference is that 403(b) is offered for employees of government and not-for-profits (or any tax-exempt entity), while a 401(k) is offered to employees of regular for-profit companies.

They are essentially the same thing. The only real thing that is different is who has access to each kind.

[dczech09]

The difference is that 403(b) is offered for employees of government and not-for-profits (or any tax-exempt entity), while a 401(k) is offered to employees of regular for-profit companies.

They are essentially the same thing. The only real thing that is different is who has access to each kind.

Another difference is that with a 403b, you can transfer the money to an IRA while still working for the company. You cannot do that with a 401k.

But otherwise yes, they are basically the same thing.

Make sure that you are investing 15% of your household income (gross) for retirement. Start with the employer match, then maxing the Roth IRAs, then any extra between the 401k and 403b.

There is a bit of an advantage keeping your money in the 401k and not having your wife contribute to her 403b. The advantage is simply through compounding your investment returns. By focusing on the 401k, you can grow the money quicker. For example: an 8% return on $100,000 is more than an 8% return on $5,000 (strictly on a dollar-to-dollar basis).

[autoxer]

Another difference is that with a 403b, you can transfer the money to an IRA while still working for the company. You cannot do that with a 401k.

That's not entirely true. It depends on how the plans are setup. The employer can setup a 401k that allows inservice rollovers.

There is a bit of an advantage keeping your money in the 401k and not having your wife contribute to her 403b. The advantage is simply through compounding your investment returns. By focusing on the 401k, you can grow the money quicker. For example: an 8% return on $100,000 is more than an 8% return on $5,000 (strictly on a dollar-to-dollar basis).

And this bit of advice is just confusing. The 401k doesn't offer a clear advantage over the 403b. They have very similar rules, just that they are administered by different types of businesses. Your contributions can compound the same in either type of account.

[bhigh8]

Another difference is that with a 403b, you can transfer the money to an IRA while still working for the company. You cannot do that with a 401k.

But otherwise yes, they are basically the same thing.

Make sure that you are investing 15% of your household income (gross) for retirement. Start with the employer match, then maxing the Roth IRAs, then any extra between the 401k and 403b.

There is a bit of an advantage keeping your money in the 401k and not having your wife contribute to her 403b. The advantage is simply through compounding your investment returns. By focusing on the 401k, you can grow the money quicker. For example: an 8% return on $100,000 is more than an 8% return on $5,000 (strictly on a dollar-to-dollar basis).

Yeah we put in 401k up to match then max Roths, and then put more in 401k. Is 15% what is recommended? We put in more but should really be putting some in other places. Like things for kids college.

[autoxer]

Is 15% what is recommended?

That depends on how many years you want to work for. If you plan to work from age 20 to age 65, then 15% is a good target. If you only want to work for 30 years, then 25% - 30% is a better target.

[dczech09]

That's not entirely true. It depends on how the plans are setup. The employer can setup a 401k that allows inservice rollovers.

I was not aware of that. Learn something new everyday!

And this bit of advice is just confusing. The 401k doesn't offer a clear advantage over the 403b. They have very similar rules, just that they are administered by different types of businesses. Your contributions can compound the same in either type of account.

Yeah my bad. I am not sure what I was trying to get at there. The compounding would all work the same, mathematically. So yeah, there really is not distinct advantage based on the compound investing. I rescind my previous statement

[sandrark]

Keep in mind that these are INDIVIDUAL accounts. SHE should be putting 15% of her gross income in HER Roth and 403(b). Just because you're putting money in YOURS, it doesn't cover HER.

It's a TERRIBLE idea to only put retirement funds in ONE person's account.