Author Topic: Roth 403b  (Read 1862 times)

Magclaw

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Roth 403b
« on: November 24, 2014, 02:19:44 PM »
I just convinced my wife to start contributing to her work 403b. I see there is an option to either do Roth or traditional. I am sure this has been discussed on here but can anyone give me a quick rundown on 1. the contribution limits for the Roth and 2. The ability to access that Roth money in the future.
We both have some money in roths already and I know we can always withdraw the contribution amount, just not sure with a 403 Roth.
If anyone has any helpful links I would appreciate that.

In the meantime I will try and do my own research, since these forms are do in the next few days.
Thanks

GGNoob

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Re: Roth 403b
« Reply #1 on: November 24, 2014, 02:48:34 PM »
What federal tax bracket are you in? You will most likely want to contribute to the Traditional 403b to take the tax savings.

Money contributed to the Roth 403b is taxed now and you will not be taxed later and there are no required minimum distributions at 70.5 (like there are with Traditional retirement accounts). The contribution limit is the same as a Traditional 403b at $18,000 in 2015. You will not be able to withdraw the money (without penalty) until she is 59.5 years old. Unlike a Roth IRA, I don't think you can withdraw contributions anytime.

Magclaw

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Re: Roth 403b
« Reply #2 on: November 25, 2014, 09:13:27 AM »
What federal tax bracket are you in? You will most likely want to contribute to the Traditional 403b to take the tax savings.

Money contributed to the Roth 403b is taxed now and you will not be taxed later and there are no required minimum distributions at 70.5 (like there are with Traditional retirement accounts). The contribution limit is the same as a Traditional 403b at $18,000 in 2015. You will not be able to withdraw the money (without penalty) until she is 59.5 years old. Unlike a Roth IRA, I don't think you can withdraw contributions anytime.

We are in the 15% tax bracket. Regarding the withdrawls, I assumed that like a regular Roth, contributions could be withdrawn penalty free anytime. So the Roth 403b is different?

GGNoob

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Re: Roth 403b
« Reply #3 on: November 25, 2014, 10:33:56 AM »
Here's something I found with a quick Google search:

Quote
How a Roth 403(b) Is Different From a Roth IRA
The tax treatment of a Roth 403(b) and a Roth IRA is similar (after-tax contribution, tax-free withdrawal in retirement). However, the Roth 403(b) is an employer-based plan, while the Roth IRA is an individual-based plan. Distribution rules are different. Roth IRA contributions can be accessed at any time (earnings after five years or until age 59, whichever is later). The Roth 403(b) can be accessed only with the occurrence of a distributable event (age 59, separation from service, disability, or death).

-Source

DrF

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Re: Roth 403b
« Reply #4 on: December 01, 2014, 10:09:56 AM »
If your wife has a 403b, that means she probably works at a University or similar.

That means that she may have access to a 457 account. If so, then I would highly suggest she put the money into the 457 before the 403b (unless there is a match, then of course do enough to get the match first).

The 457 is superior to the 403b in one major way. If your wife leaves that employer at any time for any reason, she can withdraw from the 457 at any age penalty free. She would, of course, still be taxed on the money at the time of withdrawal. (http://money.cnn.com/retirement/guide/401k_457plans.moneymag/index4.htm)

The 457 offers much more flexibility than any other retirement vehicle out there.