Author Topic: weekly contributions into Roth or 403 b?  (Read 1336 times)

steviesterno

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weekly contributions into Roth or 403 b?
« on: February 11, 2016, 05:57:14 AM »
hey all,

working on renovating my financial decision, and revisiting some of the stuff I've done before. when I elected for the company 403(b) when I started, I decided to split my contributions, thinking that some money pre-tax would help and some money post-tax would reduce my chances of being hit too hard with a major tax bill later. but since signing up for MMM, I'm leaning more towards retirement at ~50 years old (32 now). I love the idea of leaving the rat race earlier, but I really enjoy my work and want my newborn to stay in this school district.

Our work plans are not amazing, with a 1-1.5% cost depending on what we chose. But, I get a 6% salary match contribution by putting in 1%, so that's worth it. I don't yet max out my 403, but that is a goal as I work towards it.

I have student loan debt, and we're currently paying on it every month. good news though is since I work in education/non-profit, in 7 years it all goes away. I'll owe tax on the write off, so we're trying to invest about $600/month in vanguard to build up for that bill, and have as money we can get for emergencies, or retire with/use without worrying much about the tax implications.

so I guess the real question is do I split contributions to my roth and 403 (which would mean stopping vanguard contributions to get there) or do I shut down the roth contributions for a while until I can max out the 403, then throw any extra into that?


Tjat

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Re: weekly contributions into Roth or 403 b?
« Reply #1 on: February 11, 2016, 06:08:27 AM »
I would say that your first priority is to maximize the match your company provides. Secondly, pre-tax is generally more advantageous than post, so I wouldn't stress about feeling that you need to split contributions. Lastly, does your 403b plan allow for in-service distributions? Given the high expense ratio, it'd be awesome if every 6 months or so to roll your 403b balance into a traditional IRA at Vanguard.

catccc

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Re: weekly contributions into Roth or 403 b?
« Reply #2 on: February 11, 2016, 08:04:51 AM »
What is your taxable income like currently?  Do you know which tax bracket you are in?  Will you have a good mix of taxable and not taxable income sources upon fire?

Asking because a traditional IRA might be the way to go. 

Maxing your 403B and contributing to a traditional IRA in the year that the loan write off taxable event happens could also be a good strategy.