Newbie with a Maximum Contribution Question

[JustTrying]

Hi everyone! I've got 2 questions about retirement savings:

1) I'm trying to be smart and take advantage of tax-deferred retirement savings. I work for a non-profit and my employer has a 403(b) plan that I can contribute to. I've calculated my rate so that I will be just at the $17,500 limit at the end of 2014. This would be great, but I'm annoyed with the fees associated with my company's 403(b) plan. I'd love to go for vanguard's (just a tiny bit smaller) fees. However, as I've researched this, it seems that for those tax-deferred savings, I have to go through my company's retirement plan. Is that conclusion correct, or am I missing something?

2) My husband is self-employed. What options do we have for him for tax-deferred retirement savings?

(I apologize if these are very stupid questions...I'm just trying to figure this out!)

Thanks for your help!

[Frankies Girl]

For the tax deferred, you do have to go through your employer's plan - I'm almost positive on that. So the best thing to do is find the lowest fees for the type of investments you prefer, and at least put in up to the company match (if any). It might also be in your best interest even with the crappy choices to max out your contributions if you can drop your taxable income significantly enough to put you in a lower bracket.

If your husband is self-employed, he should definitely look into a solo 401k. http://en.wikipedia.org/wiki/Solo_401%28k%29

And depending on your combined salaries and whether you're under the phaseouts, you should both look into doing Roth IRAs as well.

and neither of those were dumb questions! ;)

[JustTrying]

Thanks Frankie's Girl!

[nawhite]

There is also the simple answer of "fund your traditional IRA instead of maxing your 403b." A traditional IRA works very similar to most 403b's in terms of taxes, but you can open the IRA with Vanguard and the limit is 5500/year instead of the 17,500 per year in the 403b.

[Shor]

Frequently, from what I can gather, all plans offer the ability to rollover funds from your 401k or 403b to a tIRA upon leaving the company. Some* plans might offer to do this convert while you are still employed.

I am not sure if such a transfer actually costs them anything (aside from the plan losing control of your money, which is a much smaller cost than alienating the entire company / company's HR). According to , there are limits of 1 rollover every 12 months for a 403B. I would heavily advise you to ask and look in to such action if you feel that your 403B plan is not providing good enough options for your desired investment.

* Specific to each company's plan / adviser / HR / ?

http://www.irs.gov/publications/p571/ch08.html#en_US_2014_publink1000239748

Tax-Free Rollovers

You can generally roll over tax free all or any part of a distribution from a 403(b) plan to a traditional IRA or a non-Roth eligible retirement plan, except for any nonqualifying distributions, described later. You may also roll over any part of a distribution from a 403(b) plan by converting it through a direct rollover, described below, to a Roth IRA. Conversion amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. See Publication 590 for more information about conversion into a Roth IRA.
Note.

A participant is required to roll over distribution amounts received within 60 days in order for the amount to be treated as nontaxable. Distribution amounts that are rolled over within the 60 days are not subject to the 10% early distribution penalty.
Rollovers to and from 403(b) plans.   You can generally roll over tax free all or any part of a distribution from an eligible retirement plan to a 403(b) plan. Beginning January 1, 2008, distributions from tax-qualified retirement plans and tax-sheltered annuities can be converted by making a direct rollover into a Roth IRA subject to the restrictions that currently apply to rollovers from a traditional IRA into a Roth IRA. Converted amounts are generally includible in your taxable income in the year of the distribution from your 403(b) account. See Publication 590 for more information on conversion into a Roth IRA.

  If a distribution includes both pre-tax contributions and after-tax contributions, the portion of the distribution that is rolled over is treated as consisting first of pre-tax amounts (contributions and earnings that would be includible in income if no rollover occurred). This means that if you roll over an amount that is at least as much as the pre-tax portion of the distribution, you do not have to include any of the distribution in income.

  For more information on rollovers and eligible retirement plans, see Publication 575.

[LowER]

I think that your husband can set up either a SIMPLE IRA or a SEP IRA and fund those with higher limits than a typical 403b/401k.  I DO NOT know very much about either of those IRAs but they may be a great place to start searching, may be google self-employed retirement options or something like that.  I know that you can find lots more on that subject over at bogleheads.org.

[fmzip]

Your husband's best bet is a solo401K, he can defer up to $17,500 (plus if he is over 50, an additional $5500) from his salary. His business can make an additional profit sharing contribution of up to 25% of his salary. Both combined amounts cannot exceed $52,000 for 2014.

This is without a doubt his best option.

[JustTrying]

Thank you for all your thoughts! Solo 401k is exactly what I was thinking of...I just couldn't remember the name.

I hadn't thought of rolling over my 403(b), but that is a good thought, and something to look into!

The traditional IRA is a good thought, but because of our income, we would get taxed a bit on that!

Thank you all, again!

[TomTX]

Thank you for all your thoughts! Solo 401k is exactly what I was thinking of...I just couldn't remember the name.

I hadn't thought of rolling over my 403(b), but that is a good thought, and something to look into!

The traditional IRA is a good thought, but because of our income, we would get taxed a bit on that!

Thank you all, again!

Even after you max the 403(b) and he maxes the solo 401(k) - you still would have income high enough to get taxed on a traditional IRA contribution?