Non-matched 403(b) worth it?

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
I'm 25 making 30k and my employer offers a non-matched 403(b) plan.
Am I right to assume I shouldn't have any interest in this plan as I could save the same money into a personal IRA/RothIRA with equal tax benefits and most likely lower fees?

I already know I will be leaving company in 2 years for school.
I have saved up about 3k so far which is currently hanging out in ING while I decide what to do!

Thanks for you input!!

I did see a similar thread here LINK but in this instance they were matching the 403(b) after a year whereas with mine they do not match it ever <img src="i/expressions/face-icon-small-sad.gif" border=0>

Member Summary
Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Big fan of tax deferred savings but at your taxable rate I'd fund a roth first. Hopefully after you go back to school you'll find yourself in a higher tax bracket. If your 30k is pushing you into the 25% tax bracket then maybe enough of a deductible ira to stay out of that bracket - doubt it.


There is tons of info about this stuff on the board, search for 403b, Roth, IRA, etc.

A traditional IRA and a 403(b) are a similar investment vehicles. Tax deferred growth. You can claim the Trad. IRA contributions as a deduction on your taxes (in your salary bracket). The 403(b) is pretax dollars (same benfit as Trad. IRA). You pay taxes on the profits when you retire and withdraw money. The HUGE POSITIVE of a 403(b) is the much higher contribution limit - over $10,000 vs. $4000 for the Trad. IRA.

Depending on your employer one probable negative of a 403(b) is the investment vehicles that you can use - in some parts of the US - Tax Sheltered Annuities are pushed as opposed to Mutual Fund products from companies like Vaguard, Fidelity, etc.

You should goto http://www.403bwise.com/ and read up on 403(b)'s.

Roth IRA contributions are taxed monies, so any potential profit is NOT taxable.

I am a teacher and I max out my Roth IRA in January and contribute almost $400 monthly to my 403(b) as well. Fortunatley my employer allows me to put 403(b) depositis into a Vanguard account.

IMO you should do the same, invest in both a Roth IRA and 403b, but make sure you MAX OUT your Roth IRA.

reckner77 said: [Q]

You should goto http://www.403bwise.com/ and read up on 403(b)'s.

This thread, New employee: Invest in 403(b) or invest independently should be a good read.

Just before I turned 50, I started a 403(b) that put a big hole into my annual tax bill. Nice!!! After two bad TSA's got started, I read the terms and killed both of them in favor of better terms from USAA. I'm still squeezing one of the mistaken TSA's for the last half of my donation before I got out of that. Had to take distribution over 10yrs to keep the buzzards from holding on to a third of my money, and that was after the state of Ohio released its grip on what was apparently a disasterous insurance company about to go under through bad mgmt. Yes, the company you go with makes a difference! My 403(b) is solely my own money, as my employer matched funds with a mandatory 7% deduction from my salary in a statewide retirement plan. My TSA sheltered 15% or so of my income for the few years that I was eligible to put money in it. Best investment I ever made, because it got me started thinking about net worth and how nice it is when money grows itself. Beautiful to see the end-year report of taxable earnings too, with the deferred income reported as an aside! My TSAnnuity was different from an older IRA that was brokerage, in that the TSA never lost ground or spiked or had to be monitored. Another really nice thing about my TSA at USAA was that I was able to borrow back half of my funds when times got tough. I paid 1% more than my money was earning at that time, which gave me operating money in very lean times. You cannot borrow against an IRA, apparently, but a TSA (at least mine with USAA) has a lending capacity. I'd recommend 403(b) to anyone, but do be careful about getting snookered by a salesman, as I did (almost), as you look for a sturdy company to handle your 403(b)/TSA. Your company's plan may be worth checking out, but do compare its fees/terms with those of other companies. Above all, don't miss out by avoiding creating a 403(b) to shelter a nice slice of your income. Definitely do your research to avoid getting involved with a TSA that takes away too much money as fees or as penalties. Some plans really bite. Fees are NOT something to take lightly, and my goal is not to fatten some agent's retirement at the expense of my own savings. I've dodged fees myself, especially fees from money that I've set aside as savings for my own retirement. Folks may tell you that fees are standard. Not so. Better plans are available. Do your research. Good stuff here at FWF, as you've been cued to read up on folks' experience. Keep reading. No reason you cannot have it all -- standard IRA, Roth IRA, 403(b), and more besides. I do. Each one has some advantages, depending on how your needs vary from year to year. -Zer (always happy to hear someone getting smart early on, as you are doing!) [Q]JazzyfromCO said: I'm 25 making 30k and my employer offers a non-matched 403(b) plan. Am I right to assume I shouldn't have any interest in this plan as I could save the same money into a personal IRA/RothIRA with equal tax benefits and most likely lower fees? I already know I will be leaving company in 2 years for school. I have saved up about 3k so far which is currently hanging out in ING while I decide what to do!

Thanks for you input!!

I did see a similar thread here LINK but in this instance they were matching the 403(b) after a year whereas with mine they do not match it ever <img src="i/expressions/face-icon-small-sad.gif" border=0>



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014