Should I max out my Roth IRA or put the max in my 403b (my 403b matches $.50 on the $ up to 6%)?

Answer 1

Contribute 6% to your 403b first, no matter what. That's a guaranteed 50% return on your money! Then start contributing to your Roth IRA. If you can max it out, then go back and continue to fund your 403b.

Answer 2

This is a tricky question. It depends on how much you have in savings. And how much you owe. If it's credit card debt or a mortgage. How old you are. If you're married or not. If you have dependents. There are lots of variables.

In general:

First, pay off all credit cards. Also make sure that you can pay each card at the end of the cycle, before any interest comes due. If you're paying 24% on your card, then you are actually getting a guaranteed 24% return on your "investment" by paying it off. Pay the minimum on each card, then pay extra toward the highest interest card first. After that is paid off, start on the next-higher interest card, and so on.

Then, consider this:

The Roth IRA will allow you to withdraw the amount of money you have invested penalty-free. (NOT, note NOT, the earnings.) This is like having a savings account. If your savings are low, start a separate saving account while maxing out your Roth first, making sure you stay within earnings limits. Then put 6% of your salary into your 403(b).

If you have 4-6 months living expenses saved, you can do as the others have suggested and hit the matching amount in your 403(b) first, then make your Roth investments up to the max.

(This is only in general; if you have lousy investment choices in your 403(b), that's an altogether different matter to consider.)

Edit: MAKE SURE YOU HAVE ADEQUATE SAVINGS. If you lose your job tomorrow (ever heard of "downsizing,"), will you have enough to live off of until you find a new position? You can take money out of your Roth penalty-free. If you withdraw money from your 403(b) prematurely, you will lose. And that is not always allowed. If you have no other recourse, including taking out a loan, you have to request a hardship withdrawal, your employer must ok the hardship withdrawal, and you still have to pay the taxes and penalty. The company must withhold 20% for taxes and 10% for a premature withdrawal penalty. Plus you will not be allowed to add any money to the 403(b) for 6 months. Some 403(b) plans will allow you to make loans, if your employer allows. Some do not allow loans.

Answer 3

If you were savvy, you could try to max out both.

If you get $0.50 on the dollar in your 403b it's basically free money so I suggest maxing out your 403b and putting whatever's left in your roth IRA.

Just remember the max contribution this year is $4,000 for a roth ira. Make sure you and your spouse's income limits aren't too high for a roth.

Answer 4

Take the matching gift. There aren't many investments that show an immediate 50% gain. Add on the tax advantages and you're on the way to a winner. Any funds you have left that they don't match, could go into the other. The Roth has some advantages for money that isn't matched by your employer.

Answer 5

I disagree with Peaches. Paying off debt is great, but I don't think it makes sense to choose a guaranteed 20% return (paying off the credit card) over a guaranteed 50% return (403b company match). You have to take advantage of that pre-tax company match if at all possible. If you have debts to take care of, get a part-time job for a while, or find some other way to pay them off.

Answer 6

The 403b. Contributions reduce your tax now, and you get the matching funds.

Answer 7

I say put it where you will get the most; if you company matches then go with the 403b.

Answer 8

particular you could the IRA is exterior of your 401k plan. It relies upon on your age, income, tax-submitting status ( joint or single) relies upon on the plan you pick, an ROTH IRA has an income cap at $ninety 9,000 with finished contribution if single and $156,000 if joint, the classic IRA is completely deductible as much as $fifty two,000, in part deductible as much as $sixty two,000. yet with constrained suggestion i'm no longer able to tell you alot concerning to the recommendations attainable to you. additionally you're able to look to basically make investments as much as the tournament on your 401k or 403b plans, that are many times constrained to 3 fund recommendations. i wish this facilitates some.

Answer 9

Definitely take the whole match before you even consider the Roth.

After you've got the match, you've go to decide if you want lower taxes now, or lower taxes when you retire.