Any advice on retirement investment options between a 403(b) and a IRA account? Which is the better option for my money? We are looking to increase our retirement plan while reducing our taxable income (we annually end up owing the gov’t money during tax season).
Background (please feel free to tell me what other info I need to include/ consider)
403(b)
-via NYState teachers retirement system
-no matching funds
IRA
-via private investment manager
-The Wife has an investment account through a guy who manages an inherited portfolio
-He’s, historically, been a point or 2 above the market
this is not my field . . . but I think one can contribute more $$$$ to a qualified 403(b) then an IRA . . . in my case IRA max is $6500/year while my 403(b) is $23,000
you can look at what fund families are available . . ie Fidelity, Vanguard, etc . . . and theirs costs and available funds.
Depends on what the expense ratios and investments on your 403b look like.
403b you can contribute up to $17,500
IRA $5,000
Just because the investment manager is 2pts above the market in the past, doesnt mean he will be in the future. Past doesn’t predict the future in the market. Chances are his fees cut into that 2pts above the market.
Read some books on it all and it will help you. I think the first one and an easy one is “Bogleheads guide to retirement planning” also going to the forum bogleheads.org will give you some great info. A lot of people will give you free investment advice.
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Depends on what the expense ratios and investments on your 403b look like.
403b you can contribute up to $17,500
IRA $5,000
Just because the investment manager is 2pts above the market in the past, doesnt mean he will be in the future. Past doesn’t predict the future in the market. Chances are his fees cut into that 2pts above the market.
Read some books on it all and it will help you. I think the first one and an easy one is “Bogleheads guide to retirement planning” also going to the forum bogleheads.org will give you some great info. A lot of people will give you free investment advice.
Current IRA max is $5500. 2nd the recommendation about the manager, in fact I would ask him to prove that he has truly beat the market because I seriously doubt he actually has once fees are included. My two best friends are extremely successful CFPs, neither one actively manages their own portfolio like they do for their clients, everything is in basic index funds. Unless you have an extremely complicated situation or an 8-figure plus portfolio, have no clue why people would pay someone to do it. Learn pretty much all you need to know in 5min http://www.bogleheads.org/wiki/Category:Retirement_planning
General rule of thumb is to get the 401k/403b match then max out the IRA, since you don’t get a match focus on the IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
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General rule of thumb is to get the 401k/403b match then max out the** Roth** IRA, since you don’t get a match focus on the Roth IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
where you said IRA - you should have said ROTH IRA… the ira probably wouldn’t be a deductible IRA, so he’d be better off with a Roth,
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General rule of thumb is to get the 401k/403b match then max out the** Roth** IRA, since you don’t get a match focus on the Roth IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
where you said IRA - you should have said ROTH IRA… the ira probably wouldn’t be a deductible IRA, so he’d be better off with a Roth,
I didn’t see anything which suggested they don’t meet traditional IRA deduction thresholds. Roth is in most situations preferable, but without further details it was pointless mentioning it.
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General rule of thumb is to get the 401k/403b match then max out the** Roth** IRA, since you don’t get a match focus on the Roth IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
where you said IRA - you should have said ROTH IRA… the ira probably wouldn’t be a deductible IRA, so he’d be better off with a Roth,
I didn’t see anything which suggested they don’t meet traditional IRA deduction thresholds. Roth is in most situations preferable, but without further details it was pointless mentioning it.
I really am a mental midget when it comes to investing (among other things). Currently, the Wife puts money aside into a retirement fund (403b). All of mine goes into savings/ checking to pay the bills. Now that we have a surplus, we’d like to start putting more into retirement funds.
Are you guys suggesting that some IRAs are tax deductible while others are not and that the tex deductible status may be dependent on how much is being invested in the household?
4 Likes
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General rule of thumb is to get the 401k/403b match then max out the** Roth** IRA, since you don’t get a match focus on the Roth IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
where you said IRA - you should have said ROTH IRA… the ira probably wouldn’t be a deductible IRA, so he’d be better off with a Roth,
I didn’t see anything which suggested they don’t meet traditional IRA deduction thresholds. Roth is in most situations preferable, but without further details it was pointless mentioning it.
my mistake - you’re right… I Didn’t know they raise the IRA deduction thesholds so high.
Are you guys suggesting that some IRAs are tax deductible while others are not and that the tex deductible status may be dependent on how much is being invested in the household?
it’s based on income and whether you (or spouse) have a plan (401k,403b) plan at work.
more here:
http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits
Depends on what the expense ratios and investments on your 403b look like.
403b you can contribute up to $17,500
IRA $5,000
Just because the investment manager is 2pts above the market in the past, doesnt mean he will be in the future. Past doesn’t predict the future in the market. Chances are his fees cut into that 2pts above the market.
Read some books on it all and it will help you. I think the first one and an easy one is “Bogleheads guide to retirement planning” also going to the forum bogleheads.org will give you some great info. A lot of people will give you free investment advice.
Current IRA max is $5500. 2nd the recommendation about the manager, in fact I would ask him to prove that he has truly beat the market because I seriously doubt he actually has once fees are included. My two best friends are extremely successful CFPs, neither one actively manages their own portfolio like they do for their clients, everything is in basic index funds. Unless you have an extremely complicated situation or an 8-figure plus portfolio, have no clue why people would pay someone to do it. Learn pretty much all you need to know in 5min http://www.bogleheads.org/…:Retirement_planning
General rule of thumb is to get the 401k/403b match then max out the IRA, since you don’t get a match focus on the IRA first as there is zero chance the 403b has better/cheaper funds than Vanguard/Fidelity, etc.
your right, 5,500. I was close enough for a Friday afternoon.
I really am a mental midget when it comes to investing (among other things).
If it makes you feel better. Chances are your wifes money manager is a mental midget as well, just very good at selling investments. Look into the link Stop2think gave. Most of the info you need is all there. Spend a 2-3 hours a week looking into this stuff and you’ll be knowlegable enough to know what you need to do.
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I really am a mental midget when it comes to investing (among other things).
If it makes you feel better. Chances are your wifes money manager is a mental midget as well, just very good at selling investments. Look into the link Stop2think gave. Most of the info you need is all there. Spend a 2-3 hours a week looking into this stuff and you’ll be knowlegable enough to know what you need to do.
My wife knew absolutely nothing when we married 6-months ago and didn’t have a penny to her name, now she’s beginning to help her parents and older sister clean up their financial houses and begin basic retirement investing. We talk about it occasionally, but essentially all her knowledge is via reading the Bogleheads wiki a handful of times. If you aren’t loaded it is really simply; focus on increasing savings rate, tax-deferred contributions, and a basic three-fund (domestic stock, international stock, and bond) or even a single target date fund for extreme simplicity.
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I really am a mental midget when it comes to investing (among other things).
If it makes you feel better. Chances are your wifes money manager is a mental midget as well, just very good at selling investments. Look into the link Stop2think gave. Most of the info you need is all there. Spend a 2-3 hours a week looking into this stuff and you’ll be knowlegable enough to know what you need to do.
My wife knew absolutely nothing when we married 6-months ago
Well, that’s obvious. 