No employer match for403b - ok to contribute to traditional IRA

Investing
#1

My employer has an “optional” 403b, as well as a state pension. Would it be detrimental to contribute to an IRA through Fidelity (where my Roth and rollover are held) vs contribute to a 403b through the company my employer works with? I would prefer Fidelity for ease of access because I am new to investing and attempting to educate myself.

Also- If I were to save 20/30%+ of my salary, where would that all go? $6,000 in Roth, and then??? Max to 403b/IRA (whichever I choose), and then where? (background - teacher $70,000/year, only debt is mortgage $144,000, monthly bills %400ish)

Thank you!!

#2

Hey @TeacherAshley!

So, from the IRS website on IRAs, traditional has a few shortcomings:

  • $6,000 contribution limit (vs $19,500 for a 403b)
  • Traditional IRA’s stop offering a tax break if your adjusted gross income is over $70,000/year

Since you’re so close to that income limit, I wouldn’t mess with a Traditional IRA at all. Based on 30ish% of your salary, you could be contributing $20,000+ this year. That’s awesome! And that amount conveniently fits into a Roth IRA ($6,000) and 403b ($19,500). That’s exactly what I would do. Here’s how I would prioritize those dollars:

It might be worth checking if you can administer your 403b through Fidelity. It might be as easy as opening a Fidelity account and referencing your employer in some way. If not, I’d just look for low fee index fund options in the work-sponsored 403b provider.

Way to save a ton! I might set a goal of trying to fill up those two accounts! That would set you on a course for maximum tax break and building massive wealth! :slight_smile:

#3

@Jeremy Thank you so, so much. Looks like my employer offers several different company options for a 403b with information for different funds. I’ll ask about making Fidelity a option though.

I really appreciate the information! Thank you :slight_smile:

#4

@Jeremy These are my employers approved vendors. They appear to offer different funds?
IFS/Security Benefit
VOYA
Lincoln Financial Group
MetLife
VALIC

1 Like
#5

Yeah, I imagine each of those has a set of investments you can choose from. I don’t know which funds are offered by which brokers, but hopefully there are low fee index fund options you can choose with at least one of them!

#6

@Jeremy it turns out, In order to utilize the bo-match employer 401k, I have to pay for the advisor fee as well. Sounds like contributing to a 401k independently of an advisor would cost me less?