Which to fully fund first- my Roth IRA or 403b?


I’m trying to determine which I should fully fund first - my Roth IRA or 403b.

For a bit of background, I have a pension which takes 11% of my gross yearly salary. My goal is to reach 20% retirement savings by puting an additional 9% in the Roth or 403b. I can do more than 9%, but that’s my starting goal. I already have a Roth IRA set up and it is fully funded for the year. I have not yet opened the 403b, but I found out that I can invest through Fidelity (where I have my Roth) and can choose any fund. This is great, since I hear that most 403b’s have crummy investment options. Unfortunately, there is no employer match for the 403b.

I know that the PFC investing checklist says to fund the Roth before the 403b if there’s no employer match, but I’m not sure why. A financial advisor through my bank advised me to do the opposite- fund the 403b first. She also recommended that I don’t roll over the Roth into the 403b and instead let it sit there until I can fully fund the 403b and have $ left over. I doubt I’ll be able to meet the $20,500 403b limit anytime soon.

Essentially, I’m a bit confused about the differing advice and I’m trying to make the best choice possible. I appreciate any input!

Thank you,

Hi Sara,

It depends if you think taxes will be higher or lower later when you retire :slight_smile: Investopedia is a great resource for answers to many investment related questions: Roth IRA vs. Traditional IRA: Key Differences. Also if your 403b does not have a roth option, then if you want roth, then Roth IRA is the only way to go.

Also I believe since you do not have matching, the next best would be to see which investment options you have in your Roth vs. your 403b. Invest in the ones you like better, probably lower expense ratio. Vanguard is usually the top choice because all the other firms take some of the money whereas Vanguard reinvests in themselves, meaning they put the customers first. Vanguard is also not a publicly traded company.

Also if you do max your contributions for your IRA, then put the rest in 403b :slight_smile: Tax advantaged is always number one place to invest your money! (How to prioritize your money (The phases of investing) – Personal Finance Club)

Hope that helps,

Sara I’d just like to echo your post. I’m in the same position (working in Education). However my difference is having student loans. So a lower payment with paying into my 403b helps. But is that substantial enough to just not do the Roth IRA? Following your post… thanks!

Thanks for the feedback and thoughts! I’m not sure how I’ll know whether or not I will be taxed less in retirement than now. I’ve tried to do some research on this and it’s still unclear to me. It seems as though, generally, people are taxed less as they get older, but not always.

My plan for now is to invest 9% of my income in the 403b to make the 20% retirement savings goal (11% pension + 9% 403b). I may also continue to contribute to the Roth so that I diversify my taxable accounts (I’m not 100% sure if this is the best idea, but it’s based on a bit of research that I did.

Any other thoughts and comments are greatly appreciated. Thank you!


Any chance you have access to a 457 account?


Unfortunately, the 403b is the only option available to me.