Comments on: Which Is Better – 403b or IRA?

By: Caroline Ehrlich

Caroline Ehrlich — Mon, 16 Aug 2010 17:42:57 +0000

I just spoke with my 403b representative(Fidelity administers the account) and since I am 70 1/2 this year, I must beging taking out a MRD for this calendar year. I also asked whether my beneficiaries could roll over their inheritance into an inherited IRA, and he said yes. A 403b could be rolled over into an inherited IRA. Is he correct? Caroline Ehrlich

By: Bern

Bern — Wed, 09 Jun 2010 12:40:14 +0000

Hey Christian,

I commend you for taking action on saving. It’s rare these days.

However, I hope I don’t overstep my boundaries by bringing up a concern with your strategy. With one plan, you enter pre-tax money – 403(b). With the other plan, you enter post-tax money – Roth IRA. Tax savings is going from one pocket into the other. Thus, it’s splitting strategies.

What I tell people is to take a step back and look at all of their strategies. It’s hard for us to compartmentalize each financial action…but all are related and affected by one another.

How you pay off your mortgage will affect your retirement. How you plan for retirement will affect your liquidity. How high or low your credit score is will affect your credit card payment. And so on…

For me, I think it’s best to take a macro view of our finances to make sure that everything is firing on all cylinders. Just something to consider…

By: Neal@Wealth Pilgrim

Neal@Wealth Pilgrim — Wed, 09 Jun 2010 03:16:34 +0000

Hey Christian,

I don’t about anyone else…but this doesn’t sound bad at all. I’d rather you save too much than otherwise. But you can even run yourself a free financial projection at a number of sites to see if you are overdoing it.

I only bring this up because it’s important to enjoy too! Not sure if you’re going without….but I like having a plan because it puts it all in perspective.

By: Christian

Christian — Wed, 09 Jun 2010 00:13:06 +0000

I contribute to both the 403(b) plan my agency has set up, AND a ROTH IRA. I max out my ROTH and put as much as I’m comfortable living without into the 403(b). As bad as it sounds, there’s no real strategy behind this other than I want to save more for retirement than the $5000/year allowed by the ROTH limits.

By: Spokane Al

Spokane Al — Tue, 08 Jun 2010 14:28:39 +0000

Just one small clarification – you stated in part, “If you have an IRA, you have to wait until you are 59 ½ to access the money penalty free.”

One can access IRA money penalty free via the 72t provision of the IRA code which states that in order to avoid penalties one must take substantially equal payments over five years or until one reaches 59.5, whichever is longer.

This must be done very carefully and I would recommend that one do his/her research to avoid conflict with the IRS.