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regular vs ROTH 403(b) & 457?

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  • regular vs ROTH 403(b) & 457?

    Hi all. I have a situation and hopefully get good advice here with the explanation.

    Just started a new job and has defined benefit plan with multiplication factor 2.3 from employer. I also have two other voluntary retirement account options from employer without any employer contribution , 403 B and 457. I can choose both of them. I can choose either regular or ROTH in both of them.

    So, in choosing 403 and 457 , I am confused whether to take regular or ROTH?

    If I invest in  regualr 403 & 457  I save tax money in 25 % bracet range currently. But if I invest in ROTH I save tax money after retirement when I take distribution  but not sure it is going to be in 25 % range. I may have good distribution with  defined benefit plan and SSI ( i guess) . Any advise is appreciated.

     

  • #2
    I'd be tempted to do one as a Roth, and the other as a regular.  Having money in both types of accounts is very handy at retirement time.  Do you know if the 457 is a government plan or a non-government plan?

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    • #3
      Why do people keep capitalizing all of Roth? It's an eponym, not an acronym.

      In 25% you're *probably* better doing Roth, getting the taxes out of the way and letting it grow tax-free, since it's unlikely (using 2017 brackets, at least) that you'll retire lower than that.

      I'd do whatever puts most in the bank, though. That DBP sounds very nice.

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      • #4
        it is Governmental plan called Texa$aver.

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        • #5
          investorDR said: "So, in choosing 403 and 457 , I am confused whether to take regular or ROTH?"

          I never knew that 457 plan could have a Roth option!?

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          • #6
            https://texasaver.gwrs.com/preLoginContentLink.do?accu=TexasWR&specificBundle=preLogin&contentUrl=preLogin.457.faq457#a1

             

            I am in this plan. I hope this helps.

             

            I am wondering after retirement , distribution from DB pension plan+SSI  could reach my tax threshold of 25 % ??.. I think I am thinking too much!!

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            • #7
              The problem is that there's no way to know how much SSI and your DB pension will actually be paying decades from now, or how the tax laws will change over that time.  So you're stuck with just making an educated guess.  Splitting the difference gives you some tax savings now, and some tax savings later (assuming Roths don't become taxable), but if you think you're going to be in the 25% tax bracket for a while, you could go all Roth if you're really worried about bracket creep.  Honestly, I don't think any of the choices you have are bad!

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