457b vs 403b vs Roth 403b

[drmamba]

I am a resident who has discretionary income, and would like to contribute more to my retirement savings through my hospital's options. I have already been maximizing my Roth IRA contributions annually. Questions (assuming no employer contributions to any of the 3 mentioned accounts):

1) Is the post-tax Roth 403b actually advantageous over 457b and 403b when it comes time to distribute during retirement?

2) Between the 457b and 403b, which typically offers a better breadth of portfolio options and lower management fees?

3) I keep reading about the potential for losing money in the 457 account should my hospital somehow go through financial troubles/dissolve. Is this a legitimate concern if it's a 457b?

4) With the exception of an Roth IRA, how does one decide if using post-tax dollars now vs getting tax deduction and getting taxed during distributions is better given the tax bracket for a typical resident?

Many thanks!

[artemis]

My answers (worth what you have paid for them):

1. Yes, when you are earning a low income (which you are, as a resident, compared to what you will be later as an attending). Tax deductions are worth more when you are in a high tax bracket, which right now you are not (unless you are married filing jointly and your spouse earns a significant income). I'd maximize all my Roth space right now, especially since you may not be able to use the backdoor Roth IRA trick in the future.

2. That depends entirely on the plans in question. You should be able to get a list of investment options for each plan from Human Resources, which will help you decide what plan to favor.

3. This depends entirely on what type of 457b plan your employer is offering. Governmental 457b plans are backed by the state, and are basically an extra 401k/403b. non-governmental 457b plans, on the other hand, have no such backing and are subject to creditor risk. If your employer went bankrupt and you had money in their nongovernmental 457b plan, you could lose it (as technically it's their money, not yours, and their creditors would have first dibs). This is a very small risk, but a real one!

457b plans of both types can have very restrictive payout options (such as requiring you to take all the money as a lump sum payment when you leave employment). Generally governmental 457b plans can be rolled into an IRA when you leave your employer, but non-governmental ones cannot. These details you need to check out very carefully before you enroll in a 457b (particularly when you know you won't be working for your employer long-term).

I'd favor the 403b over the 457b if you have to choose between the two (which you probably will; I doubt you'll be able to max out both).

[JBME]

another advantage of the Roth 403b over the 457 or traditional 403 is when residency ends you can roll the Roth 403b money into your Roth IRA. Roth IRAs are the only retirement account that do not have required minimum distributions (RMDs). 457bs, 403bs, 401ks, even Roth 403b/Roth 401k plans all have RMDs. No RMDs = easier for your to control/determine your own taxes at retirement.

I agree with everything artemis said

[spiritrider]

Generally governmental 457b plans can always be rolled into an IRA when you leave your employer, but non-governmental ones cannot.

I'd favor the 403b over the 457b if you have to choose between the two (which you probably will; I doubt you'll be able to max out both).

Some small clarifications.

Governmental 457b plans can always be rolled into any eligible destination after separation. Non-governmental 457b plans can never be rolled over to anywhere except another non-governmental 457b plan that accepts such a rollover.

A 457b plan is a non-qualified plan and is not subject to the employee deferral limit. In almost all cases, if you are eligible for 403b and 457b plans. An employee can contribute to neither, either or both.