Independent Roth vs. Institutional Roth 457(b)

[skittles]

Hi,

I've read may of the posts about different retirement options that weight the different benefits.  They've been helpful at introducing the various options, but I haven't been able to piece together the information to help me answer my dilemma.

The residency I'm at only offers a Roth 457(b) option.  After talking to a financial advisor, one suggests that I open an individual Roth for a 1% fee.  I will only be at my current institution for a prelim year before moving onto my specialty residency, where I don't know what retirement options will be offered yet.

What would you suggest?  Which is a better option in the long-term?

Appreciate all your insights!

[treesrock]

I would start off by asking your financial adviser what the 1% fee gets you, the answer might be enlightening and just enough to motivate you to learn on your own so you don't have to worry about adviser fees.

It would be very odd for an employer to only offer a 457b and not a 401k/403b.  But regardless, does your employer offer a match into any of your retirement accounts?  If not, then I would open an individual Roth IRA (with any of the low-cost index fund providers, Vanguard, Fidelity, Charles Schwaab), and fund an individual Roth IRA with the max ($5,500 a year) throughout residency.

If your employer provides a match (which is rare for a residency program), then you should definitely take advantage of that, and make contributions to obtain the maximum match, then direct excess funds to your individual Roth IRA.

This page on WCI should be very helpful for you. https://www.whitecoatinvestor.com/the-five-big-money-items-you-should-do-as-a-resident/

[jfoxcpacfp]

There is no need to open a Roth with a financial advisor unless it is in conjunction with some kind of financial planning. Just go with the Roth 457b at your residency and r/o to a Roth when you leave.

[Faithful Steward]

At this point, the only advantages the Roth IRA could offer would be:

• the possibility of better investment options, if your Roth 457(b) has lousy options


• it starts the clock on the 5-year rule, but this is not a concern in your case due to the number of years until you retire

[The White Coat Investor]

I'd do a Roth IRA before a Roth 457, but would try to do both if I could. You can just open a Roth IRA at Vanguard.com or similar without hiring an advisor.

But you really need to look very carefully at anything HR can give you. It's weird to have a 457 without a 403(b) and Roth 457s are unusual as well. You might be mistaken about what is available. For instance, it is likely a 403(b) with a Roth option and a tax-deferred 457.