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  • Contribution to 403b

    My wife is a new teacher and has set up a 403b account. The annual max contribution is $20,500. Do you guys know if all $20,500 has to come directly from her salary deferral? For example, can she have $5,000 of her annual salary go toward the 403b, then we use some of my income to max it out? We have set her 403b up through Vanguard.

    It just sucks for her to work full time and see almost no money hit the checking account. Texas teachers also pay 8% of their salary into a pension. Our overall tax bracket is the highest bracket.

  • #2
    No. Let her see your paystubs enter the checking account. Y’all are a team.
    why does it matter if her stubs are small when it hits the checking account?? Are you a one income household or you split finances with your wife?

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    • #3
      On her mandatory in Texas, is she in ORP or the pension option? That is an irreversible option. They then have a 403b and a 457 plan too. Tax wise, she needs to fill every tax advantaged bucket available.
      It is a rare privilege to be able to save every penny possible for retirement. SHE is in a position to be independently wealthy. Of course your paycheck is used for spending whatever luxuries she wants.
      It does not suck to max out retirement tax advantaged savings. As a teacher, her ability to generate wealth is phenomenal. Great benefits for the family.

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      • #4
        She is going to do the 403b. I think over time that will be a better option with the $20,500 max. Plus, we are hoping she can roll her traditional IRA into it so she can start doing a backdoor Roth.

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        • #5
          My wife sometimes had take home pay as low as $300. But we maxed out her 403b for over twenty years. She's retiring mid year and might earn $30k total and I think we still will max it out.

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          • #6
            As others said, you two bring in household paychecks, not individual paychecks. Money is fungible. She’s contributing more to the retirement money and spending than she otherwise would if she’s psychologically struggling when she sees such a small paycheck each pay period

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            • #7
              Originally posted by straightwire View Post
              She is going to do the 403b. I think over time that will be a better option with the $20,500 max. Plus, we are hoping she can roll her traditional IRA into it so she can start doing a backdoor Roth.
              The Texas plans are excellent. You have a choice of self managed brokerages (Fidelity included). They are set up to allow the maximum IRS tax advantages. Not sure if her particular school district allows her to participate,
              • 403b ORP or DBP mandatory
              • 403b optional
              • 457b optional (probably not available to her)
              If she is just starting, choose the ORP. Much more flexibility. It takes a long time for the DBP to payoff. The primary advantage of the DBP is every public educational employer participates in the same plan. That is every employee of a school, school district, university and medical hospital associated with a university.
              The improvements in options would be from the IRS. As a teacher, she has great benefit possibilities and no state income tax.
              This approach have left teachers unions with very little impact. Use every benefit possible.

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