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Roth Vs Pre-Tax 403B with pensions

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  • Roth Vs Pre-Tax 403B with pensions

    Hi all,
    My wife and I are a dual physician household (early thirties). We work at a place with a pension. We are planning to stay for our career and the institution is in very strong standing. We are not depending on the pension but wondered if we should contribute all to Roth 403b rather than pre-tax 403b accounts because if we have the pensions then our minimum tax bases in retirement will high with the pensions. We also have access to 457 accounts for some tax reduction. I understand that typically attendings should do pre tax contributions but wasn't sure if this situation would change things.
    Thanks!

  • #2


    We are planning to stay for our career and the institution is in very strong standing.
    Click to expand...


    But is the pension at the institution, or at a state? Might make a difference. I'd suggest you fill up all of the pre tax accounts, some roth accounts (might be back door roths too), and plan for taxable fund too. Having a higher tax base in retirements isn't always a bad thing!! Keep reading about different types of retirement accounts, and if you should use them (e.g. 457). Using a financial planner is a good idea too. They can help walk you though some options.

    A couple of other questions: Do you both work at the same institution? Do you get any matching funds from your employer? Do you have an option to contribute to the pension? Do you have to contribute?

     

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    • #3
      Possibly would benefit you to contribute part of your $18k allocation to a Roth. As @adventure said, some planning, including tax projections would be beneficial.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        Thanks for the responses
        1. We work at same institution.
        2. We do get a small match for 403b. The match is pretax
        3. We do not have option to contribute to pension
        4. 457 terms appear favorable if we ever left

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        • #5
          My answer stands. If you work for a non-profit, I'd take a closer look at the 457b. They don't follow the same set of rules as most retirement accounts and you can be forced to empty the account over a short period and pay taxes upon separation from service. It's wonderful that you both have pensions, very rare these days. otoh, be aware that it ties you both down to your job. I'd run projections with and without to ensure you'll have enough saved should you decide to leave or retire before you're fully qualified to receive it.

          I'm a huge Roth proponent but there is no way to give a solid answer without knowing your tax bracket, your goals, resources, and future plans.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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