Roth 403b

I learned recently that my employer now offers a Roth 403b plan in addition to the traditional 403b I’ve been contributing to for several years. It seems wise, if I can take the current income hit, to switch. The only downside is I’ll have an additional account to maintain.

Any reason not to?

It really depends on what you current income tax rate is vs what you expect you retirement income tax rate will be. Also it would matter if your already maxed out today or not. The more money invested today has more time to compound.

I’m in my prime earning years (50s), so my tax rate is likely as high as it will ever be, or close to it.

My county had a 457 plan, both pre tax and roth. I just directed some to the Roth to fund it from payroll deductions. I’m glad I didn’t convert because my tax rate in retirement is quite low.

Are you currently maxing out all pretax savings? If not, you should do this first. Roth works well when your early in career and in low tax bracket. Also many that plan to retire to low cost state should also defer now because their rates will plummet during retirement. Wife and i live on her tribal lands. Assuming were still here during retirement, we will be able to avoid state taxes on all our 401k. Might be moot because the state is trying to get income tax free today.

The big unknown is what will taxes look like in 20-40 years when your pulling money out. If we end up with a vat like tax, youll get hit again on those dollars again.

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It depends on how much he’s contributing and his income. Sometimes having an after tax bucket can defer and reduce your tax bracket in retirement so there still may be a place for it depending on how much of your income you’re replacing in retirement

It’s likely the RMD rules might change on Roth accounts but for now IRAs are not subject to RMDs but Roth 403Bs are subject to RMDs at 72. Also contributing $31,000 post tax is like contributing $43k pretax if you are in the 28% bracket at retirement or $33,000 if you’re in the 6% bracket. Of course if you’re in the 32% bracket, that is costing you $10,000 for the privilege of tax free income later

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But that extra $10k growing at 6% for 20 years is about $33k more that you never had if it was post tax.

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I would not convert either. It’s already ensconced. Seems a marginal benefit to change to Roth. I’d just do Roth going fwd.


If your employer offers a match, it will still go to a pre-tax 403b. That’s the way it works with Roth 401ks so that employers can get the deduction for their contribution. So you end up with both accounts anyway behind the scenes.

There’s no match. This is in addition to a traditional pension, so all contributions come from me.