Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Transfer Roth IRA money into 403b? Need advice..
Old 05-26-2011, 12:54 PM   #1
Recycles dryer sheets
Join Date: Jul 2010
Posts: 51
Transfer Roth IRA money into 403b? Need advice..

I'm 37 and have been a school teacher for 13 years and can't retire until i reach 62. (This may change in the next few years because my state, RI, wants to make 67 the retirement age for public employees.) I am at top pay scale so i probably won't get a raise any time soon so i have a few questions about my 403b and Roth IRA. I just started up a Vanguard Roth IRA that has $8,000 in it and my unmatched school Fidelity 403b has about $50,000 in it.
I want to put as much as i can into my retirement but i have a question about taxes and whether i should move my Roth into the 403b if possible or keep it as it. i don't know if i'll be able to fully fund both the $5,000 Roth and $16,500 403b every year (since i have two small children) so i'm thinking of of moving money if it makes sense. Should i move the Roth money into the 403B because i'll probably will be at a lower tax bracket when i retire, so i'll be getting taxed less when i make withdrawals? right now i guess my roth contributions are getting hit with taxes before they actually go into Roth account. I could use some advice. Thanks

dooo42 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-26-2011, 01:13 PM   #2
Recycles dryer sheets
Join Date: May 2010
Location: SW Ohio
Posts: 360
Roth is already at 0% tax. No need to move it anywhere. I would never roll any $ into a 403b or 401K. Always roll $ out of 403b or 401K into a self directed IRA.

Converting from IRA/401K/403b to a roth depends on your tax bracket.

jayc is offline   Reply With Quote
Old 05-26-2011, 02:33 PM   #3
Thinks s/he gets paid by the post
RunningBum's Avatar
Join Date: Jun 2007
Posts: 3,733
Do not move your current Roth IRA money. I hope that's not what you are asking, but it does kind of sound like it. That money has already been taxed and will not be taxed again, unless you are foolish enough to move it into your 403B.

I think you're really asking about future contributions. Guessing future tax rates is just that, it's a guess. That is the #1 factor though, if you can defer taxes AND pay less tax in the future than you could now, fill the 403b first. Does a 403b have an RMD at age 70 like a 401K or regular IRA? If it does, at $16.5K/yr + growth you might be surprised at the income you'll have in retirement. You can always convert some of it to a Roth in retirement.

There are other factors at play. You can invest that Roth IRA however you like, and at Vanguard you may have lower fees than your 403b. If you don't like your 403b choices, you might want to fill your Roth and contribute what you can to your 403b.

A Roth also gives you some flexibility if you would need the money in an emergency. I can't remember all of the rules but it is more flexible than a 401K. I think there are also some advantages with the Roth to your heirs if you should die early.

With today's tax laws, there's another advantage to keeping retirement income low, in that if you are in the 15% bracket, any dividends or cap gains that stack on top of your income but keep you in the 15% bracket are untaxed. Social security is also taxed less if you have less income. Money pulled out of a 403b in retirement is income, money pulled out of a Roth has already been taxed and is not income.

Always do the matched contribution first, but it sounds like you don't have one. I'd tend to go with the Roth next, unless you're pretty confident about your taxes being less in retirement. If you qualify for contributing to a Roth, your tax bracket can't be that high right now. Mostly 25%, possibly some in the 28%, right?
RunningBum is offline   Reply With Quote
Old 05-26-2011, 02:42 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 7,662
Many folks around here contribute up to the maximum to their 401(k) or 403(b) regardless of any match, and then if they have any more money leftover that they want to contribute to a retirement plan they contribute to an IRA.

Some folks have incomes low enough now that even if they contribute to a 403(b) or 401(k), it makes sense to contribute to a DEDUCTIBLE traditional IRA instead of a Roth IRA.

The reason is that they get the tax breaks now and later they may not have to pay taxes. So unlike Roth IRA contributions which are taxed now at essentially your marginal income tax rate, these folks make tax-free contributions now and later they can get nearly tax-free withdrawals or conversions to a Roth IRA in the future. Tax-free going in and tax-free coming out.

So what's best for you? I don't know. But there are many possibilities until you learn the rules about what you can and cannot do with your income and your contributions.
I found the best way to understand all this is to become adept at doing your own taxes each year and not relying on a paid preparer or too much on tax software. Sure, use tax software, but understand what it is doing.
LOL! is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Fund my Roth IRA first or 403b? No company match dooo42 FIRE and Money 2 05-11-2011 09:17 PM
Contribute to Roth IRA, 403b or both if possible? dooo42 FIRE and Money 6 02-24-2011 11:12 PM
Should i contribute to both a roth ira and unmatched employee 403b or just use one? dooo42 FIRE and Money 1 12-23-2010 08:15 AM
Need Advice: Roth 403b vs. traditional 403b SingleMomDreamer Young Dreamers 0 01-10-2008 07:57 AM
Roth 403b AND Roth IRA? macdaddy FIRE and Money 3 07-05-2006 06:25 PM


All times are GMT -6. The time now is 11:12 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.