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Subject:  Re: Employer 403b vs R-IRA Date:  11/8/2013  12:59 PM
Author:  aj485 Number:  73717 of 88544

My question regards how to weigh the pros/cons of pre- and post-tax accounts - whether it makes more sense to just keep bumping up contributions to the 403b (in unmatched contributions) where my investing options are limited - or to increase funding to the R-IRA where I can invest as I like.

I would agree that outside of the 403(b), the first account invested in should be a Roth IRA, if you are eligible.

After that, I would say that you need to weigh the value of getting a tax deferral now, and paying ordinary income taxes later, by making unmatched contributions to your 403(b) with limited investment options vs. your desire to invest in investments that aren't available in your 403(b), but having to pay taxes on the income now, with potential capital gains/losses being taxed later.

It depends on your situation which is best for you.

Personally, I believe that in retirement, it will be best to have 3 types of accounts: tax deferred (traditional IRA/403(b)/401(k) type accounts), tax free (Roth IRA/401(k) type accounts) and taxable (traditional brokerage/mutual fund type accounts). I feel that will allow me to minimize the taxes I will pay. The allocation to each type of account would also depend on your situation.

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