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Following up to the earlier post about Roth vs. 403(b), I have a very generous 403(b) program with TIAA-CREF (I have to give 4.5%, my employer gives 11%). However, I'd like to be able to use those savings possibly toward buying a house several years down the road (I'm 29 now) and the TIAA-CREF advisor recommended I open an SRA with them, for all additional income.

Can anyone offer wisdom on if an SRA is the best route for that?


No, it's not! I have an SRA (which I no longer contribute to), and I've checked into the withdrawal rules and you currently cannot withdraw that money unless you leave your job. So if a house is a goal, the Roth is the better option. But that will only allow you to use $10,000 toward a house. You'll need more than that, so I would suggest putting your additional savings (after you've maxed out the employer match in the 403b and after you've maxed out your Roth) into a normal taxable account.

The SRA does have advantages as a retirement savings vehicle--the tax-deferred status and the ease of making contributions through payroll deduction, and TIAA-CREF has good funds--but it won't do you any good for buying a house, unless you've left your job by that point. I've found the extra flexibility of the Roth to be an advantage. If you think there's any chance at all that you might want to invest in individual stocks in the future, then go with the Roth, since you would be able to do that. I never thought I would want to when I opened my SRA 8 years ago, but now I want to and it's frustrating to me that I can't get at that money.

John
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