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Greetings, Sujeong, and welcome. You wrote:

I just got this job. I can put in up to 16% in my 403b(?) account, but without the company's match for the next two years. I talked to the broker that handles the company plan and did not care for him so I am not going to use him for my other investments. Should I still go ahead and put in the maximum allowed or should I use other methods to invest until my company matches?
Also, what options do I have in setting up $4,000/yr IRA accounts for me and my husband? For instance, do find a broker, bank, or who to set it up?


The biggest advantage to putting money into something like a 403b is the immediate tax deferral you get on both your contribution and on your earnings. The money is basically locked up in the plan until you retire, so it forces you to save for that important phase of your life. In the absence of an employer match, though, these plans become less attractive. Indeed, using the same kind of savings discipline as you would in the plan itself (i.e., automatic payroll deduction and increases to savings as your pay goes up), you can often beat your savings growth within the plan by using taxable alternatives. Additionally, in the absence of a match, putting $2K in a Roth IRA before using the plan becomes an especially attractive option. What you want to do is examine your options carefully, compare the tax-equivalent long term results between those options, and then decide what's best for you. I suggest one means of doing that in Step 4 of my 13 Steps to Foolish Retirement Planning. You can find that missive at http://www.fool.com/Retirement/Retirement.htm .

As to the Roth, both you and your hubby may contribute after taxes up to $2K each from your wages to your separate Roth IRAs. Your options are wide open in that you may invest your money in your choice of mutual funds, a self-directed brokerage account where you choose the securities, a bank product like a CD or even an insurance company- provided annuity. For information on IRAs in general, you may want to read my Foolish Retirement Plan Primer, which is also available at the previously provided link. What you choose is entirely up to you. In Fooldom, we believe stocks we select ourselves make the best long term investment, so we prefer the self-directed account at a brokerage of our choosing.

Regards…..Pixy

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