I need to open one of the retirement plans offered through my employer (TAMU - 403b, 457). I already have an old 401k from my previous job, and was recently looking to open an IRA when I discovered I could make larger max yearly contributions via the 403b and 457 plans (than the IRA). Since I am working in public service, I am actively trying to reduce my AGI as much as possible in order to maximize my PSLF amount, therefore these larger max contributions make the 403b and 457 plans seem mighty appealing.

So do I create a 403b, or a 457 (or maybe both)? And if you max out the 18k contribution for either (or both) of these accounts, can you still contribute an additional $6,000 to an IRA? I have considered creating a traditional IRA and then converting to Roth so that the $6k max contribution can help reduce my AGI if possible as well, though I am not very familiar with this strategy or its pros/cons.

These investments are not exclusive of one another, meaning you can invest in all 3

Both the 403 and 457 off the same tax deferral benefit. Key difference is 403 plans usually come with some sort of employer matching whereas 457 typically don't.

457 plans are also not technically as secure - as they are not considered a qualified plan. What this really means is in the event the employer goes bankrupt, the 403 gets paid out in front of the bond holders where the 457 does not necessarily.

If you've got a long investment horizon to withdrawing the funds, you really cannot beat the ROI of tax deferred vehicles.

You can do both the 403b and the 457. They have similar contribution limits, but the underlying investment providers may be different.

403b plans are invested in separate accounts that are never subject to the non-profit's financial condition. 457's have different variants, some that don't put the funds in separate accounts for each participant. They may also have restrictions on rollovers.

For those reasons, most folks do 403b first. If you max that out and want to defer more, then consider the 457.

The IRA is always an option, but the variant (Roth or Traditional) and tax deductibility is based on income.

If through TAMU, the 403b is the better option. The 457 can limit you on the fund selection. More options with the different 403b providers. ORP is worse than both.

Nutmegger said:

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I need to open one of the retirement plans offered through my employer (TAMU - 403b, 457). I already have an old 401k from my previous job, and was recently looking to open an IRA when I discovered I could make larger max yearly contributions via the 403b and 457 plans (than the IRA). Since I am working in public service, I am actively trying to reduce my AGI as much as possible in order to maximize my PSLF amount, therefore these larger max contributions make the 403b and 457 plans seem mighty appealing.

So do I create a 403b, or a 457 (or maybe both)? And if you max out the 18k contribution for either (or both) of these accounts, can you still contribute an additional $6,000 to an IRA? I have considered creating a traditional IRA and then converting to Roth so that the $6k max contribution can help reduce my AGI if possible as well, though I am not very familiar with this strategy or its pros/cons.

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Assuming you're under 50 you can do a voluntary contribution maximum of 18,500 to both 403b and the 457.

If you're in TRS you can do a voluntary account. Utilizing the amounts above. A&M also allows utilization of a Roth 403b. There is not a Roth 457.

If you are ORP eligible and select it, then the university matches your contribution. You still have the ability to do the voluntary contributions to both the 403b and the 457. Depending on your AGI, you can also contribute to an IRA. I would be happy to visit with you in person or on the phone about this....I'm local and have been working with faculty and staff at A&M for over 20 + yrs.

Rasslin Cheesehead said:

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Nutmegger said:

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I need to open one of the retirement plans offered through my employer (TAMU - 403b, 457). I already have an old 401k from my previous job, and was recently looking to open an IRA when I discovered I could make larger max yearly contributions via the 403b and 457 plans (than the IRA). Since I am working in public service, I am actively trying to reduce my AGI as much as possible in order to maximize my PSLF amount, therefore these larger max contributions make the 403b and 457 plans seem mighty appealing.

So do I create a 403b, or a 457 (or maybe both)? And if you max out the 18k contribution for either (or both) of these accounts, can you still contribute an additional $6,000 to an IRA? I have considered creating a traditional IRA and then converting to Roth so that the $6k max contribution can help reduce my AGI if possible as well, though I am not very familiar with this strategy or its pros/cons.

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Assuming you're under 50 you can do a voluntary contribution maximum of 18,500 to both 403b and the 457.

If you're in TRS you can do a voluntary account. Utilizing the amounts above. A&M also allows utilization of a Roth 403b. There is not a Roth 457.

If you are ORP eligible and select it, then the university matches your contribution. You still have the ability to do the voluntary contributions to both the 403b and the 457. Depending on your AGI, you can also contribute to an IRA. I would be happy to visit with you in person or on the phone about this....I'm local and have been working with faculty and staff at A&M for over 20 + yrs.

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Rasslin, I know this is old but if you're around, could you shoot me an email? I've been searching for information like this and this thread popped up. If so: rowdy979-texags at yahoo Thanks!