Contribute raise amount to 403b or Roth 403b?

Submitted by gadorg t3_10pgkze in personalfinance

Hi all - I received a small raise at the beginning of the year and I'm just going to apply a comparable amount to either a higher 403b contribution (currently I do around $1200/month) or Roth 403b ($100/month). Am I better off for the former or the latter? The amount would be $400 or so. With my current 403b, we don't get a company match (we contribute a certaing percentage of our gross towards our state pension fund), so that's not a factor.

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plowt-kirn t1_j6kd820 wrote

Replying to gadorg (#1,632,542)

This is the situation for most people.

Very generally speaking, Roth is best in your low earning years early in your career. Traditional is best in your peak earning years.

Some tax diversification is good. If you are not currently contributing to a Roth IRA, that is something you should consider.

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gadorg OP t1_j6keyfn wrote

Replying to plowt-kirn (#1,632,646)

Our combined AGI precludes us from contributing to a Roth IRA, unfortunately, however, both my spouse and I have Roth contribution options within our employer plans, so we contribute way. We could do a backdoor Roth, however, it's a little complicated in my case to do so, which I won't bore everything with in this thread!

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alwayslookingout t1_j6krm8s wrote

Replying to gadorg (#1,636,333)

Sorry. I just realized you said you have a 403b. It’s functionally the same as a 401K. You can’t just open a 401K unless you own a business.

Contribute to the trad 403b, not Roth 403b. Do a backdoor Roth IRA if you want to do Roth.

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gadorg OP t1_j6l6kn0 wrote

Replying to alwayslookingout (#1,639,470)

Okay, that's what I thought you meant. Thanks, I'll go ahead and increase my existing contribution to my employer 403b. Is there a reason why that's a better way to go than increasing my contribution to my employer Roth 403b (after tax money)?

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