401k or 403b for part-time spouse

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Kow
Posts: 24
Joined: Fri May 27, 2016 5:04 pm

401k or 403b for part-time spouse

Post by Kow » Sat Jan 27, 2018 6:10 pm

My wife is going back to work part-time and has the option to contribute to either a 401k or 403b. We are lucky enough to be able to 100% invest her earnings into one of these accounts and we expect her annual earnings will be just under the $18.5K pre-tax max.

Both plans have the same funds, allow 100% contribution with the only difference I can tell that the 401K has a 3% match where the 403b does not. Is there any reason we wouldn't go forward with the 401k option?

My wife has a 403b from a prior employer.

krow36
Posts: 2252
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: 401k or 403b for part-time spouse

Post by krow36 » Sat Jan 27, 2018 7:33 pm

Go for the match! :D

User avatar
FiveK
Posts: 7854
Joined: Sun Mar 16, 2014 2:43 pm

Re: 401k or 403b for part-time spouse

Post by FiveK » Sat Jan 27, 2018 7:45 pm

Kow wrote:
Sat Jan 27, 2018 6:10 pm
Both plans have the same funds, allow 100% contribution with the only difference I can tell that the 401K has a 3% match where the 403b does not. Is there any reason we wouldn't go forward with the 401k option?
The 3% match is a significant tiebreaker.

The 403b plan might have an advantage, depending on her age and the plan details - see What You Should Know About Making 403(b) Catch-Up Contributions - but the 401k match is still significant.

User avatar
obafgkm
Posts: 418
Joined: Fri Mar 11, 2016 9:12 am
Location: Pennsylvania

Re: 401k or 403b for part-time spouse

Post by obafgkm » Sat Jan 27, 2018 8:04 pm

Whew! I'm glad "part-time spouse" didn't mean what I thought it meant! :P

User avatar
CyclingDuo
Posts: 2713
Joined: Fri Jan 06, 2017 9:07 am

Re: 401k or 403b for part-time spouse

Post by CyclingDuo » Sat Jan 27, 2018 8:56 pm

Kow wrote:
Sat Jan 27, 2018 6:10 pm
My wife is going back to work part-time and has the option to contribute to either a 401k or 403b. We are lucky enough to be able to 100% invest her earnings into one of these accounts and we expect her annual earnings will be just under the $18.5K pre-tax max.

Both plans have the same funds, allow 100% contribution with the only difference I can tell that the 401K has a 3% match where the 403b does not. Is there any reason we wouldn't go forward with the 401k option?

My wife has a 403b from a prior employer.
Clue #1 - both plans have the same funds. Check
Clue #2 - the 401k receives free money via a 3% match. Check

This problem has now been solved.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Topic Author
Kow
Posts: 24
Joined: Fri May 27, 2016 5:04 pm

Re: 401k or 403b for part-time spouse

Post by Kow » Sun Jan 28, 2018 7:37 am

Thanks everyone! That's what I was figuring but never want never want to leave any unknown benefits on the table! I appreciate the responses.

Also, when I went back to my post I realized there was a better way to word it. Full time spouse. Working full time, plus part time for a paycheck. :D

User avatar
CyclingDuo
Posts: 2713
Joined: Fri Jan 06, 2017 9:07 am

Re: 401k or 403b for part-time spouse

Post by CyclingDuo » Sun Jan 28, 2018 9:52 am

Kow wrote:
Sun Jan 28, 2018 7:37 am
Thanks everyone! That's what I was figuring but never want never want to leave any unknown benefits on the table! I appreciate the responses.

Also, when I went back to my post I realized there was a better way to word it. Full time spouse. Working full time, plus part time for a paycheck. :D
Which one offers the 401K, and which one offers the 403b?

Does she make enough money, and with your household income, that it would be possible for her to max out one of them? Step one is to contribute the minimum amount required to the 401K to receive the 3% match. Beyond that, and if both plans offer the same funds and fees - it doesn't matter where the next layer of contributions go, but obviously there will be more income to pull out of the salary at the full time job compared to the part time job.

Does she have a defined benefit plan as well (pension) with her full time job?
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Post Reply