how to decide if I should do Roth 403b vs traditional 403b?

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dred pirate
Posts: 59
Joined: Tue Nov 27, 2018 11:46 am

how to decide if I should do Roth 403b vs traditional 403b?

Post by dred pirate » Thu Nov 07, 2019 4:29 pm

My company is going to start to allow roth contributions to our 403b. I am trying to determine if it makes sense for me to do that or not. I know an over simplified way to answer this question is will I be in higher tax bracket in retirement or not?

Right now we are in the 24% tax bracket (make about 205k combined). We currently both max out our 403b AND our Roth's (Our MAGI is below the cut off- so we get 100% contribution to Roth).

Didn't know if anyone used any sort of formula or percentage to contribute to each version.

One thought - if we have a Roth 403b - is the limit still 19k? b/c 19k in a Roth is > than 19k in a traditional 403b.

thanks!

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F150HD
Posts: 2429
Joined: Fri Sep 18, 2015 7:49 pm

Re: how to decide if I should do Roth 403b vs traditional 403b?

Post by F150HD » Thu Nov 07, 2019 6:25 pm

Seems the sentiment I have read is that taxes under the current tax law may never be this low again, so do the Roth as in the future rates will only be higher. YMMV

I recall this thread being interesting

viewtopic.php?f=2&t=263722#p4209089

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teen persuasion
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Joined: Sun Oct 25, 2015 1:43 pm

Re: how to decide if I should do Roth 403b vs traditional 403b?

Post by teen persuasion » Thu Nov 07, 2019 6:53 pm

If you switch to Roth contributions, will your MAGI STILL be below the limits?

Topic Author
dred pirate
Posts: 59
Joined: Tue Nov 27, 2018 11:46 am

Re: how to decide if I should do Roth 403b vs traditional 403b?

Post by dred pirate » Thu Nov 07, 2019 7:00 pm

ooo - good question - didn't think of that.

This year our MAGI will be 183k (193k is limit)
Some changes for next year (thinking outloud)
-my raise - currently unknown - goes into effect in January - likely ~around + 4k.
But can now contribute 3k more to an HSA due to adding baby to my insurance - 3k
Wife dropped hours to spend more time with kids, so -12k.
So total change ~-11k - which puts us 21k below the limit doing a back of the napkin calculation - so yes, we could change some/all of mine

TropikThunder
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Re: how to decide if I should do Roth 403b vs traditional 403b?

Post by TropikThunder » Thu Nov 07, 2019 7:05 pm

dred pirate wrote:
Thu Nov 07, 2019 4:29 pm
One thought - if we have a Roth 403b - is the limit still 19k?
Yes, the combined employee elective deferral limit is $19,000 this year in any combination between Roth and Traditional.
dred pirate wrote:
Thu Nov 07, 2019 4:29 pm
b/c 19k in a Roth is > than 19k in a traditional 403b.
Perhaps, but in your tax bracket it will take you $25,000 in earnings to put $19,000 in the Roth. You could instead put $19,000 in traditional 403b and fully fund a Roth IRA with just the tax savings.

Topic Author
dred pirate
Posts: 59
Joined: Tue Nov 27, 2018 11:46 am

Re: how to decide if I should do Roth 403b vs traditional 403b?

Post by dred pirate » Thu Nov 07, 2019 7:58 pm

very true on the last comment - I guess I was thinking IF I could max out all of them - if I go Roth- I likely won't be able to max it out

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