College student, hourly worker, eligible to participate in 403(b) plan

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cashheavy18
Posts: 131
Joined: Fri Jun 15, 2018 3:19 pm

College student, hourly worker, eligible to participate in 403(b) plan

Post by cashheavy18 »

Unsure how common this is, but sharing for those of you with college students who you encourage to learn and participate in tax advantaged investing.

Just found out (wish we knew from the beginning) that our college student is eligible to participate in their University's 403(b) plan as an hourly employee!

This in addition to the Roth IRA they've been contributing to since starting to work. Hoping they're off to a good start!
AllMostThere
Posts: 142
Joined: Sat Dec 31, 2016 2:04 pm

Re: College student, hourly worker, eligible to participate in 403(b) plan

Post by AllMostThere »

I wouldn't jump for joy just yet. Can you give some details on the funds, fees and ER's? Many 403(b)'s are notoriously high fee and aren't the best. It may be better to have the student invest in ROTH IRA. Student is in the lowest or maybe 0% tax bracket, so ROTH is a good fit. Of, course that may change if the employer offers a 403(b) match, then contribute up to the match then invest in ROTH. Awesome that you are instructing your child on the need to invest. Early start is best benefit - time in marked is most valuable. :moneybag
Topic Author
cashheavy18
Posts: 131
Joined: Fri Jun 15, 2018 3:19 pm

Re: College student, hourly worker, eligible to participate in 403(b) plan

Post by cashheavy18 »

AllMostThere wrote: Sat Jan 11, 2020 9:35 am I wouldn't jump for joy just yet. Can you give some details on the funds, fees and ER's? Many 403(b)'s are notoriously high fee and aren't the best. It may be better to have the student invest in ROTH IRA. Student is in the lowest or maybe 0% tax bracket, so ROTH is a good fit. Of, course that may change if the employer offers a 403(b) match, then contribute up to the match then invest in ROTH. Awesome that you are instructing your child on the need to invest. Early start is best benefit - time in marked is most valuable. :moneybag
Very fair questions.

There is no employer match, there are 4 providers to choose from:
  • Ameriprise
    Fidelity
    Lincoln Financial
    TIAA
    T. Rowe Price
Fidelity has many low ER options to choose from & will be the one used.

I was happy when our child knew the best option was to go the Roth route, because of their tax bracket. She is also contributing to a Roth IRA.
highdesert
Posts: 67
Joined: Sat Nov 28, 2015 11:50 am

Re: College student, hourly worker, eligible to participate in 403(b) plan

Post by highdesert »

Interesting. At the large state university where I used to work, students were specifically excluded in the 403b plan document. I second the Roth opinion, though.

Most full-time college students would be hard-pressed to max out an IRA, let alone start contributing to a 403b -- congratulations on rearing one with such good financial sense. :sharebeer
Topic Author
cashheavy18
Posts: 131
Joined: Fri Jun 15, 2018 3:19 pm

Re: College student, hourly worker, eligible to participate in 403(b) plan

Post by cashheavy18 »

highdesert wrote: Sat Jan 11, 2020 10:05 am Interesting. At the large state university where I used to work, students were specifically excluded in the 403b plan document. I second the Roth opinion, though.

Most full-time college students would be hard-pressed to max out an IRA, let alone start contributing to a 403b -- congratulations on rearing one with such good financial sense. :sharebeer
Yes, I was quite surprised. Out of curiosity, I started poking around at a handful of other universities where friends kids go and didn't see this an option for student hourly workers. I'm impressed our university provides the option.
redstar
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Joined: Thu Jul 13, 2017 11:15 pm

Re: College student, hourly worker, eligible to participate in 403(b) plan

Post by redstar »

At my university it depends on how many hours one works in a year. I think it’s approximately 50% of full-time. Only US citizens are eligible for the 403(b), but there’s a separate 401(k) program that all eligible workers can participate in.

Our 403(b) has both Vanguard and TIAA, although they are removing Vanguard next month :( . There are Roth contributions, but no after-tax contributions to do a Mega Backdoor Roth.

I’ve refrained from mentioning it to other students because most don’t earn enough to max a Roth IRA, let alone contribute to the 403(b). I’ve been using it to slowly move investments from a taxable account (100% of paycheck to 403(b), pay myself from taxable).
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