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| Teacher/State Employee Question Posted by rpg37 I just got my first teaching position. Now, a good principal friend of mine is yelling in my ear to immediately start funding about $100 a month in a Deferred Comp. Anybody have any experience with this? He said it pays awesome after retirement in about 30 years. on 7/2 at 8:41 pmReply • Back to Top |
quote: Roth IRA would be better imo....since you'll likely be in a higher tax bracket at retirement rather than early in your teaching years. I don't think the tax savings now will be significant enough. Not to mention, you'll have more investment options with a Roth on your own. This post was edited on 7/2 at 8:45 pm Reply • Back to Top |
| if he wasn't wearing a fedora, he can't be trusted Reply • Back to Top |
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| He's probably pushing the 403b. Do it. Any money you can set aside now will pay dividends down the road. I will start my 14th year teaching next year and I've been putting money in a 403b. They take it pre-tax out of your check so it's painless. Reply • Back to Top |
quote: Not doubting you, but can you explain. This is new to me. Reply • Back to Top |
quote: 14 years...looks like you're a good source. How would you suggest I go about this? I'm 25 and will start this Fall. Reply • Back to Top |
quote: No offense, but as a teacher the "benefit" of providing "pre-tax" is negated by the amount you will likely be able to contribute and being limited in your investment options. Also, like I said, consider where you anticipate tax rates to move, for you individually, and just in general. You may just be better off biting the tax bullet now rather than later. If you are able, my suggestion would be to provide the $5,000 annual max to a Roth, THEN funding a 403B with any extra you may have. My wife is a teacher...in her 6th year, so I know there isn't much left at the end of the day... This post was edited on 7/2 at 8:58 pm Reply • Back to Top |
| Very Helpful Link ETA: I'm assuming no employer match on the 403b... This post was edited on 7/2 at 8:55 pm Reply • Back to Top |
| Thanks. Reply • Back to Top |
| I don't want your head to explode but you might have access to a Roth 403b if your plan document allows it. Talk to someone who provides 403b in your parish or school district. They are the most qualified to give you advice. What parish or school district do you work for? Reply • Back to Top |
| Also if you decide to go with a 403b, which I would suggest, you don't have to go with the rep that comes to your school during enrollment. You can set it up with anyone. I worked for a school system for 9 years..... Reply • Back to Top |
| Basically if you do the Roth IRA, you pay taxes on it now, and will not pay taxes on it in the future. Depending on how the good the benefits you end up with are, you might be making more money when you retire than now. If that's the case, he's saying max out a Roth now at $5K/year beacuase 1. your tax rate will be higher in retirement if you're making more money then than now and 2. with our current govt. spending spree, taxes are likely to increase, so you will likely have a higher tax rate in the future anyway. Better to pay 25% now than 28% or 30% in the future. But if you expect to be taxed at the same tax rate as now or lower in the future, the 403b plan is better from a tax planning perspective. ETA: didn't click on the link that explains it more clearly. This post was edited on 7/19 at 9:41 am Reply • Back to Top |
| I thought the LDCP contributed into a 457 plan? Mrs. TheWiz just started her residency at a LSU System hospital so she was eligible for the program. My basic understanding was that she would basically not be contributing to Social Security, so we adjusted it so that she was contributing 7.5% to the plan. The major perk about that 457 was that she could roll it into a 401K, roth, or she could touch the money (paying taxes of course). Reply • Back to Top |
Posted by Santos on 7/21 at 9:08 am to meldawg399 quote: The Roth 403b works the same way. But instead of being limited to 5000 in contributions per tax year , the 403b allows contributions of 17,000 per year. And the employee is still allowed to contribute 5000 to a Roth IRA. Reply • Back to Top |
| The state deferred comp plan is not bad. It is ancillary and does not replace the state retirement. It can be a good deal. The contributions are all done with pre-tax money. Great West has some decent mid cap funds that can be profitable. Mine made over $5000 in the last quarter. You do have to keep an eye on it and move the money to the fund that is doing best for a given time interval (year). Reply • Back to Top |
quote: I don't know that MPERS allows teachers to do this. Reply • Back to Top • Refresh |
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