re: need direction

I'm 31 years old and have 6K in a 401K from my last job. My new job (school) states that they don't offer any plans because they're so small and that it's up to me to choose one into which, after a year, they will start contributing. The 401K at the old place has no administrative costs, but I'm wondering if I should roll the funds over into my (to be acquired) 403b? I've done some research on this (403bwise, discussion forums, and other websites) but am still wondering the best option to take. From what I've read, seems like Fidelity and Vanguard are the favored companies to go with...

I basically live month to month, so very little in savings and am still single. I have no debts currently and will probably be able to contribute about $500 a month. And also, should I open an IRA account? I'm assuming I will be retiring in about 25-30 years at a much higher income bracket, but will probably get married and buy a home in the next 10 years. Any thoughts are much appreciated.

Reply to
pod2pea
Loading thread data ...

Roll it over into a regular IRA where you will have better investment options.

If your employer isn't matching funds for your 403b, you might be better off putting that money into a Roth IRA.

You can have a regular and a Roth IRA at the same time, but if you only have a small amount in your regular IRA, you might want to convert it to the Roth for simplified accounting.

-- Ron

Reply to
Ron Peterson

I think you're a little confused. A 403b is just like a 401k, except it's for scools, universities and non-profits. That being said, it is still an employer-sponsored plan. You, personally, cannot open one. You can open an IRA, though, at a place like Fidelity or Vanguard. And this is precisely what I would recommend you do. I would also consider doing a Roth conversion, if you qualify.

This is a red flag. Instead of putting money toward retirement, I would establish an emergency fund. The standard advice is 3-6 months of living expenses. Besides being good, sound advice, you also need to start amassing a down payment, if you intend to buy a house.

--Bill

Reply to
Bill Woessner

I don't understand this. Choose one what? And how are they going to start contributing? What about other employees? Do they have any kind of pension?

You can't establish your own 403b plan. The school has to establish one where you can then sign up.

Reply to
PeterL

If you do not have enough money to create both the emergency fund as well as putting $4K/yr in a Roth, I suggest you go with the Roth, and both invest it and consider it your emergency fund. If you need to tap it for a bone fide emergency (actually there is no stipulation to the purpose as far as IRS is concerned), the amount deposited may be withdrawn regardless with no penalty. But if you earn your way to a higher income and have other funds, you didn't miss the chance to save in the Roth, and perhaps had 2-3 years' deposits saved up. JOE

Reply to
joetaxpayer

As always, Joe has rendered sage advice. I would add one thing. If you're going to multitask your Roth as an emergency fund, I wouldn't invest in anything volatile. Instead, I'd stick with money markets until you have enough savings to separate your emergency fund from your retirement fund. Needing to tap your emergency fund is a bummer. Doing so at a loss just adds insult to injury.

--Bill

Reply to
Bill Woessner

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.