403(b) retirement plan
 

I got hired by my ideal role yesterday after originally them being unsure on hiring me a couple months ago due to my situation and having no EAD (they didn't understand how it worked), but the person they offered it to fell through at the last minute and they called yesterday and offered me the job right after they asked if I now had my EAD! So I start next week now after orientation this week!

I've got a lot of paperwork to fill out, and one of them is all centered around the 403(b) retirement plan.

Now, I know absolutely nothing so any help, guidance, or tips would be hugely appreciated! I'm in my 20's, so very new to this but I want to get a retirement plan started. I'm going to put a couple hundred in each paycheck (biweekly) hopefully (I'll make a biweekly budget plan before I decide exactly how much).

Unfortunately, my employee do not offer a match scheme for this. From my brief research on google, if I don't already have any retirement funds set up, then this is not a big deal, it's more important to get one started? I'm leaning more towards a Roth so that I'm taxed now and what I have when I retire in my retirement funds is already taxed and I don't have to worry about tax at a later date. Any thoughts on Roth vs standard (if that's the right term)? I am also reading it is best to invest in mutual funds as opposed to annuities?

Any other advice, tips, or help you guys can give on this topic? Appreciate any help, no matter how little, as this is all new and extremely confusing to me!

Re: 403(b) retirement plan
 

I have had a roth 403b plan in the past, now rolled into a roth IRA once I moved to a for-profit organisation. I do not know your circumstances, but whatever plan I am offered, I max out my contributions, especially since I intend to stay in the US and retire here. Currently my max is $5500 (roth ira), my old 403b I believe was circa $18000.

Never too early to start saving for retirement!

Re: 403(b) retirement plan
 

403(B) is the non profit version of the 401(K).
I'd save as much as you can into the scheme, especially since it is tax free savings (just so long as you don't withdraw before the age of 59 and a bit.
My employer (non profit) will put in 9%, provided I match at least 5% of my pay.
I don't know if I can afford to retire in 20 years, but I do intend to put as much as I can into the scheme over the years to at least try and get something of value. I doubt my UK pensions will cover the cost of heath care insurance in the USA when I do retire.
Did the company arrange for you to meet with the fund company to discuss your requirements?

Re: 403(b) retirement plan
 

If you have a choice, it's better (IMO) to make the contribution pre-tax, to lower your total taxable income for the year. Why should Uncle Sam keep your money for the next 35 years? You keep it!

Rene

Re: 403(b) retirement plan
 

The employee limit for 401(k)s and 403(b)s is $18500 for 2018.

Re: 403(b) retirement plan
 

In general, as everyone states above, pre-tax is the way to go. Investing sites will tell you that Roth is a good idea if you expect to be in a higher tax bracket after you retire. If you're in your 20s, unless you're working for dirt, that's going to be hard to reconcile. Perhaps if you're in a situation where you expect your tax return to refund you pretty much all your tax for the year, a Roth might make a lot of sense. Otherwise, the pre-tax 403(b) is probably the way to go. And if you can't work it out, just go with the pre-tax.

As for the annuities vs mutual funds, not really sure. I have an old 403(b) and I vaguely remember sales-type people trying to convince me of annuities. That made me very suspicious and pushed me to mutual funds. Maybe it's unjustified, I don't know. But you'll read a lot about fees on retirement investments - anything involving traveling salesmen can't be too low on fees.

Re: 403(b) retirement plan
 

Thanks. I'm going to be putting as much as I can afford into the scheme but leaving myself a little 'spending' money after anticipated bills etc. My wife and I created a financial sheet with both our income and figured out how much I can afford to invest into my retirement fund right now. I am literally leaving myself around 150 buck per week after deductions, outgoings and car repayments! That will mean I can save up long term for luxuries I want, and won't throw my money away because I 'had' it lying around in my checking account!

I'm going to put as much as I can afford into it for now, and change it down the line if I realise I can put more in!

My wife and I will get a decent inheritance from each of our grandparents. We spoke to the in-laws last night and we both know what inheritance we will get, and the father in law recommended Roth IRA as we are going to be filing jointly eventually and whenever we do get that inheritance, some of which is properties etc, we will be pushed into a higher tax bracket.


Also, I'm thinking of setting up a HSA with some of what I would put into my retirement fund. Is this advisable/a good thing to do?

Re: 403(b) retirement plan
 

Does your insurance plan have an HSA? Are you on the high deductible plan?

I have an HSA and I love it. I know that money for medical expenses is there, and in the long run it's my money to keep.

Rene

Re: 403(b) retirement plan
 

I can either take the more expensive, low deductible one and have no option for a HSA due to the deductible being just under the limit. Or I can pay the cheaper health insurance (1/3 of the price of the low deductible plan) and open a HSA if I so wish. I have no health conditions or issues, I am only in my 20's and there are no genetic illnesses I may need to watch out for. My only 'health' issue is my hearing loss but that'll all come out of pocket as insurance doesn't cover that. Is it probably worth taking the cheaper health insurance and opening the HSA, and invest the maximum amount I can?

Re: 403(b) retirement plan
 

Yep, that's exactly what I did.

Rene

Re: 403(b) retirement plan
 

Congratulations on the job and you've got great advice on the pension fund. But I'm surprised you applied and interviewed for a job before your EAD arrived. I've been told that's a breach of immigration/visa laws. Also how long did your EAD application take?

Re: 403(b) retirement plan
 

it's fine to apply and interview while waiting for the EAD. You just can't starry working until you have the EAD in hand.

Rene

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Re: 403(b) retirement plan
 

Re: 403(b) retirement plan