I'm a teacher and due to budget issues nothing is very stable in my school district. I've been considering moving my money from my 403b over to a Roth 401k or IRA since my district doesn't offer a match. Any thoughts?
Dear Quincy, Your decision will be governed in part by the immediate tax consideration - since shifting money from a tax-deferred account to a Roth qualified account requires you pay ordinary income tax on the entire balance. In the future, all contributions to a Roth savings plan will preclude the benefit of postponing taxes on all deferrals. On the other hand, there are significant long-term benefits to having a Roth qualified plan since you never again are taxed on capital gains and you are not required to follow RMD (required minimum distribution) rules for withdrawing funds.
Quincy: How long untilyou plan on retiring/ withdrawing these funds? The traditional/Roth decision (in part) is based on your time horizon. What's more important, however, is your underlying investment strategy. What is your mix of stocks, bonds and cash? Are you choosing the funds by yourself or outsourcing that function to an advisor? Do you have a comprehensive, long term financial plan in place? Thanks and best of luck!, Evan