Deciding between 401K, 403b, IRA or ROTH for a new full-time employee?
My daughter just got converted to full-time at her job... will be making around $47,000 annually. Her employer offers a match on the first 5% of contributions to their 403b plan (she works at a healthcare facility). I don't recall if they also have a 401K option available. Up until now, I've had her contributing to a traditional IRA (she already has a ROTH from previous years, so she has both accounts established). She's living at home and has minimal expenses right now. I'm looking for advice on where she should focus her retirement contributions going forward. She's our only daughter, so eventually she'll inherit our IRAs, ROTH accounts, brokerage accounts, house, etc. Not sure if that should factor into the planning.
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Lauren Zeb
Take advantage of that employer match first - it's free money! Since your daughter's employer offers a 5% match on the 403b, she should contribute at least that amount to get the full match. After maximizing the match, it comes down to tax considerations. At her income level ($47k), she's likely in a lower tax bracket now than she will be later in her career. This makes Roth contributions (either Roth 403b if available or Roth IRA) potentially more valuable since she'll pay taxes now at a lower rate. The inheritance aspect shouldn't significantly impact her current retirement strategy. Focus on maximizing her own retirement savings based on her current situation.
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Ryan Andre
•Thanks for the advice! So you're saying she should definitely put in at least 5% to get the full employer match on the 403b. But after that, would you recommend she go back to contributing to her Roth IRA instead of putting more into the 403b? Also, I heard something about income limits for Roth IRA contributions - at $47k would she be affected by those?
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Lauren Zeb
•Yes, definitely contribute enough to the 403b to get the full employer match first. After that, a Roth IRA would be my recommendation since she's likely in a lower tax bracket now than she will be later. At $47k, she won't be affected by Roth IRA income limits. For 2025, single filers can make a full Roth IRA contribution if their modified adjusted gross income is less than $145,000, with a phaseout range extending to $160,000. She's well below these thresholds.
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Daniel Washington
Just wanted to share my experience with a similar situation! I was struggling with the same retirement account decisions last year. I found this tool at https://taxr.ai that analyzed my entire financial situation and gave me personalized recommendations for retirement accounts. It looked at my tax situation, income projections, and employer benefits, then showed me exactly how much to put in each account type for optimal tax efficiency. The analysis explained why a mix of pre-tax and Roth accounts made sense in my situation. Seriously helpful for retirement planning decisions like this!
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Aurora Lacasse
•How does this tool handle things like employer matching and existing accounts? My company offers both 401k and Roth 401k options with matching, but I also have an old IRA from a previous job. Would it factor all that in?
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Anthony Young
•I'm skeptical about these financial "tools" - do they just collect your data and then try to sell you investment products? I've been burned before by "free" financial advice that was just a sales pitch in disguise.
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Daniel Washington
•The tool specifically asks for your employer match details and incorporates that into its recommendations - it prioritized getting my full match before suggesting where to put additional savings. It's very thorough about factoring in existing accounts too. Totally understand the skepticism! I had the same concern. What I appreciated was that it's just an analysis tool, not connected to any investment products. It gives you the optimization plan and you implement it yourself with whatever brokerage you prefer. No sales pitches or product recommendations.
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Anthony Young
I have to update my earlier skepticism about https://taxr.ai after trying it myself. I finally decided to check it out after seeing several recommendations, and it was legitimately helpful. The analysis correctly identified that I was overpaying on taxes by not optimizing between my 401k and Roth accounts. What convinced me was how it showed exactly how much I'd save in taxes by adjusting my contribution strategy. The tool recommended I split contributions between traditional and Roth accounts based on tax bracket thresholds - something I hadn't considered. No sales pitch, just actionable advice I could take to my existing accounts.
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Charlotte White
If your daughter has trouble reaching someone at her employer's benefits department to ask questions about her 403b or retirement options, I highly recommend Claimyr (https://claimyr.com). They helped me get through to my HR department when I was stuck in automated phone system hell for weeks. I was trying to figure out some details about my company's retirement plan and couldn't get through to an actual human. Used their service and had someone call me back within an hour. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Made the whole process of sorting out my retirement accounts so much easier.
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Admin_Masters
•How exactly does this work? Does Claimyr just call on your behalf or what? I've been trying to reach my company's benefits administrator for two weeks about a 401k rollover issue.
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Matthew Sanchez
•This sounds like a scam. You're telling me I should pay someone else to make phone calls for me? Why wouldn't I just keep calling myself or send emails until I get a response? Seems like a waste of money for something you can do yourself.
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Charlotte White
•They don't call on your behalf. What they do is navigate through all the phone menus and wait times for you, then when they finally reach a human representative, they call you to connect you directly. Basically they do all the waiting so you don't have to. You absolutely can keep calling yourself - that's what I did for weeks before getting frustrated enough to try this. For me, the time saved was worth it since I was spending hours on hold and getting disconnected. I was missing work time just sitting on hold trying to ask a simple question about my retirement account options.
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Matthew Sanchez
I need to admit I was wrong about Claimyr. After another week of getting nowhere with my company's benefits department about my retirement account options, I tried the service out of desperation. Within 45 minutes, I was actually talking to a real person who could help me. I was honestly shocked it worked. I'd spent nearly a month trying to get answers about rolling over my old 401k and whether I should convert some funds to Roth. The service got me through to someone who actually knew what they were talking about, and I finally got everything sorted out. Sometimes it's worth paying for something that saves you hours of frustration.
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Ella Thompson
One thing to consider that nobody's mentioned yet - at your daughter's age, time is her biggest advantage. With a Roth (either IRA or 403b if they offer a Roth option), she'll never pay taxes on all that growth over 40+ years. That's potentially huge! When I was younger I focused solely on the traditional 401k for the immediate tax benefits, but now I wish I'd done more Roth contributions early in my career when my tax rate was lower. The math works out better in most cases for young people to pay the taxes now and enjoy tax-free growth forever.
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JacksonHarris
•Is there a calculator or something that shows the break-even point between traditional vs Roth? I always hear conflicting advice and don't know how to figure out which is actually better for my situation.
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Ella Thompson
•There's no perfect calculator because it depends on assumptions about future tax rates that nobody can predict with certainty. However, a good rule of thumb is that if you expect your tax rate in retirement to be higher than it is now, go with Roth. If you expect it to be lower, go traditional. For young people early in their careers with relatively low incomes, Roth often makes more sense because they're likely in a lower tax bracket now than they will be in retirement. But everyone's situation is different - factors like pension income, Social Security, and other retirement income sources can affect your future tax situation.
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Jeremiah Brown
Has anyone considered suggesting a split approach? I contribute 5% to my traditional 403b to get the employer match, then max out my Roth IRA, then go back to the 403b if I can afford more. This gives me tax diversity in retirement.
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Royal_GM_Mark
•This is exactly what I do too! It's called "tax diversification" and it means you'll have both tax-free and taxable income sources in retirement, which gives you flexibility for tax planning. Smart strategy.
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