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Pre or Post tax contribution?

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  • Avatar candyapple 
    Participant
    Status: Physician
    Posts: 3
    Joined: 06/08/2019

    Hello, I’m new around here and I’m currently credentialing for a new job and the employer has given me two options for the 403b. The language is:

    “You may contribute from 1–60% of your allowed compensation, up to the IRS contribution limit for the year. You can contribute to the plan before taxes are deducted or through an after-tax Roth option”

    I’m just learning about this stuff and I’m wondering which option would be the best to go with. Any input appreciated.

    #220138 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8128
    Joined: 01/09/2016
    • You should contribute enough per paycheck to total $19k/yr
    • In general, physicians should choose the “pre-tax” option rather than Roth. That advice can change in some specific situations, but I am assuming you are reasonably high income and that the $19k will be a valuable tax deduction in the present.

    Welcome to the forum!

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #220144 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4434
    Joined: 01/08/2016

    Hello, I’m new around here and I’m currently credentialing for a new job and the employer has given me two options for the 403b. The language is:

    “You may contribute from 1–60% of your allowed compensation, up to the IRS contribution limit for the year. You can contribute to the plan before taxes are deducted or through an after-tax Roth option”

    I’m just learning about this stuff and I’m wondering which option would be the best to go with. Any input appreciated.

    Click to expand…

    the vast majority of people should choose pretax, not Roth.

     

    #220147 Reply
    Liked by Lordosis
    PhysicianOnFIRE PhysicianOnFIRE 
    Moderator
    Status: Physician
    Posts: 1536
    Joined: 01/08/2016

    I’ve got a post for that and I agree with both Johanna and “Peds.” Traditional is the better choice for most high-earning professionals.

     

    40-something anesthesiologist and personal finance blogger @ https://physicianonfire.com [Part of the WCI Network] Find me on Twitter: @physicianonfire

    FIRE. Financial Independence. Retire Early.

    #220155 Reply
    Liked by Peds, jfoxcpacfp
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4434
    Joined: 01/08/2016

    “Peds.”

    Click to expand…

    i like that i might not be a real thing….

    #220158 Reply
    Avatar candyapple 
    Participant
    Status: Physician
    Posts: 3
    Joined: 06/08/2019

    Thanks everyone for the recommendation and for the helpful link! 🙂

    #220195 Reply

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