My company provides a 403(b). Naturally, money from my paycheck goes directly into my 403(b) before taxes. After recently filing for taxes, I noticed you can take deductions on IRA contributions. So, is there any advantage to contribute to my 403(b) over an IRA?

To clarify, my company does not provide a match on my contributions, so that advantage does not exist.


The money you put into a nonRoth 403(b) account is not included in the taxable income reported on the W-2 form and so you don’t get to deduct it on Form 1040; it’s already been deducted. The money you put into a Traditional IRA is from taxable income and so you can deduct it on Form 1040. But the maximum you can contribute to an IRA is much smaller than the maximum you can contribute to a 403(b) plan; a consideration that becomes more important as you grow older and closer to retirement.

  • Hmm, is the difference in contribution limits really coming into play here? It appears that X dollars could be allocated to either 403(b) or Traditional IRA and the effect on the taxable income will be the same. Also, if the employee has sufficient funds, is there reason to think that both limits should not be maxed out? Is there a limit on the combined contribution of Traditional IRA and 403(b)? – Robert Dodier Jul 13 '20 at 3:41

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