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I currently have a Roth IRA Account I started a few years back when I was in college. Only have like 1300$ in it now. I started a full-time job now and I have a 403b plan. The thing is, I will not be able to get a match until I've been there a year. Before this I was giving 15% to the Roth 403b, but does it make more sense to contribute to the Roth IRA first? For instance if I get to the 5500$ in the roth ira I then should move to the Roth 403b? Is that right?

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I am not sure that there is a real 'right' answer here. If I read correctly that the 403(b) wont match until you've been employed for a year, they won't retroactively match on your anniversary will they? Just begin matching going forward.

If I got that right, then it won't really matter which you fund first. The Roth IRA probably has more investment choices as the 403(b) will probably be limited in choices. A 403(b), depending on the specifics of the plan, may have more choices to borrow from yourself for example when you purchase a home. However, once money has been in the Roth account for 5 years, you can take the amount you contributed (NOT any earnings that money may have made) penalty-free.

Basically, there are advantages and disadvantages on each account. Only you can decide which choice you prefer.

  • "they won't retroactively match on your anniversary will they?" Depends on his employer, but there's at least a good chance it's a vesting cliff and they actually will. He should check and see. – Kevin Jun 15 '18 at 17:53
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    In the general case the employer will not match contributions retroactively. I would be surprised if any (not tiny) employer did this. – xyious Jun 15 '18 at 18:04
  • @Kevin: That's a very common thing for employers to do, but it would not be described as a match starting at the one year point, it would be described as a match during the whole time with delayed vesting. – Ben Voigt Jun 16 '18 at 17:55
  • "However, once money has been in the Roth account for 5 years, you can take the amount you contributed (NOT any earnings that money may have made) penalty-free." I don't think this is right. I believe that withdrawals from Roth 403(b)/401(k) withdraw pro-rata from contributions and earnings, and the earnings portion would have tax and penalty for an early withdrawal. On the other hand, withdrawals from Roth IRA come from contributions first, so you can roll the Roth 403(b)/401(k) to Roth IRA, and then withdraw contributions without tax or penalty. – user102008 Jul 15 '18 at 5:52

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