Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
Suppose you could invest in any and all types of retirement accounts, and there were no income limits, etcâ€¦ How would you â€œrankâ€ the different types of accounts? In other words, if you could invest in a 401(k), 403(b), Roth IRA, etc., how would you decide which to invest in FIRST, SECOND, THIRD…
Off the top of my head, here’s my answer…
I would start by making any contributions that come with matching funds. Once I maxed out the matching funds (= free money), I would move on to the Roth IRA. After that, I would go back to making deductible contributions. In some cases, there’s no choice left to be made at this point… Many people have a 401(k) and that’s it.
Assuming that I had more than one choice, such a a 403(b) and a 457(b), I would rank these by the available investments. If one has great, low-cost funds, then that’s the one I would go with first. After that’s maxed out, then I would move on to the other one.
In fact, this is exactly what I’ve done. My employer compels me to contribute 5% (no more, no less) to a defined contribution plan, to which they add a little better than 8%. In the past, my top priority after that has been maxing our Roth IRAs, although that’s no longer an option for us as we’re bumping up against the income limits.
The reason that I opted for the 403(b) ahead of the 457(b) is that Vanguard is available through the former, and I’m a total Vanguard junky. The best option in the 457(b) is TIAA-CREF which is a bit more costly.
Of course, I’ve also been able to take advantage of a SEP-IRA to make additional deductible contributions above and beyond what’s available through the more ‘standard’ options. And in my case, I would rank the SEP-IRA ahead of the 457(b) for the same reason that I prefer the 403(b) — the ability to invest through Vanguard.
With all of that being said, I’d love to hear what you guys think…
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (288)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)