Retirement contribution question

[Birdie dog]

I have a call out to my guy, but he covers my whole hospital system, so if he calls back, it probably won't be for weeks....

I currently invest 17% of my earnings in retirement (and I'm vested and my hospital matches 5%). I found out yesterday that I'm getting a raise so I'm going to increase my investments by 1-2 percent. If I go with 2%, I'll put 1% in my (pretty decent) 403b and the other 1% in my newer and much smaller Roth.
I currently put 15% in the big account and 2% in the Roth.
If I only increase my retirement by 1%, does it matter what account I put that money in?
Thanks.

 

[DLgal]

I have a call out to my guy, but he covers my whole hospital system, so if he calls back, it probably won't be for weeks....

I currently invest 17% of my earnings in retirement (and I'm vested and my hospital matches 5%). I found out yesterday that I'm getting a raise so I'm going to increase my investments by 1-2 percent. If I go with 2%, I'll put 1% in my (pretty decent) 403b and the other 1% in my newer and much smaller Roth.
I currently put 15% in the big account and 2% in the Roth.
If I only increase my retirement by 1%, does it matter what account I put that money in?
Thanks.

The prevailing advice is max out your Roth first and then put the rest into the taxable retirement account.

 

[spiders]

I always put everything into the Roth. Make sure your raise and that extra 1% you're going to put in doesn't max you out early.

 

[ctinct]

If the match is in the 403b only, I’d first put enough in to get the maximum match (I assume it’s capped), then fully fund the Roth, and anything left after maxing out the match wherever it is and the Roth would go into the 403b again. UNLESS you have a high deductible health plan with an HSA. Then I’d do the HSA to
the max first (triple tax advantaged), then do the steps above.

Also, if you do have an HSA, I’d put itinto an investment account, and not just a savings account earning next to nothing. I can’t tell you how many of my coworkers I’ve tried to convince to do this. In our HSA plan, you have to dig through the website to even find out you can invest rather than just save. It’s made a huge difference in my HSA.

 

[tvguy]

You need to seek advice of a Financial and Tax Adviser with knowledge of your retirement plans, goals, age and account balances.
In my case, a few months short of age 64, my retirement plan is focused on reducing taxes today and delaying withdrawals until mandatory distributions kick in.
The assumption being I will be in a much lower tax bracket then. And if there is any balance left when I pass away, there will be zero tax liability to my heirs until they withdraw money. A Roth makes no sense to someone like me.
My mom used this plan and saved thousands in taxes during her working years, and only had enough taxable income to require her to even file a tax return one of the 27 years she was in retirement.
BUT AGAIN, YOU NEED PROFESSIONAL ADVICE FOR YOUR SITUATION.

 

[clh2]

Our financial planner -for our circumstance- recommends reduction in taxes first, so while we do have Roth’s, they are about 5% of our retirement nest egg.

our FP also highly encourages the use of the HSA, and the advice CTINCT mentioned about investing it, vs letting it sit in a savings account is great, and yes, it makes a difference!

I agree with TVGUY, a financial professional would assess and advise on your specific situation!