Can You Fund a Roth IRA & a 403B?

Roth IRAs and 403bs are two different retirement options. If you are eligible, you can contribute to both plans each year.

Who Can Contribute to a 403b?

Only employees of non-profits like schools and hospitals that offer 403b plans to their employees are eligible to contribute to a 403b.

Roth IRA

You can only contribute to a Roth IRA if your income falls below the annual limits based on your filing status. For 2010, if your income exceeds $120,000 for singles, $177,000 for married couples filing jointly or $10,000 for married couples filing separately, you cannot contribute.

Function

Contributions to a 403b plan are made through your employer with money taken out of your paycheck. You make contributions to your Roth IRA independently of your employer.

Options

Roth IRAs allow a wide range of investment options: the IRS only forbids using Roth IRA money to invest in collectible items. 403b plans only allow investments in insurance company annuities or custodial accounts investing in mutual funds.

Tax Breaks

Both accounts allow the money to grow tax-free in the account. However, 403b contributions are tax deductible in the year you make them, while money in the Roth IRA can be withdrawn tax-free at retirement.

References

• IRS: Roth IRA Rules
• 403(b) Wise: 403(b) Plan FAQs