My daughter is in her first year of public school teaching and needs some general advice regarding the pros and cons of contributing to a 403B vs a Roth IRA. (She can afford only $100 a month to start.)

I'd appreciate any feedback that could be offered or referrals to relevant web sites that may have additional information.

Thanks.

I reccomend the Roth IRA
Assuming your daughter is fairly young the fact that the money is available is a definate advantage.

In terms of ecconomics there are several unknowables but my assumptions are as follows:

Her tax bracket at retirement will be at least as high as it is now (15%)

There will be signifigant value in having funds that are not subject to minimum withdrawl requirements at age 70 1/2

Brent Rowell

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Brent

Brent Rowell makes some very good points that should be carefully evaluated. On the other side of the coin, there are many positives associated with tax deferred savings. One such advantage is that she can contribute more to the tax-deferred plan than she can to the Roth IRA and have the same net check amount.

In the 15% marginal tax bracket, she could contribute $117.65 and in the 28% bracket she could contribute $138.89. Consequently, she would see her tax-deferred account balance grow much more rapidly through the years. Of course, taxes would be due on every dollar distributed, whereas no taxes would be due on distributions from the Roth IRA.

[This message has been edited by Harvey Carruth (edited 03-24-2000).]

[This message has been edited by Harvey Carruth (edited 03-25-2000).]