SEP, SIMPLE, 403B, ROTH Oh My!?

Hi everyone,

I have the above plans available to me. Is there any order that I should be contributing to these? They are all linked up with Vanguard. Right now I'm filling up the SEP first and can get the SIMPLE to 50%. Wife is the W2 teacher. I'm self-employed sole proprietorship (obviously). 403B has no matching because the district matches the state retirement fund. Teachers and the district contribute 7.5% equally.

They all seem to do the same thing tax wise. Anything I'm missing or any suggested order for contributions?

None of these plans have matching, just an FYI. I'm the only person in my company, so I guess I can match myself.

Hi! You ask a question that many people I know have wondered about, too. General rule of thumb is you contribute first to wherever you get matching (at least enough to earn the maximum match you can), then any tax-advantaged accounts.

Since all the accounts you're discussing have similar tax treatment and there's no matching, I'm not sure that's relevant. However, you may not want to contribute to a Roth if you're doing well. You pay taxes on Roth money upfront and take it out tax-free so it makes sense if you're in a lower tax bracket now than you will in the future; however, if the opposite is true, you might want to put the money into your IRAs, since you'll be taxed at a lower rate.

You might want to also talk to a financial planner about a deferred comp, depending on how much you make, can be a great way to limit tax liability and get money during retirement. I found mine at www.plannerconnect.com. Good luck.

I'd always do an IRA first and fully as they're the most versatile and most protected. Personally I'd be inclined to do stocks, not mutuals (as I'm assuming you have with Vanguard). If nothing else, don't put everything in mutuals--not a fan of them and market is such that that's not necessarily a great idea.

After that, I'd say it depends on what your menu options are--if you have good investment choices in the 403(b) and the SEP and SIMPLE, then you want to get as much in as possible--at least to the point where things are matched as that is "free" money.

They are pretty much the same concept--just as you know for different fields of employment (401(k) is same thing as 403(b). SEP is for the self-employed.

I'd just encourage you to read up on your different options and make sure you pay as little in fees, etc. as possible and have some diversification in your portfolio. IRAs allow for not just stocks and bonds and CDs, but real estate, businesses, etc.

You may be able to find things you didn't know if you dig a bit.