2023 Money Moves for Educators
January 3, 2023
Happy New Year. January is a perfect time to kick saving for retirement up a notch.
- Open a Roth IRA — We advocate for the 403(b) and the 457(b) but we think all educators should have a Roth IRA. Why? Three reasons: a) Educators can use any vendor they want which includes our two highest rated financial companies: Fidelity Investments and Vanguard; b) After-tax savings. Roth money is contributed with after-tax money so when it's accessed in retirement, no taxes are owed; and c) New maximum contribution limit: $6,500 (up $500 from 2022). Learn more about the Roth IRA here and here.
- Open a 457(b) — We are called 403bwise and focus heavily on the 403(b), but the 457(b) is simply a better retirement plan than the 403(b). One of the biggest reasons is that the plan is subject to more employer fiduciary oversight than the K-12 403(b). The other reasons is that 457(b) money can be accessed penalty-free at any age upon separation of service. Learn more about the 457(b) here.
- Increase 403(b) contributions — If you have done items one and two, and have a good 403(b), strive to get as close as possible to the new maximum contribution limit: $22,500 (up $2,000 from 2022). Learn more about the new 403(b) contribution limits here.
Stay wise and well (and have a great New Year)
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