rnelsonee t1_iyeg5be wrote on November 30, 2022 at 8:03 PM

I'm not a financial advisor, I just give out random advice on r/pf and help people with taxes, but my small pea-brain says you should use disability insurance for disability insurance, use life insurance for life insurance, and use retirement accounts for retirement. Using the financial vehicle designed to replace wages in case a car breaks your hip as the same one to give you tax advantages to allow you to retire just doesn't seem sensible.

What's most likely is your mom's financial advisor is making a commission on these products they're trying to sell.

>Now my major question is because the 403b match is trash and the vesting is 3 years should I even put money into the 403b?

Yup, because a trash match is still free money. And if/when you leave, you can just roll over your money into an IRA. Even if you get no vesting, we're still talking about retirement money which means no capital gains, no taxes on dividends, and the option to defer income taxes.

PAvibes t1_iyeicqy wrote on November 30, 2022 at 8:17 PM

I apologize if this is a dumb question but I'm really new to all of this. I wasn't aware that you can roll over the money from a 403b or 401k into an IRA. I'm aware that an IRA has a max of 6,000 a year in regards to contribution. Does this rule still apply for rolling over?

For example, let's say I had 10,000 in my 403b and I plan to transition to a new job and roll the money over into a IRA. Would I have to face penalties for the 10,000 being over the 6000 mark?

rnelsonee t1_iyemxvq wrote on November 30, 2022 at 8:46 PM

The $6,000 is for direct contributions, there's no limit on the amount to roll over. If you have a 403b after leaving an employer, you can keep it there (if >$5,000, otherwise your old company can force a cash-out to transfer), roll it to your own IRA, or transfer it over into your new work's plan if they allow it.

So if you had $10,000 in a 403b, you can keep it, roll it to an IRA, or if your new job allows move it to them. The money stays pretax, there's no tax added to your 1040, and no penalties. A small wrinkle if the transfer is done via paper check, but if that happens just ask us... within 60 days of getting the check.

thesleazye t1_iyem82p wrote on November 30, 2022 at 8:42 PM

I’m not a financial advisor and I agree with the notion of the commission angle. I used to sell whole life, ages ago, and it is a useful option due to the nature of it; however, it becomes very expensive later in life and it’s not touchable until retirement. I’m 15 years out of insurance, so I don’t know if an underwriter offers a whole life that “acts like a 40XY”, but that’s not the main purpose of the product. I typically sold term because it’s an easier product to sell - the expense of WL is somewhat sales prohibitive unless you have an income and strategy that takes advantage of it.

Disability insurance is great to have, but it’s a protective plan: not an investment plan.

Also agree that the match is okay, but if you’re not staying longer than the vesting period meh. Maybe you get access to low fee plans from the employer and that’s better than the alternative (nothing or IRAs). Check the fund offerings and how much fees are compared to your Roth IRA.