Setting up a Roth IRA takes time and effort, but for most people, their effort will pay handsomely.

When our daughter began her career in education, I strongly discouraged her from participating in 403B plans offered through her employer. I tried to make it a learning experience for her, and for her next job, she ditched the 403B by herself. 403B plans often get failing grades.

403B plans, like their 401K kinfolks, allow participants to make tax-deductible contributions, which then grow tax-deferred until retirement. 403B plans have one huge difference, though. With 401Ks, the employer has a fiduciary obligation to plan participants, a commitment missing from 403B plans. As such 403B contributors have a limited legal basis if their retirement plan provides lousy investments.

Beginning in 2007, Congressman George Miller (D-California) used the fiduciary obligation to push for 401K plan fee disclosure and transparency. Subsequently, lawsuits against employers and 401K plan providers mushroomed. In response, 401k plans improved substantially with lower fees and better investment options. For many retirees, their 401K plan is more advantageous than rolling it over to an IRA, especially with a 1% asset management fee or, even worse, a deferred annuity. I am not making a blanket indictment of IRA rollovers or annuities either, but retirees should compare costs before making a change.

Mama taught high school history but stayed home to raise my two brothers and me. She wanted to go back into teaching when we graduated high school, but she died when she was 41, never reaching her dream. In honor of her and for the Christmas season, here’s a Christmas present for teachers: Educators, especially younger ones, should fund a Roth and forget about a 403B.

Tax-free distributions from a Roth beat taxable distributions from high-cost 403B plans. Since teachers don’t get paid much, tax deferral provides scant benefits. Setting up a Roth IRA is a little bit of a hassle, but it’s no more complicated than purchasing something on Amazon or using Uber. Pick a target-date fund from Vanguard, T Rowe Price, or American Funds. Choose one coinciding with your retirement age; add 65 to the year you were born, voila. 401K plans generally include modest employer contributions. While providing an incentive to save, the match also offsets any fees charged. However, school systems usually don’t give matching contributions for 403B plans. IRAs have limits on contributions and income levels. Given pay scales for teachers and the cost of living, most teachers won’t have a problem with annual limits, $6,000, plus $1,000 over age 50 catch up or income levels, $122,000, single, $193,000 married couples.

The problem with Roth IRAs is sloth and inertia. Sloth, as we learned in "Dante’s Inferno," is a deadly sin while inertia is Newton’s First Law of Motion. With a 403B deferral, you check a box, and that’s it.

Setting up a Roth IRA takes time and effort, but for most people, their effort will pay handsomely.

You can’t always get what you want, but Buz Livingston, CFP, can help you figure out what you need. For specific advice, visit or drop by 2050 West County Highway 30A, M1 Suite 230.