Taxes on 403(b) vs IRA
My company provides a 403(b). Naturally, money from my paycheck goes directly into my 403(b) before taxes. After recently filing for taxes, I noticed you can take deductions on IRA contributions. So, is there any advantage to contribute to my 403(b) over an IRA?
To clarify, my company does not provide a match on my contributions, so that advantage does not exist.
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The money you put into a nonRoth 403(b) account is not included in the taxable income reported on the W-2 form and so you don’t get to deduct it on Form 1040; it’s already been deducted. The money you put into a Traditional IRA is from taxable income and so you can deduct it on Form 1040. But the maximum you can contribute to an IRA is much smaller than the maximum you can contribute to a 403(b) plan; a consideration that becomes more important as you grow older and closer to retirement.
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