403b's

[vettechick99]

What do you know about a 403b? I used to have a 401k with my old employer and eventually turned the savings into a Rollover IRA, which has been sitting around for 5 years. Is moving my Rollover IRA into this 403b better than into a traditional IRA? Neither is going to offer me matching from an employer.

By the way, the company is ValuTeachers (Retire 101). Any experience?

Thanks!

 

[mickeyboat]

Our 401(k) turned into a 403(b), and I don't even think anyone here noticed the difference, other than getting a whole bunch of paperwork. We do have a matching component to ours.

Denae

 

[Dan Murphy]

In the past, there were more differences between 403(b)'s and 401(k)'s, but today, almost the same from a practical point of view, certainly as a participant. Main difference is who can provide them, for-profits do 401's, non-profits do 403's.

Probably the only practical advantage a 403 may have over an IRA is the ability, if need be, to borrow from it (not necessarily good, but there if needed) and your plan permits it (most would). The only way to use IRA money, if needed, is to withdraw from it, which would be taxable, ordinary income, plus 10% penalty if under age 59 1/2.

You should also take a look at the investment choices/performance of the investment selection you have available in the 403 and your IRA. If 403 is substantially better, might be reason to move, but then again, you need to verify any penalties from the IRA investment (not tax, but rather company penalty/charge for moving, depending what invested in currently).

In any case, review the enrollment materials from your 403, do the quizzes, etc, asset diversify, don't get hung up on "what is doing well 'today'".

(not to be considered investment nor tax advice)

 

[Chapter 11]

That's a tough question because there are so many variables. A lot depends on whether you intend to contribute to the account going forward, or just let it sit, as you are doing with the IRA. If you intend to contribute, the dollar limits of your pre-tax contribution may be more limited in the IRA context, although not necessarily. Also, what investment options are there in the 403(b)? Lots of those plans require investment in insurance products or annuities, as opposed to mutual funds, and that can be a not-so-attractive option at your young age. Finally, from an asset-protection standpoint, a 403(b) may be better shielded from creditors than an IRA, especially in Georgia (not the most debtor-friendly state). What you should do is hie thyself to a qualified financial planner (one who is fee-based as opposed to commission-based), and ask him or her these questions. Decisions should be made with an overall financial goal in mind. I consider myself fairly knowledgable on financial-type issues, but I confess that this is one area where it pays to consult someone who does it for a living. Sorry if this just adds to your confusion rather than resolves it, but that's the nature of the question you posed.