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aammps writes:
Hi! I am a teacher for a district which only allows us to participate in the 403B plan with variable annuities. I have $600. per month for 10 months each year going into Life Insurance Company of Virginia. I have completed 19 months of contributions, so far. So, I have deposited approximately $ 11,400 into the variable annuity and today my statement reads that I have $13800. The annuity has (loaded funds) participating. I chose Fidelity Equity Income, Oppenheimer Cap. App. and Alger American Small Cap. as the funds into which the $600. contribution is split.I understand the rule of thumb that pre-tax dollars and building for retirement is the best strategy as my husband and I are in the 28% tax catagory. However, I'm skeptical of ALL the FEES and ONLY 9% gain (my estimation). My question for you... Is this 403B plan the best way to go? I can add more to my contribution to total $950. per month. Should I? OR would I do better cashing the $13K+, paying a 6% penalty, rolling it over to my IRA and invest in stocks. My portfolio is doing a nice 18% (I listen to TMF)

I think you should check your math, or try plugging the data into Quicken. By my calculations, your annual return in the 403b account has been around 19-25% (I can't tell exactly without knowing in which 19 months you contributed).

You may have arrived at the 9% figure by assuming that the $11,400 was invested all at once when you started two years ago, rather than spread out over the whole period.

Of course it's still quite possible that you'd be better off rolling over to a self-directed IRA or one using low-cost mutual funds, but I'd consider my options carefully before paying a 6% penalty.

- Darrell
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