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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: New Fool Needs Help Date: 7/29/1997 8:49 AM
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Greetings, BMNorth, and welcome to Fooldom.

<<I'm a new Fool, and need some help figuring out how best to take advantage of my company's retirement plan. My employer offers a 2 fold retirement plan: the first part is comprised of 5% of my gross salary invested and managed by our CFO. This money comes from my employer and is not deducted from my salary. That part's easy. The second part is a 403b plan to which I am planning to contribute, and therein lies the rub. The 403b plan is managed by Merrill Lynch and I am trying to decide which mutual fund to put this pre-tax money into. I've asked the broker if they offer TMF's recommended Vanguard's Index fund, but haven't yet received an answer. If I can't get the Vanguard Fund, does anyone have some suggestions as to which fund(s) to choose?

Also, am I correct in assuming that by participating in my company's 403b plan, I must use Merrill Lynch, the plan's administrator, or may I set up a self directed plan with the same tax advantages? I suspect not, but I want to be as Foolish as possible about all of this.>>

In all probability, you will only be offerred selections from Merrill Lynch's family of funds. They have over 300 different funds, so which ones and how many will be available to you through the administrator I can't say. As to which to choose, that's entirely up to you. If you've got more than ten years before retirement, though, IMHO you are best served in growth vehicles like stocks. History shows over time and despite yearly fluctuations, stocks produce the best long term return. That's why we prefer them within Fooldom over anything else. Be aware in the short run they can be risky. You can literally see the value of your holdings plunge overnight by 20% or more. Yet if you have the courage to stay the course, history also shows they will recover and ultimately go on to even greater highs. Accordingly, with stocks one needs to think long term, and the longer the better.

In a 403b, you are restricted to two types of investments, annuities or mutual funds. You may not trade individual securities. Within those limitations, though, you are not totally restricted to using Merrill Lynch's options. You may move your contributions to another fund or to an annuity provided the fund or annuity accepts 403b accounts. Many brokers and mutual funds do. If you want to invest in the Vanguard 500, it should be possible for you to do so. For all I know, the fund itself may accept such accounts. But if it doesn't, you certainly can find a broker who does and will make the purchase for you (for a fee). Just let your fingers do the walking and call around until you find one who can help you at a reasonable cost to you.

The details of transferring your money from the existing 403b to another 403b with a broker or different fund are relatively simple. It's simply a direct transfer from one custodian to another. You have to request this. Some employers and administrators may require you to do so with every deposit you make to the 403b, which can be a pain, but it is allowed if you want to do it. The broker or fund of your choice should be able to help you with the mechanics of this.

Regards......Pixy
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