Greetings, Byelow, and welcome.<<My wife (44 yrs) changed jobs 7/97. She has a 403(b) (#1) that we have socked the maximum amount in for the past 4.5 years. This was non-contributory by employer. We have seen a 37.7% net gain on this account in that time. However, fees are running $15/year admininstrative per fund and 1.75% for mortality, expense and management. There is a declining 5% deferred sales charge for 5 years on contributions, not appreciation.When she started the new job she began a new 403(b)(#2) with a different carrier. This is also non-employer contributory with $15/year administration and 1.5% for mortality, expense and management. There is a declining 5% deferred sales charge for 10 years on all surrendered amounts. Two months into the new program the carrier removed every fund we had selected and replaced them with brand new funds, i.e. no history or earnings performance. The remaining choices have long-term bond fund rates of return. We stopped contributing to this fund at year-end 97. She remains employed there and expects to retire in 10 years.We have learned today that her employer will allow any 403(b) program we want to set up including the previous carrier or a 403(b)7 option. We have current Vanguard IRAs that will accept a 403(b)7.I am self-employed (50 yrs) expecting to retire in 10 years. We are socking the max allowed into a SEP-IRA for me every year. Our modified adjusted taxable is above $100K so I don't see a Roth as an option.1. Want do you recommend for the 403(b) from the previous employer? I am leaning toward creating a self-directed IRA with the Fools Portfolio as a model.>>We don't usually recommend specific investments for folks in Fooldom, but we sure like to comment. Keep in mind that a 403b plan or 403b(7) account can only be invested in mutual funds or annuities. Neither of those options is especially attractive to Fools. So if you're stuck with a 403, the place for the highest return is in a stock fund, assuming you can tolerate the risks inherent in the stock market. For the past twenty-five years or so, the Vanguard 500, which you have available to you, has consistently beat the overwhelming majority of managed stock funds available. For that reason, that's the fund Fools prefer when we invest in funds at all. With the old employer's 403b money you don't have to do that. It is eligible for immediate transfer to a self-directed IRA within which you can invest in securities yourself. By doing that and following one of the Fool strategies, particularly the Dow variations, you stand a very good chance of beating the market and the Vanguard 500 over the long haul. If you're comfortable with doing your own thinking and investing, it can be far more rewarding than mutual fund investing.<<2. Do you recommend using the 403(b)7 option with the current employer? If yes any recommends on a particular mutual house? My instinct there is to put it in Vanguard between the 500 index and Primecap funds.>>Sure if that's the only way you can get the Vanguard 500 and your wife's current plan has inferior options . Can't speak for Primecap, though, because I know nothing of its history. I assume it to be a managed stock fund. If so, IMHO you are wise to compare it's year-by-year returns against Vanguard for the past ten years. That will give you a feel for its long term potential. History is never a guide to the future, but it still serves as a reasonable indicator.<<3. Can we use a 90-24 Transfer to roll the newer 403(b) (#2) contributions into a newer 403(b)7 program that we setup now? The #2 balance is only about $3.5K so the 5% penalty is fairly negligle.>>Yep. Just call Vanguard and they can guide you through the hoops.<<4. Do we face anything unforeseen with her 403(b) and my SEP/IRA filing jointly?>>Don't see why. Both are legitimate deductions from gross income perfectly permissible under the tax code.Regards…..Pixy
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