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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 79718  
Subject: Re: Questions about 403(b)7 Date: 4/17/1998 4:44 PM
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Greetings, JimFish, and welcome.

<<Through my employer I have an annuity. This annuity is called a 403(b)7 plan. I currently contribute 6% per pay period because that is the amount that my employer will match. This is a pretax contribution. I would like to start contributing more than 6% even though my employer will not match my increased efforts, due to gaining an increased tax shelter. My question is this: is there either percentage max limit or maximum contribution limit on these types of arrangements, similar to the $4000 limit on IRA contributions. I can and probably will ask the program administrator, but I would like to know the answer before I talk to him.>>

Basically, it's the same limit as that found in a 401k: The lesser of 25% of your compensation or $10K in 1998.

Unless you have a compelling reason to go beyond the employer match in an annuity, you may want to investigate putting your next $2K in a Roth IRA in an index fund if nothing else. Almost assurredly the index fund will outperform your annuity because they are generally quite lousy investments over the long term. The Roth contribution won't give you an immediate tax deduction, but it grows tax deferred and ultimately all of the proceeds will come to you totally free of tax. It's worth a look in your situation.

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