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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 75781  
Subject: Re: 403(b)(7)..HELP!!!! Date: 9/30/1999 12:58 PM
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Greetings, sxdx99, and welcome. You wrote:

<<My wife has been with her employer's 403(b)(7) plan for about a year now. I have a standard 401(k) from one of the big three auto makers. My question concerns the 403(b)(7). It is called a 403(b)(7) but in some of the documents it is also called a TSA (or Tax Sheltered Annuity). My concern is that I have heard that annuities are not your best option for retirement investing, although the plan we are a part of allows us to invest in the Vanguard Index 500 fund. When we reach retirement age (we are both 30) are the distributions from the 401(b)(7) any different from the distributions from my 401(k)? Also is there anything else I should know about 403(b)(7) plans. I would like to become very foolish on this subject and any help or feedback is greatly appreciated.>>

403b plans are often called Tax Sheltered Annuities or TSA because often that is the only investment available. However, under Internal Revenue Code Section 403b(7) investments may also be made in mutual funds. Your wife's plan allows the latter, so it would seem you don't have to concern yourself with the annuity aspect of that plan. At retirement or on termination from her job your spouse should be able to transfer all of her investments in the plan to an IRA just as you can with your 401k plan.

To learn more about the differences in and similarities of 403b and 401k plans, see my Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm.

Regards..Pixy
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