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Greetings, Wandering Wit, and welcome.

<<I work at a college and have 403(b) options available in addition to a good state retirement plan. I already tax shelter my required contribution to the state retirement plan. I have been working for 20 years at various colleges but have only become vested in the retirement plan at my current place of employment due to frequent changes of jobs in my early working years(I've worked here 10 years). I can afford to contribute the maximum ($9500)to a 403(b) and have the option of investing the funds in a no-load mutual fund. Should I do it? Or should I take the portion of my salary that I'd be contributing to the 403(b), pay taxes on it, and invest it elsewhere? My employer doesn't match any portion of my 403(b) contributions. Any suggestions?>>

Tough question to answer. In the absence of a match, the only benefit you get up front is the tax deferral on the contribution and earnings. Thus, you must compare the pre-tax returns you can get in the 403b against potential after tax returns in something else. Only you can run those numbers and make the decision. However, given you are limited to just annuities and mutual funds within the 403b plan, be aware that in Fooldom we believe you can do better for yourself in a taxable alternative simply because you have the opportunity to do your own investing, If you have no interest in the latter or can't tolerate the risks in the stock market it entails, then the 403b ain't half bad - especially if one of your choices is an index fund like the Vanguard 500.


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