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Author: jtmitch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75793  
Subject: Re: 403 distributions Date: 3/9/2002 1:29 PM
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I'll leave it to others to answer your question on asset allocation. But at the risk of sounding like a "know it all" I just want to point one thing out to you.

You say you are in a 403B which has a heavy implication of annuity. (Not all 403B's are annuities but most are.) When you say you have the choice of the 3 fund families, do you know whether or not you are investing directly with Fidelity/Vanguard or as a "subaccount" choice with an annuity insurance company? If the annuity is run by Fidelity or Vanguard, your M&E (mortality and expense) fee is probably fairly low. If these are subaccount choices available through an annuity run by VALIC or someone else, I'll bet your overall expenses are approaching 2% which is way too high. The point here is that even though Vanguard funds are low cost and Fidelity funds are moderate cost, buying them as subaccounts through an expensive annuity can remove any cost advantage.

TIAA-CREF, on the other hand, has only its own subaccounts available within its annuity. Its overall expenses (about 30 - 40 basis points depending on the specfic investment choice you select) are lower than virtually all basic mutual funds (except Vanguard).

jtmitch

Disclosures:
1. I own a TIAA-CREF rollover IRA which was created from a 403B I had with a previous employer.
2. I looked "under the hood" at my daughter's 403B choices some time ago and was shocked to learn how much she was getting ripped off because her only choices were with expensive VALIC and VALIC-like annuities.
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