I'm hoping some of you folks can give me some guidance. My wife works at a small, not-for-profit agency and participates in a 403(b) plan, to the tune of $100.00 per month. (There is no contribution by the employer.) She has about $12,000.00 built up in it. The problem is, the mutual fund she is in has performed at more than 14% below the S&P 500 over the last 5 years. (While still carrying above-average fees, I might add.)

My first thought was to just switch into an index fund. She can only invest in Mainstay funds, however, and the index fund has a minimum $1000.00 contribution. They justify this by saying that if you leave your money in for 10 years you are guaranteed to get back at least what you put in. In addition, it would cost us $538 to switch funds.

I don't know what to do. I can't stomach the thought of staying in this under-performing fund. should I switch the money in there now into the index fund, then find a less-bad Mainstay Fund for her furture contributions? Should we ditch the 403(b) completely and put the money into an IRA? We do make separate contributions to a Roth IRA, so this option would cause problems with the $2,000.00 limit on IRA contributions.

If anyone has any thoughts, they would be greatly appreciated.

Tom