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Author: jesserivera67 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: Old Question/jesserivera67 Date: 11/29/2003 2:18 AM
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I've included my old post below. I changed my answer to #1 for you Nick...;-)

I noticed Nick provided you with some great links...here's another link for you...

http://www.fundadvice.com/FEhtml/InvestingBasics/0103b.html

If you provide some more details on your 403b plan we could perhaps help further...

The annuity in your 403b plan doesn't offer any advantages that I can see but I may be missing some details...I would expect that what it does offer you is a larger fee structure...

old post below...

"1. Leave it where it is."

I wouldn't...I like to add to my investments. Won't kill you to leave it there as it will grow.

"4. Roll it to an annuitity"

DON'T, DON'T, DON'T, DON'T, DON'T...This is abominable choice. I'll explain later.

"2. Roll it to a Roth IRA"

Always a good choice but as indicated you need to roll it to a T-IRA first. See pub. 590 for more details. It's written fairly well.

http://www.irs.gov/pub/irs-pdf/p590.pdf

"3. Roll it to the new company"

Depends on the quality of the funds in the 401k. Many 401k's are not very good passing up free money from your employer if they offer it (and they should) is a big mistake.

Not sure of your situation but you might want to ask yourself a few questions...

1) How am I saving today? Am I on target for retirement?
2) Am I contributing the max to my new company's 401k?
3) Do I also contribute max to a T-IRA
4) Am I making more than $160,000 a year? If so, a Roth is not an option.

If you are not contributing the max to your 401k or T-IRA then find a way to do that first depending on your ultimate goal.

Annuities are just not very good choices at all (See http://www.fool.com/retirement/annuities/annuities.htm).

There are way to many alternatives to really make an annuity a good deal. Look at annuities vs. just regular mutual funds. The selling point of tax deferral comes at a significant cost in fees and the death benefit is rarely worth it. 401k's and T-IRA's gains are taxed at your income level when you retire. Annuities follow the same pattern. If you're income tax rate is say 31%...well...whack 31% off of your gains. You can invest in a low cost no load index fund which is very tax efficient and as long as you hold on to it for over a year (some times vary I think) will be taxed at 20%...correction...15% long term capital gain!!!

Some aren't bad like TIAA-CREF but if you're not contributing the max to your 401k or T-IRA/ROTH then an annuity rarely makes any sense.
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