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I've got a 401(k) with my current employer through Putnam Investments, and all but one (PVOYX) of the fund choices available to me suck out loud compared to the S&P 500 (yup--you guessed it--overtrading and high expense ratios), even though many are nearly "all-stock" funds.

I am in the process of trying to get an academic (college) position that offers a tax-deferred retirement program (like a 401(k) or 403(b)). I also have a Roth and a non-tax-sheltered account as well.


1. How available is a 401(k) option at colleges and universities? I am currently of the ignorant opinion that I'll be "stuck" with a 403(b). Is this true?

2. If a 401(k) is available at the college and offers Foolish choices (like Vanguard), can I roll my $ over from my current 401(k) into the new one w/o incurring penalties or taxes?

3. If a 403(b) is the only option, can I roll the 401(k) $ from my present job into the 403(b). I suspect that this is either forbidden or quite a hassle.

Thanks everyone.

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I don't believe you'll find a 401K at a college or university - the 403b is the non-profit equivalent. However, for all intents and purposes, they are the same: just different numbers. That also means that you'll be subject to the whims of the employer in choosing options. I work for a large private university, and we have a pretty good plan: just about any funds from Fidelity, Vanguard, or TIAA-CREF.

I don't think that you'll be able to roll your 401K into a 403B, but you will be able to roll it into an IRA, which is even better - you won't have any restrictions on your investment choices, then.

- Olivia
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I work at a state university and, while we have a lot of options, they are ALL annuities. Although some more enlighted universities do offer some mutual funds, annuities are by far the most common offering. As is fairly typical with annuities, the expenses and management fees are absurdly high for most of the offerings (in the 1.5-2.5 range, averaging around 2%). The exception to this is TIAA-CREF, which you will find at almost all academic institutions in the country: their fees tend to be in the 0.25-0.5% range, lower than most mutual funds. For the most part, their variable annuities perform quite well and are pretty stable, without a lot of turnover.

I don't know about rolling over a 401k into a 403b, although you can roll one 403b into another. But I second Olivia's suggestion about moving the money into an IRA instead. I am in the process of looking for a new job and will probably move my current 403b money into an IRA so that I have more investment options.

By the way, you may want to check out the Teachers board for folks who are more knowledgeable about the ins and outs of 403bs and academia.

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I am retired from a research house that used TIAA/CREF - a 403b plan. The TIAA is the fixed income arm -- and they own major real estate around the country. I had put 50% of my funds into TIAA and the other half into CREF. CREF is the "mutual fund" half of the organization. Exceptional performance, considering that it is much bigger than Magellan. About 60 - 70% indexed, the remainded managed. Asmentioned, very low fees.

In addition to the employer's contribution, we were permitted to contribute a matching amount. When I retired, they tried VERY hard to sell me an annuity, based on those amounts that I had in the plans. However, they claim that college professors live longer than average, so their payout was lower than that for average mortality tables.

Each school, etc., has a separate agreement with TIAA. Ours permitted rolling out all of our own contributions and all of the CREF. The fastest roll-out of the TIAA funds was 11-pay/10-year.

So, I rolled out everything I could into an IRA, and the slower roll-out of the TIAA funds is progressing (at 7.5% return on the money invested there -- which isn't bad, for a fixed income vehicle).

Although I chafed under the restrictions when I was contributing, I now must acknowledge that TIAA/CREF has done well for me. Specifically, the CREF funds have grown faster than Vanguard Index 500 would have.

Recommend that you consider this option

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Thank you both WaggleTail and OlGeezr. You both pointed out stuff I need to consider should I be offered a position this Fall. Now, I'm off to the Teacher's board....
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