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I have a question concerning a state retirement plan. My wife is a retired teacher in Alabama. She has a state retirement plan (RSA-1) that is an IRS Section 457 Deferred Compensation plan. The plan has two options where members can put their money. One option is a Fixed income plan and the other option is a Stock Investment Option that is a S&P index Fund.

About half of her money is in the Fixed Income Plan which consists of Money Market, GNMA, US Agency Securities and Collateralized Mortgage Obligations. The total returns for the fixed income plan have been as follows: (Fiscal Year is Oct-Sept)
4.39% for 2011
8.01% for 2010
10.75% for 2009
-0.06% for 2008
7.96% for 2007
For January through April the Current Year To Date yield is 1.76%.

And about half of her funds are in the Stock Investment Option. The returns for the last 5 years are: (Oct-Sep)
1.04% for 2011
9.92% for 2010
-5.98% for 2009
-21.43 for 2008
16.03% for 2007
For January through April the Current Year To Date yield is 11.73%.

We are 15 years from retirement and have several other sources of retirement income. I am a small business owner with several businesses so we can tolerate risk.

My question is that I’m considering moving the funds in the fixed income plan into the Stock Investment plan because I feel the yield for the next few years will be so low in the fixed income plan. She is allowed to change the distribution in her plans once a year.

There is one more option – we can move the entire funds and roll it over into a an IRA elsewhere where we would have more than just the two options.

I’m looking for opinions from others. What do you think is a wise move?

Thanks. Ken
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