TMFPixy will give you a better answer, I am sure, but here goes.Your 403b is similar to a 401k, in that funds saved are tax-deferred. That means you only pay tax on withdrawn funds. An annuity works the same way. However, I believe you can cash out your 403b money and roll it into a self-directed IRA, if you leave your job or retire. You can't do that with an ordinary annuity, since it is not a retirement plan, merely a "tax-advantaged life insurance vehicle" (I read that somewhere). You can purchase an annuity within your 403b, which will let you cash out and roll that money into an IRA if you wish.Zev
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