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Author: jamartin712 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 9947  
Subject: To keep 403b or not to keep? Date: 3/9/2000 7:34 PM
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About three years ago, My tax/accountant informed me that I should maintain a 403b for tax purposes, etc. etc. etc. Is this 403b the same as a mutual fund? What should I be looking out for in my 403b? Do I compare it to the S&P? Again, bare with me, I am new to all this investing "stuff". And so I just want to start asking questions about what is right and wrong without hearing confusion, or as my significant other would say, "Don't you know what the hell you're doing?" Thanks
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Author: TMF2Aruba Big funky green star, 20000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 608 of 9947
Subject: Re: To keep 403b or not to keep? Date: 3/9/2000 7:55 PM
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About three years ago, My tax/accountant informed me that I should maintain a 403b for tax purposes, etc. etc. etc. Is this 403b the same as a mutual fund? What should I be looking out for in my 403b? Do I compare it to the S&P? Again, bare with me, I am new to all this investing "stuff". And so I just want to start asking questions about what is right and wrong without hearing confusion, or as my significant other would say, "Don't you know what the hell you're doing?" Thanks

Hi jamartin!

A 403(b) is great for a retirement account for tax purposes on several levels. First, and most obvious is the fact that your investments grow tax-deferred, and when you're eligible to withdraw, you'll be taxed at your current rate at that time. So there's one very nice advantage.

Another benefit is that the monies that are contributed now come out of your gross pay. Therefore, while you are contributing one amount, you're actually seeing less come out of your pay. For example, you may have $100 being contributed, but since it's pre-tax dollars, you may only see something like $75 less in your net pay. Of course, your mileage may vary. ;)

Regarding the mutual fund question, it works like this. 403(b)'s must be invested in mutual funds. You cannot invest in individual stocks as you can with an IRA. However, whatever company you choose to deal with, that's up to you (and of course, whichever company your employer will allow you to deal with--you'll need to check that out). You can select as many different funds as you like also, and of course one of these may be a fund that mirrors the S&P. I'd suggest using Vanguard, if you can, simply because they offer a wide variety of funds, including the Index 500, and they have the lowest fees in the industry.

Hope this helps!

Tony
...but I still am...

Off2Aruba

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Author: Dodgeball Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 609 of 9947
Subject: Re: To keep 403b or not to keep? Date: 3/9/2000 11:22 PM
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jamartin:

Tony gave you a good overview of 403b's, but he forgot to mention that 403b's may be invested in annuities or mutual funds. Find out if your 403b is invested in an annuitiy or mutual fund, and go from there. Many times annuities contain a number of fees that can really eat into your returns.

If you can invest your 403b in an S&P 500 index fund, then you are making a very wise choice indeed.

Post back if you have more questions.

Dave

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