My wife is switching jobs and has about $6K in her 403B which is invested in an annuity..We are thinking of rolling it over to an IRA because of the insanely high fee of $150 per year.. The negative is that the surrender fee is about $800...What would we be better of doing???? Paying the $150 fee each year, or taking the one time hit of $800???

No one can really answer that question before we know how long your wife has before retirement. Most likely the answer will be yes roll it over into an IRA (better returns/less fees), but no diffenative answer is possible without knowing the time frame.

Let's see.

$800 ~ 5 years * $150. assuming the growth rate is the same. Will the $800 ever go a way?

How has the 403B been doing compared with the market i.e. a Total Market Index/ S&P 500 Index fund? The cost of management will be lower in a no-load index. The lowest cost provider for index funds is Vanguard.

150/6000 = 2.5% management fee.
800/6000 = 13.33% Surrender fee.
Index management fee .5%
assuming equal performance the breakeven point is 6.67 years.

If the $800 fee will not go away and
if the index funds have done better than the 403b.
Logic would suggest a rollover.

First off, we are both 32 years old so this will be a long term investment.. If I roll it over, it will be a self directed IRA and will be invested equally in two small cap stocks.. Right now this represents about 15% of our portfolio..

As for the surrender fee, it decreases with time.. Really not sure at what rate, but I assume its an equal amount each of the 7 years...

Thanks for the replies..This was a plan we got some bad advice on (not told all the details) and now we are trying to get out with as little damage as possible...

Ok, I looked to make sure, here are more specific details... As of now, the account is worth $5730 and the surrender value is $5200..The inception date is Nov. 2000 and its a seven year contract..

The negative is that the surrender fee is about $800...What would we be better of doing???? Paying the $150 fee each year, or taking the one time hit of $800???

Ok, I looked to make sure, here are more specific details... As of now, the account is worth $5730 and the surrender value is $5200..The inception date is Nov. 2000 and its a seven year contract..

so only $530 to get out of this? and it costs $150 a year to keep it in investments you're unhappy with?

I think I'd rollover to an IRA...unless you plan on retiring or dying in the next year or two to make keeping it where it is more cost efficient.(even so...I think I'd STILL roll it over, just to be able to invest in something I'm comfortable with)

there's my 2 cents
;-)

gahdzila