As a teacher, my school offers a 403b. I'm not exactly thrilled with my investment options because it appears to only be mutual funds with load fees and I have only gotten a return in the 4-8% range over the past ten years. My school does not match my 403 contributions.I also have a Roth IRA with NY York Life but again appear to be stuck with only mutual funds with load fees with average to below average returns.Where does a Motley Fool put their money based on that scenario?
No load mutual funds from Vanguard and/or Fidelity are usually a good choice for your Roth IRA. Vanguard's 500 Index Fund, ticker VFINX, is a good one to begin with or consider a total market fund like VTI.It is possible to move your Roth IRA to another custodian, but often your insurance company Roth will have your money in annuities that have surrender charges until a specified date. Check out those fees and understand when they expire before moving your funds.However, note you can put this years (and until you file income taxes last years) Roth contribution to any account you want. So you can start a second Roth at a different custodian if you wish. Your total contribution to all of your Roth IRAs (and traditional IRAs if you have any) must not exceed the max for your age group, usually $5500.With no advantages for your 403b, I should think you would want to max your Roth contribution first, and then do 403b if you have the resources.
I would second the idea of opening up a new Roth or moving your Roth. New York Life is an insurance company, not a brokerage, so you may want to check that your RIRA isn't actually an annuity. If you move your RIRA or open a new account to somewhere like ScottTrade or Fidelity, you will be able to buy and sell individual equities as well as mutual funds, if that is your goal. If you want to stick with mutual funds, you may want to consider Vanguard. FuskieWho notes that as expensive as your 403b is, the amount you can contribute is likely larger than your annual IRA contribution limit...
Before you completely give up on your 403B, check and see if your school has more than one provider. Many school systems offer as many as five or more different providers for their 403b. You might find one that is more cost effective than your current plan.While a Roth is a great option, your ability to save for retirement in a tax-advantaged manner is limited by the contribution caps. You can put only $5500 a year into your Roth but you can probably put as much as ~ $17,000 a year into your 403b.
Hawkwin,You wrote, While a Roth is a great option, your ability to save for retirement in a tax-advantaged manner is limited by the contribution caps. You can put only $5500 a year into your Roth but you can probably put as much as ~ $17,000 a year into your 403b.I'm not a 403(b) expert, though my ex was a teacher. Here's a quick search tells me:1. The ability to contribute to a 403(b) is not limited by contributions made to an external Roth IRA.2. 403(b) contribution limits for 2014 are $17,500. They increase to $23,000 if you will be at least 50 some time this year. 3. 403(b) contributions appear to also be subject to what is known as the 15-year rule that allows additional catch-up contributions if you have had 15 years of service and have contributed less $5,000/yr on average.The first two are the same as a 401(k).- Joel
The ability to contribute to a 403(b) is not limited by contributions made to an external Roth IRA.Did you somehow get the impression that I suggested such? 403(b) contribution limits for 2014 are $17,500.Yes, and this is why I think one should not ignore the 403b - because your ability to save for retirement in a tax-advantaged manner is MUCH GREATER than the $5500 cap you have on a Roth.By all means, take advantage of a Roth, just don't ignore what might otherwise be available via various 403b companies.My wife (a teacher) uses both and while she has Ed Jones for her 403b, they utilize R shares which do not carry a load and the expenses are reasonable for load-waived funds (mostly American Funds).
I'd do a new Roth IRA at a different place - If you like Vanguard you can buy through Vanguard directly, or if you want more options you can do pretty much any brokerage. I use eTrade, which is OK, although I think their trade cost is a little higher than some places. You can have your NY Life IRA transferred or not, as desired. My husband likes American Century and does his IRA there - they have a lot of no load, low expense ratio funds that seem pretty good.Any money after that Roth IRA ($5500/year currently) I'd do the 403. It may not be the best, but its still a tax deferred account and specifically geared toward retirement so it will help to save money where it won't be spent easily.
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