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Greetings, DW525, and welcome. You asked:

<<Help. I'm trying to get my son and daughter-in-law in the folds of the Foolish. Please forgive me, because I've never had a 401 of any kind. We have on own company and have a defined benefit plan.
My daughter is a school teacher and she has a 401(?)b. (A certain amount of her pay is taken out, "tax free," but not matched, I'm not sure of the lettering that goes after this type of 401 account.) Please don't cringe, she is putting the funds in an annunity. (She's 30!)
Can she put these funds that are already in this fund in her self-directed IRA? As yet, she doesn't know what the other places are available for her 401 funds. She is having a meeting with her "advisor" next week to find out her alternatives.
Also my sister retired several years ago and bought an annuity that has earned a big 4% for the last 4 years. She is under the impression that she can't change this annunity until she is 70 1/2. Can you all tell me what she has done here? Can she change this annunity to something else? I know these were funds were from as she said her "retirement account." I'm sorry to ask you all to read between the lines, but she isn't very helpful and we live 300 miles apart. I haven't reveiwed the paper work and if I did, I'm not sure I'd know what I was looking at. Is there some type of advisor that I can tell her to contact?>>

As DW525 mentioned, your daughter almost certainly has a 403b plan. You can read about them in my Foolish Retirement Plan Primer at . They're similar in many respects to a 401k plan save they may invest in annuities and/or mutual funds only. Those are her only alternatives within the plan. If she has an S&P 500 Index fund available as one of her investment vehicles, that will probably be the choice that gives her the greatest potential cash at retirement. That's because history shows that the vast majority of managed funds fail to beat the S&P 500 Index over the long term. Also, because she receives no employer match to her contributions, she may want to consider a Roth IRA and even a taxable investment instead of her 403b. The tax deferral isn't everything. Often, someone who maintains the same discipline in an alternative investment as they do within a 401k/403b plan (i.e., regular contributions that increase as one's pay does) can beat the plan's cash accumulation after all is said and done. To determine if that may be the case you have to run some numbers of the plan versus alternatives on a tax-equivalent basis. I suggest one way to do that in Step 4 of my 13 Steps to Foolish Retirement Planning, which can be found at . You and/or your daughter may want to review that missive to see if it applies to her situation.

As to your sister, it sounds as if she bought an annuity within an IRA. Further, she appears to be confusing when mandatory withdrawals must start from an IRA (at age 70 ½) with her ability to do something else with her annuity. That can always be surrendered, even within the IRA. The insurance company, though, may impose some fee for her doing so. Surrender fees usually disappear after the annuity has existed for seven to ten years, but not always. She needs to check her paperwork to be sure. If there is no fee, then certainly she can cash in the annuity and invest in something else should she so desire. Indeed, even if there is a surrender fee, she can still do so assuming she's willing to pay that fee.

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