No. of Recommendations: 1
I've included my old post below. I changed my answer to #1 for you Nick...;-)

I noticed Nick provided you with some great's another link for you...

If you provide some more details on your 403b plan we could perhaps help further...

The annuity in your 403b plan doesn't offer any advantages that I can see but I may be missing some details...I would expect that what it does offer you is a larger fee structure...

old post below...

"1. Leave it where it is."

I wouldn't...I like to add to my investments. Won't kill you to leave it there as it will grow.

"4. Roll it to an annuitity"

DON'T, DON'T, DON'T, DON'T, DON'T...This is abominable choice. I'll explain later.

"2. Roll it to a Roth IRA"

Always a good choice but as indicated you need to roll it to a T-IRA first. See pub. 590 for more details. It's written fairly well.

"3. Roll it to the new company"

Depends on the quality of the funds in the 401k. Many 401k's are not very good passing up free money from your employer if they offer it (and they should) is a big mistake.

Not sure of your situation but you might want to ask yourself a few questions...

1) How am I saving today? Am I on target for retirement?
2) Am I contributing the max to my new company's 401k?
3) Do I also contribute max to a T-IRA
4) Am I making more than $160,000 a year? If so, a Roth is not an option.

If you are not contributing the max to your 401k or T-IRA then find a way to do that first depending on your ultimate goal.

Annuities are just not very good choices at all (See

There are way to many alternatives to really make an annuity a good deal. Look at annuities vs. just regular mutual funds. The selling point of tax deferral comes at a significant cost in fees and the death benefit is rarely worth it. 401k's and T-IRA's gains are taxed at your income level when you retire. Annuities follow the same pattern. If you're income tax rate is say 31%...well...whack 31% off of your gains. You can invest in a low cost no load index fund which is very tax efficient and as long as you hold on to it for over a year (some times vary I think) will be taxed at 20%...correction...15% long term capital gain!!!

Some aren't bad like TIAA-CREF but if you're not contributing the max to your 401k or T-IRA/ROTH then an annuity rarely makes any sense.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.