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VALIC is a variable annuity that has a number of funds ("subaccounts") that you can invest in. A lot of 403(b) plans are with VALIC. The overall expenses on the funds within the annuity vehicle range from about 1.75% to 2% which is fairly high. (TIAA-CREF, another variable annuity vehicle available to many in the education community, by comparison, has expenses of about .35% a year.) In addition, most VALIC contracts have a surrender fee starting at 7% and reducing to 0% over 7 years. This is not a good deal for you.

In addition to the considerable resources available on the Motley Fool, see http://www.403bwise.com/ for more information on 403(b) plans and variable annuities. See http://www.403bwise.com/storysampleletter.html for a letter I wrote for my daughter (who was in a VALIC plan) to send to her employer. The purpose of the letter is to try to get better 403(b) options made available at her place of employment. She and I have concluded that given the fact of no employer match, she is better off putting her money into a Vanguard Roth IRA rather than VALIC.

The sad reality is that many school systems offer lousy (that is, high cost) 403(b) choices to their employees. If there are other options in you husband's school system you may want to study them and see if there is lower cost option. The aformentioned site might give you some hints on action you could take to try to educate the educators who picked this plan for the school system.

jtmitch
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