Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Dump the 403b?
Old 02-28-2005, 08:31 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Dump the 403b?

Having just finished our first married-filing-jointly return, I see our federal tax rate was about 7.5% along with a 6.1% california rate.

My wifes been pushing up her 403b contributions, as in her former 28% tax bracket that made a lot of sense. In our current tax environment, I'm not sure its worth the tradeoff. Her 403b only has a small selection of funds, none of which I'm thrilled with, and all of which carry ~1-1.5% expense ratios.

There were enough options for me to cobble up an AA mix of s&p500, broad bond, reit, small caps, mid caps, and a smidgeon of global bonds. But wow, the expenses are sky high and except for the s&p500 index its all managed funds with lagging returns.

I'm terribly tempted to have her drop the 403b contributions completely. At that point her income would more than satisfy our monthly cash requirements, allowing me to completely stop withdrawing from our portfolio with the exception of major capital purchases or special expenses.

We'd also get to do our investments in the fund choices I prefer at 1/5th the costs, and withdraw that money anytime without penalties as opposed to waiting until we're 59.5 to start withdrawing from the 403b's. All with after tax money though, which I think is our only downside. I would still fully fund both of our Roth accounts each year, and her hospital contributes to an annuity pension setup that should pay her a nice sum when she retires.

Any holes in that plan?

And yes, its pretty sweet to marry a nurse with a purse
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Dump the 403b?
Old 03-01-2005, 07:39 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Dump the 403b?

Sounds about right to me. The only thing to check is whether should would pass up any employer matching funds. If so, I would probably put in just enough to get the match.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 09:14 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Re: Dump the 403b?

I think you are right to question the usefullness of 403bs. My wife is a teacher and her 403 program has few choices, no match, high fees and is almost ununderstandable. She will be retiring next year and I expect to have her roll it over into a Vanguard fund. The only good aspects of her 403 are that it was "forced savings" and it did reduce our taxes up front. Go to 403bwise.com for good information. A decent 401k is generally better.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 09:41 AM   #4
Dryer sheet aficionado
 
Join Date: Jan 2005
Posts: 46
Re: Dump the 403b?

Ah, the lovely 403(b) plan. *Somehow the insurance industry weaseled their way into this field. *People talk about wanting to pay teachers more. *Heck, if they did away with high-fee 403(b) plans, teachers would get a huge raise!

Here's a cool website about 403(b) plans that you might want to check out: http://www.403bwise.com/index.html. *This guy has done a nice job with his website.

JLP

http://AllThingsFinancial.blogspot.com
JLP is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 10:39 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Dump the 403b?

The 403B plans do have more liberal withdrawal rules than 401Ks or IRAs. My understanding is that you can begin withdrawing at any age. All you have to do is declare retirement. That could be an advantage, depending on where the remainder of your funds are.
__________________
sgeeeee is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 11:00 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Dump the 403b?

Thanks SG, I didnt know that about 403b's. I presumed they worked like 401ks only with lousier investment options. I need to read up on that suggested web site a little more before deciding. I'd love to roll it over into vanguard, but I remember something about a sizeable withdrawal penalty. Might be worth it.

Theres no employer matching on this 403b, the employer contributed separately to an annuity pension fund that we can control the investments on, but they're also very limited. On that one, we have 100% of it in the American Balanced Fund...a typical 60/40 with a reasonable set of costs.

I like the idea of being able to place our taxable portfolio into autopilot and not taking any more money out of it and just use her income as our cash pool. We let the taxable port grow for 5-7 years and we can easily afford for my wife to quit working, if thats what she wants. Right now she loves her job and wants to keep doing it. Since she has asthma, our medical insurance would have to go the cobra-hippa route with blue cross and hope we can force them to keep the policy, or go with the state high risk pool. I'm betting thats a little spendy.

Our tax profile is still likely to remain low...while we had some extra property taxes this past year between two principal residences and a 3500 special assessment to bring us "city water" in place of our well...but we made ourselves a new deduction and he's a lot cuter.

Besides, we were starting to look like we'd be a little TOO flush when we hit 60. By then, my IRA would be over a mil (projected) in todays dollars, she'd have about 750k in todays dollars in her 403b, we'd have about 450k in Roths, plus the taxable portfolio that I've been living on, plus her pension which would run about 25k a year in todays dollars (COLA'd), plus our social security (if any).

Maybe we live a little better today instead of rolling in it in 20 years.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 11:09 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Dump the 403b?

I may be wrong about the 403B withdrawal rules. I've not had to do any research into these myself and am only repeating what I heard from a friend the other day. If they are right, it might be worthwhile to look into.
__________________
sgeeeee is offline   Reply With Quote
Re: Dump the 403b?
Old 03-01-2005, 06:42 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Dump the 403b?

Even if she's not a teacher? She's in health care.
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
403B Roth or Traditional drboston FIRE and Money 1 12-29-2006 10:32 AM
Are Scholl District 403(b) Plans really this... jdmorton Young Dreamers 13 08-15-2006 11:25 PM
Roth 403b AND Roth IRA? macdaddy FIRE and Money 3 07-05-2006 07:25 PM
403(b) help? brewer12345 FIRE and Money 10 07-01-2005 02:06 PM
403(b) vs. 457(b) Differences WanderALot FIRE and Money 3 01-18-2005 01:55 PM

 

 
All times are GMT -6. The time now is 09:08 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.