MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Roth 403b - worth it with the loads and fees?

hawkmountain
edited October 2012 in Fund Discussions
Hi all!
Our SIL got a job in a school district. They offer a regular 403b and a Roth 403b. The offerings approved by the Board are limited to 7, you guessed it, insurance and annuity companies. A 403b wrapped in a TSA...geez, these guys oughta be in jail.
Anyway, is it possible the advantages of a Roth 403b will eventually offset the loads and mortality & expense fees charged by these characters? SIL is age 37.
My gut reaction is to advise a pay- tax -as -you -go plan, as an independent investor. Max the Roth IRA, then buy tax efficient funds, then some MLPs. Or something to keep the tax bill down.
My kind friends at MFO, I ask your comments on this dilemma.
best, hawk

Comments

  • Pangolin
    Need a key piece of data: is there an employer match involved? If yes, is the match the same for the regular 403b and the Roth 403b?
  • hawkmountain
    No, there is no match for either one.
  • Pangolin
    With no match, my inclination is to use the Roth IRA and Roth 403b vehicles while you can, as I think they'll be outlawed eventually, e.g.:

    http://articles.latimes.com/2011/apr/10/opinion/la-oe-scorse-roth-iras-20110410




  • msf
    I'm looking at a prospectus for a relative's 403(b). Including the annuity fee, the ER for some of the funds are: American Funds EuroPacific Growth 0.65% (M* 5* gold), Western Asset Core Plus Bond 0.55% (5* silver), DFA Emerging Markets 0.71% (4*), T. Rowe Price Large Cap Growth 0.67% (4*), etc.

    It also offers a real estate account - not a REIT account, not a securities account, but a portfolio that owns real estate directly. You can't get that in a mutual fund - it's illegal (thanks to Investor for pointing this out).

    That's a kind of plan I'd live to have. You provided no details of your son-in-law's plan, so you may be seeking confirmation of sweeping generalities. But that's all they are - generalities; the devil is in the details. There are lots of good 403(b) annuities (and lots of bad ones). The first step is to take a close look at what the plan provides.
  • hawkmountain
    Thanks, msf and pangolin. Often wondered when the tax ax will fall on roths. After all, soc sec wasn't supposed to be taxed either...It is possible the ax will fall first on inherited roths, then conversions, then finally contributions and the program will cease going forward.
    The details of the Roth 403 b will emerge soon (he just got this job) and we will see what funds these insurance companies use. I hope they are as reasonable as pangolin's examples.
    Thanks again.
  • FundStudent
    Reply to @Pangolin: Good article - thanks! There will probably be lots more Roth conversions in 2012 because of the tax rates going up in 2013. Politicians are short-sighted - they want money to spend now and dang the future. I don't think Roths will ever be outlawed.
Sign In or Register to comment.