The 403b Horror Show

I recently listened to a well educated teacher who had been investing in one life insurance based Annuity 403b program. He and his wife have been maxing out their retirement contributions, but they sure haven't been doing their homework.

Holy Cow! Imagine paying front end loads (5%) on the annuity, and not having any alternatives for self directing their investments. Today they are achieving "guaranteed" returns of around 3%. They couldn't figure out how to roll this into other vehicles without taking a distribution. Their commission based Financial Advisor sure won't tell them.

Imagine not knowing that you can roll your 403b investment from one vehicle to another with no tax consequences. Of course the danger of the Annuity investment is the penalty on withdrawal as well as a possible tail end load!

Teachers of America, beware, your 403b investments need to be carefully managed. Please research and educate yourself before committing 25 years of retirement investments into a 3% guaranteed return.

The author has managed 403b programs for public schools and colleges and never ceases to be amazed at the greed of many so called Financial Advisors. Imagine one College professor who was talked into rolling his 403b from investment A (an Annuity) into investment B... another annuity! and then seeing his first statement in his new investment wondering where 6 1/2% of his investment principal disappeared to! No one had warned or advised him of the significant front AND back end load that he had committed to.