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Retirement Plans: 403(b), 457(b), etc

I want more information about 403(b) and 457(b) plans. My employer in my temporary job has apparently turned over financial/retirement management of its employees' contributions to Fidelity, and I will not be transferring any money from what I think is a zero-risk zero-return account (called UC DCP, which I think means University of California Direct Contribution Plan) to this account since I suspect it is loaded with fees that would eat up any accumulations.

Or so that is what I am reading.

At this point in my complicated life---facts/details about it below, for those of you who like to be tested by complicated life situations--I don't expect to hire/rent/buy the services of a certified financial planner, since my employment (and home residence) situation is not stable at the moment. Just in case you were set on telling me to find a CFP.

I just want to know what to do with this some $6000 I have in a non- performing retirement account. As paltry as it is, it still represents probably 40-50% of my net worth.

======= Facts/Details about Investor's Status

  • 48 y male, PhD in life sciences
  • Returned in July last year to USA after 15 years abroad
  • Net worth: about 00 in a retirement account and 00 in a checking account; owned "home" (a flat with total market value in USD about 0,000) in foreign country in which wife and 12 y o daughter now live but counts as zero to net worth in effect
  • Employment history since July 2007 (repatriation): abominable...keeps head above water
  • 2007 Form 1040 AGI: ,966 (effectively last 6 months of that year, since all other income was excluded foreign income)
  • 2008 income: about 00, including 2.5 months unemployment @ 0 per week
  • Changed residence 4 times since July 2007, currently paying little rent to family to hold a room until permanent employment obtained
  • Debt: no liabilities at all---who would give credit under these conditions----but no assets as well (see net worth above)
  • Anticipated major obligations in short or long term: college education support for 12 year old daughter in 5-6 years; home ownership; possibly new car ownership
  • Retirement: no plans to retire at age 65 or even 70...probably will have to work until deep-sixed the way things have looked with the year since repatriation...to my surprise...never thought a guy with a PhD would be so untouchable

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Reply to
Protein Chemist
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Because they are pre-tax and payroll deduction, these plans are usually very good places to save. But you are right to be concerned with costs. So before ruling them out, how about giving us an example or two of the fees you mentioned - tell us both the fund's name (example: Fidelity Equity Income) and the fee that bothers you.

-HW "Skip" Weldon Columbia, SC

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Reply to
HW "Skip" Weldon

I note that the "UC DCP" appears to be used in lieu of your normal social security contributions, rather than in addition to it. That

*seems* like it would be a good thing.

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Reply to
bo peep

Actually, it may be very detrimental. A person can work for many years in a job that is covered by SSec, then also work in a non-SSec job. If the person works enough, even the minimum, in the non-SSec job to earn a pension, he has now compromised his entire Social Security benefit. And even if he has never worked in a SSec covered position, if he earns a pension from a non-covered position, all his spousal benefits are lost.

Elizabeth Richardson

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Reply to
Elizabeth Richardson

"Protein Chemist"

If the $6k is in a non-performing account, why are you worried about putting it in an account which would be performing, even if there are some minimal costs? Or am I missing something here.

Elizabeth Richardson

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Reply to
Elizabeth Richardson

I would be concerned about emergencies and having money available to cover them. E.g. your employment appears a bit tenuous, so you are perhaps often living off savings. Within the retirement plans, and if possible, perhaps you should consider keeping the $6k in a money market account or CD, should you need to access it. Certainly right now, and from what you say, it seems imprudent to invest it in the stock market without taking on great risk.

you could (1) withdraw this money in an emergency and without penalty; or (2) rollover this money into a Traditional IRA, where there are provisions for emergency withdrawal (see the IRS tax code, or ask as needed), or certainly more flexibility will be available as far as where you can invest the money.

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Reply to
Elle

Why don't you confirm this "loaded with fees" aspect before you jump to any conclusions?

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Reply to
PeterL

I think the citations in your links are dated. Today one could argue that generally the only important difference between a 401(k) and a 403(b) is that the 403(b) is what certain non-profit institutions offer, whereas for-profits will, if they wish, offer 401(k)s. IOW, it's a difference in name and not substance. This is due to a 2001 law called "ERISA"; google for more info. Both plans may take advantage of the employee by way of high fees. But in the last five years or so, the fees have come down a lot, under pressure from Congress as well as the market. Significantly, mutual fund choices (without an annuity involved) are much more common in 403(b) plans today.

But why not go to the horse's mouth? Here are the descriptions of your plans:

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It appears you have to contact Fidelity for info about your

403(b)'s specific mutual fund choices. You should be able to log in at
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Reply to
Elle

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