Ask Terry Questions 403b’s invested in insurance companies annuities

403b’s invested in insurance companies annuities

By Terry Savage on July 13, 2022 | Investments

I’m a retired public school teacher. Before I retired, all of us teachers were only allowed to invest in our 403b’s with insurance annuities. I don’t know why this was, but that was something I never understood. Anyway, I guess that I did OK with them as I contributed more and more regularly over the years, but always felt that there were hidden fees that ate into my returns. Needless to say, when I retired I immediately rolled this tax deferred portfolio into a low fee mutual fund company divided into various different funds of theirs for diversification. Would you say that I did the right thing and am I right about the annuities hidden fees?

Terry Says

Well, that depended on who managed your school retirement plan. If it was TIAA-CREF, probably no problem with fees. But that’s all hindsight now. If you’re with a low-cost mutual fund company(Vanguard, Fidelity, T. Rowe Price, etc) then all you have to worry about is diversification — AND having cash on hand to take RMDs starting at age 70.

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