401k vs 403b

MoneyenoM · #1 (**permalink**) 01-31-2008, 08:23 AM

I have my 401k with previous company. After I moved to a new company (non-profit org), it has 403b.

- What is different between 401k and 403b? Many told me that they are the same, but I feel doubt a little bit.

- Can I combine a new 403b to my current 401k? or they need to be separately?

- If I move to another company that has 401k again in the future, Am I going to end up with 2 accounts of 401k and one for 403b? Would it be possible to consolidate into one account? I don't want to track many accounts.

Please help this newbie.

Thanks in advance

jIM_Ohio · #2 (**permalink**) 01-31-2008, 09:03 AM

I would roll the 401k into a rollover IRA
I would use the 403b the same as the 401k. Is there a match?

if you leave this job, roll the 403b into the rollover IRA.

They are similar. I am sure the fine print might have some differences. Money goes in tax free, gets taxed at ordinary income rates in retirement. The rest is just finer details for withdraw, I would assume.

disneysteve · #3 (**permalink**) 01-31-2008, 10:25 AM

I agree with Jim. The 403b and 401k are essentially the same. The only difference is that a 403b is only offered by a non-profit institution - schools, hospitals, religious organizations, etc.

I also agree with rolling any old money into an IRA. That way, you have full control of the money and have an unlimited range of investment options.

kilapapipa · #4 (**permalink**) 01-31-2008, 10:25 AM

In my experience a 403b is for non profits but functions the same as a 401k. In our 403b(education), there is no match like a 401k in a profit based company so that is a downside to my 403b.

MoneyenoM · #5 (**permalink**) 01-31-2008, 12:20 PM

Thanks a lot guys

I will follow Jim's recommendation

BabyBear · #6 (**permalink**) 02-02-2008, 08:41 PM

I worked for a company for 9 years that had a 401(k)--no match.

I was terminated (I wouldn't change the books to show a profit......

) and that same day they sent a letter stating I HAD to roll it over immediately or they would send me a check.

I now work for a not-for-profit and have a 403(b). I was offered the job 3 days after being let go from the other company. So, I sent the first company a letter; told them NOT to send me a check and that I would get the info to them that they would need to roll it over as soon as I could. Thankfully, they waited and let me roll it over. I put it in a new Vanguard account that is different than the one my 403(b) goes into.

And I now get a 3% match as well!! Better than what I got before!! And it is very, very flexible and easy to use.

Broken Arrow · #7 (**permalink**) 02-03-2008, 08:52 PM

I've never had first-hand experience with 403(b), so please take this with a grain of salt. But I read something once suggesting that, while the tax umbrella is nice and all, the investment options by some of these institutions that handle these 403(b)s are not always very good. By that, it claims that much of the money could be invested in unnecessarily complex and redundant tax-deferred annuities.

In any case, the point is to please look into your investment options as well. If they're not that good, I would see if there is a way to get it transferred out to a dependable 3rd party brokerage....

disneysteve · #8 (**permalink**) 02-04-2008, 07:58 AM

Quote:

Originally Posted by Broken Arrow

I've never had first-hand experience with 403(b), so please take this with a grain of salt. But I read something once suggesting that, while the tax umbrella is nice and all, the investment options by some of these institutions that handle these 403(b)s are not always very good. By that, it claims that much of the money could be invested in unnecessarily complex and redundant tax-deferred annuities

This can be true. The teacher plans are notorious for this. Other 403b plans are just fine, though. My wife was in one when she worked for our synagogue and could invest in any Oppenheimer funds and they had a good variety, plus the loads were waived for plan participants.

anonymous_saver · #9 (**permalink**) 02-04-2008, 08:57 AM

Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs

Here is a link that I found that has a table that somewhat easily shows the differences between 401(k)'s, 403(b)'s, and 457 plans.

I work for a public University, and therefore have the option to put the full amount allowed by the IRS in a 403(b) and a 457 plan. I've chosen the 457 plan for now, because it is a bit more flexible with withdrawing money. Each of the 403(b) and 457 plan at my work have fabulous options to put your money into. I know that I am very lucky.

MoneyenoM · #10 (**permalink**) 02-05-2008, 12:08 PM

Quote:

Originally Posted by Broken Arrow

I've never had first-hand experience with 403(b), so please take this with a grain of salt. But I read something once suggesting that, while the tax umbrella is nice and all, the investment options by some of these institutions that handle these 403(b)s are not always very good. By that, it claims that much of the money could be invested in unnecessarily complex and redundant tax-deferred annuities.

In any case, the point is to please look into your investment options as well. If they're not that good, I would see if there is a way to get it transferred out to a dependable 3rd party brokerage....

It is not good at all. I got only 3% match for 403b. If I leave the company by 5 years of service, I have to forfeit employer contribution portion. That's suck!

Snave · #11 (**permalink**) 02-07-2008, 08:56 PM

Quote:

Originally Posted by MoneyenoM

I have my 401k with previous company. After I moved to a new company (non-profit org), it has 403b.

- What is different between 401k and 403b? Many told me that they are the same, but I feel doubt a little bit.

- Can I combine a new 403b to my current 401k? or they need to be separately?

- If I move to another company that has 401k again in the future, Am I going to end up with 2 accounts of 401k and one for 403b? Would it be possible to consolidate into one account? I don't want to track many accounts.

Please help this newbie.

Thanks in advance

My wife was a teacher and had a 403B. Basically, it is the exact same. As for your 401K, you may be able to keep it where it is, or you can roll it over to an IRA. This is fairly simple. I have actually rolled mine over twice. I just called my plan provider and they walked me through it. I think they made me read the rules and say I understood them. Then, they sent me the 401K money in check form and then I had 90 days to transition it to an IRA.