403b Options

[Shotput]

Hello,
First post here. My wife just started her first job out of graduate school. She is eligible to participate in her 403b plan. The first year she will not get a company match but after 1 year she will get 50% of her first 6% she puts into the plan. Her company offers Fidelity funds for the 403b plan. I was considering which funds to purchase through Fidelity. I already have a 403b and a Roth through Vanguard and also some mutual funds as well. I have 70% of my retirement accounts in Vanguard's Global Equity and 30% in the S&P Index. I'm already overlapped a bit in my funds as it is, so I don't want her's to overlap too much either. Any thoughts about good Fidelity funds for her 403b. We will not be contributing more than the company match to the fund. I feel that maxing out our Roth IRA's will be better for us in the future (because we will be in a higher tax bracket upon retirement due to pensions, investments, etc.)
Thanks for the help.

[atomicrc11]

I usually just go with the Target Date Funds. Those really aren't too bad and I really don't have the time to study the market to know which funds or companies are best.

The other option is index funds. Fidelity has the Four-in-One index fund (FFNOX) which is an index of the S&P, Bonds, Extended market, and International index funds. It also has a low expense ratio. Only downside is minimum $500 investments, however if it is inside a 403b, this shouldn't be an issue.

Either of those choices would be a good place to start.

[anonymous_saver]

I would caution against having so much of your money in global equity funds. Maybe try to mix in some domestic small and mid cap funds as well. There are great options with Vanguard that I use.

Not that I have the perfect "magic" mix, but this is how my money is distributed currently (I'm 26 years old):
45% 500 Index
15% Mid Cap Index
15% Small Cap Index
25% Total International Index

Have your wife fund her Roth IRA to the max this year instead of putting money into the 403(b), until they start matching of course!! If you have extra money to go towards retirement, then of course she should put some in her 403(b), but I'm assuming that's not the case?

[jIM_Ohio]

Come up with an allocation, and apply that allocation to each account (403b, 401k, IRA). This way you can rebalance each without knowing the details of the other.

[anonymous_saver]

While Jim's idea isn't wrong, I prefer to consider allocation accross all accounts.

That way, when you adjust your allocation you don't necessarily have to do it to all of the different types of accounts. Either way, it's just a personal preference.

[atomicrc11]

Also, as in my case, I do put in a good amount to my Roth, but you can put a little money into the 403b to offset some taxes. Regardless of the match, if you need to shelter some income, it's there for you to use.

[jIM_Ohio]

While Jim's idea isn't wrong, I prefer to consider allocation accross all accounts.

That way, when you adjust your allocation you don't necessarily have to do it to all of the different types of accounts. Either way, it's just a personal preference.

30-50 years is a long time to work. Do you think you will have only one workplace account over that period of time?

I have worked in one building for 11 years. I have had 4 different employers based on aquisitions, buyouts and sell offs.

If I made an allocation decision because that first 401k had a great small and mid cap fund, the 3rd 401k in that sequence had bad mid and small cap choices (no mid cap choice at all, and not a decent small cap choice other than index funds).

My advice would be:

1) Allocate Roth and Rollover IRAs exactly as you want. If you want a certain position, make sure the IRA has it.

2) In 403b, 401k and similar workplace accounts, try to mimic the allocation in the IRA as best you can.

3) if the 401k/403b changes you can
a) probably roll the account into the rollover (which has the right allocation anyway)
b) try to mimic the allocation with new monies


Look at the IRA as the core, even though for many people the 401k type accounts will have more money initially (because of the match and higher contribution limits).

My 401k had close to 90% of my money as recent as 3 years ago. Now my 401k has about 20% of my money.

It will catch up quickly based on contribution limits (I submit 7k+ before the match) relative to my Roth (5k annual limit).

[anonymous_saver]

I am very lucky I guess as I work at a University where there are 250 investment options in my 457 plan, including my favorites from Vanguard. I only have 1 fund (500 index) within my 457 plan and diversify with my Roth IRA. It all ends up being the percentages I put in one of my previous posts. If I ever leave this employer for another, I would just roll over my money into an IRA at Vanguard (where my current Roth is at).

I'm still intrigued why the OP has so much in Global Equity. I'm not against global equity, it just seems like such a high percentage.

At least we are are all lucky enough to have jobs where we have these options!!