YOU HAVE FOUND OUR OLD WEB SITE. BE SURE TO CHECK OUT OUR NEW AND IMPROVED SITE!     Start a 403(b)     Begin by asking your employer for a list of the participating investment companies available to you. This is usually referred to as the vendor list. Many employers offer some combination of insurance company products, brokerage-sold investments and mutual funds. Many products are sold by a company representative, agent or broker. Other products may be purchased directly.   You do not need a representative to set up and manage a 403(b). These individuals, however, can provide valuable services such as retirement planning, information about state retirement plans, and analysis of other financial needs. In almost all cases you will pay more for using a representative. The key is to figure out exactly what services you are receiving, and exactly what fees you are paying for these services. Only then can you determine the true value of using a representative. If you are looking for professional help another option would be to hire a Certified Financial Planner who can be paid on an hourly basis to aid you with your 403(b).   You are also free to invest directly with companies on your own. Companies known for low fees whose products can be purchased directly include: Fidelity, T. Rowe Price, TIAA-CREF, Vanguard and USAA. Not all employers make low-cost direct investment choices available. For information on improving investment options see: Get Better Choices.   Whether you plan to invest yourself or through a representative research potential companies with an eye toward performance and cost. Many investment choices are fee laden. Pay particular close attention to total annual operating fees and the existence of surrender charges. See: Fees and How They Affect Your 403(b) for more information. Once you have chosen a company you will need to open an account with them. Some employers make enrollment information readily available and some do not. Most enrollment information can be downloaded from the internet.   After you have selected a vendor (or vendors) to invest with, you need to determine how to allocate your money. See: Allocate Wisely for information on asset allocation.   Next, determine the amount of money you wish to contribute monthly. Most companies require at least $50 per month.   Lastly, return to your employer and fill out a salary reduction agreement. This is an arrangement under which you (the employee) agree to take a reduction in salary. The amount reduced is directed to your 403(b) investment. These contributions are known as "elective deferrals" and are excluded from your income. So not only have you begun saving for retirement, you have reduced your taxable income to boot. Nice work. The key to effective 403(b) investing is knowledge. Research your options. A great source of information is our Discussion Board. Post questions about options and investments there. The truly Wise never rely on only one source so check out the three M's: Morningstar, Motley Fool, and Money for more information.   For 2008, workers are able to contribute the smaller of: 1. the elective deferral limit of $15,500 (which is unchanged from 2007), or 2. up to 100% of includable compensation (must be less than the elective deferral limit), or 3. for those with employer matches or other employer contributions, limits are $46,000 or 100% of compensation (whichever is less). The employee is still limited to the employee elective deferral limit ($15,500 for 2008). An employer can add up to another $30,500. 4. in addition, if you are 50 or older at any time during 2008, you may contribute an additional $5,000.   Note: There is a provision of the Internal Revenue Code that temporarily increases the elective deferral limit for those eligible employees. This increase is known as the 15-year-rule. This special provision increases your elective deferral limit by as much as $3,000 more than the current $15,500 limit (as of 2008). To qualify you must have completed at least 15 years of service with the same employer (years of service need not be consecutive), and you cannot have contributed more than an average of $5,000 to a 403(b) in previous years. The increase in your elective deferral limit cannot exceed $3,000 per year under this provision, up to a $15,000 lifetime maximum. If you have 15 or more years of service with your employer, it is highly recommended that you consult with a tax professional concerning the limits on your contributions. Note that if are eligible to contribute to both the age 50 catch-up and the 15-year-rule the IRS will first apply any contribution above normal limits to the 15-year-rule.     Home | Disclaimer | © 2001-2007 bWise Guys, LLC. All rights reserved.