403(b)

I can't remember the letters.

403B.

Is it automatic, or do you get a say in it?

I get a say in it.

Inside was a thin file folder labeled in Allison's rapid, slanting script, Retirement Legal.

On the ledger printout, a withdrawal, $35,000 from her 403B dated the previous week.

The funds had vanished from the account.

Underneath, a business card, Rachel Levi, J.D., Confidential Counsel, I.P.

You are doing everything pre-tax.

So your 403B, your 457Bs, your 401Ks, if there's a 401A in there, you get a solo K in there.

If you get a cash balance plan, all of a sudden, a lot of things are tilted towards that pre-tax.

So for a lot of you as high income physicians, you're doing it right.

And you also have the downstream impact.

That means you need less money from maybe your 403B or your IRA or your after-tax assets.

And those are going to grow if markets grow.

But it will give you a sense for which one is right for you.

Thank you for taking my call.

My question is, I am faced with the decision of a pension plan that's being stopped at my employer, and they've given us the option to roll it into our 403B that we have with them, or taking a lump sum cash payout, which I understand has fees and penalties, taxes, those type things, or doing the annuity where you have the monthly payment.

And I think that also has fees.

My first instinct is just to roll it over to my 403B.

And then I got to thinking the closer it gets to the date of decision, should I take a lump sum and maybe pay off debt?

Hmm.

You can only put so much in a tax deferred environment each year.

And that's a real asset because as it's invested and as it grows for the future to be available in a retirement season of life to supplement Social Security or to be used for extra spending or maybe specifically for health care related costs, probably your biggest risk in that season of life.

All right, today we're talking about a question a lot of you in healthcare and academia are sitting with right now around retirement.

Should I annuitize my 403B when I retire? You've spent decades putting money into that account, maybe into more than one of you, if you've worked at more than one hospital or university.

Now someone's handed you a form asking you to make one choice that you can't take back.

So let's get into it, Amy.

Should someone annuitize their 403B when they retire?

My favorite answer, it depends.

I

Annuitizing means trading your account balance for a guaranteed paycheck for the rest of your life.