People at work have been complaining that the companys retirement plan sucks. We have 403b matching up to 3% and they put another 3percent without us having to do anything. Most people don't do it. All they have to do is open the accound and they get 3 percent free but they don't.
Now they are asking the company for 401k plans and the company refused saying we already have a really good plan and you can do it on your own if you want.
So why do they think 401K plans are so great? I'm thinking it is just them being stupid.
2007-06-15 04:45:38 · 6 answers · asked by Peggy Pirate 6 in Business & Finance ➔ Investing
401k and 403b plans are actually the same thing - 401k plans are for for-profit companies, and 403b plans are for non-profit companies, schools, government agencies, etc.
The same funds and stocks are available to both 401k and 403b plans, it just depends on who the manager of your fund is, and which funds he has selected. You can have your HR department contact the fund manager and ask him to provide a wider range of funds to choose from, or you can open your own retirement account (an IRA, which functions very much the same as a 401k or 403b, except its a personal account) at any bank or financial broker. Usually companies have access to better deals/funds than individuals can access, so it's better to go through your company plan.
Frankly, any of your coworkers who are NOT accepting the 403b and are missing out on the company's matching contributions are being extremely foolish. Would you pass up a $100 bill sitting on the sidewalk? That's what they are doing by not opening this account - the company is offering free money and they aren't taking it! They are also being reckless with their future by not investing in any sort of retirement account - IRAs and 403bs offer great tax advantages: it reduces your amount of taxable income, so you pay less in taxes each year, and the investment grows tax-free!
Your coworkers probably don't really understand what 401k are and how they work. You might to suggest some of the following books to them - they are very easy to understand and explain how small investments now can turn you into a millionaire upon retirement.
-The Complete Idiot's Guide to Managing Your Money
-The Automatic Millionaire, by David Bach
2007-06-15 05:04:20 · answer #1 · answered by teresathegreat 7 · 1⤊ 0⤋
I assume you work for a non-profit or a school system? That's almost always where you find 403B plans. There are some minor differences, but to the employees the 401K and the 403B work the same, especially with employer matching funds involved. Wikipedia has a good comparison of the two.
2007-06-15 04:58:32 · answer #2 · answered by Michael J 5 · 0⤊ 0⤋
From your standpoint, there is very little difference between a 403(b) and a 401(k). Both are before-tax retirement accounts which can hold mutual funds and which you contribute money to. When you leave your job, either one can be rolled over to your next employer's plan or a Rollover IRA.
The main difference is from the company's side. 401(k)'s are for profit organizations, while 403(b)'s are for non-profit organizations.
Unfortunately, many 403(b)s are run with high-cost variable annuities. This might be the reason that your coworkers are complaining.
2007-06-15 06:27:07 · answer #3 · answered by derobake 4 · 0⤊ 0⤋
Difference 401k And 403b
2016-11-04 12:46:06 · answer #4 · answered by ? 4 · 0⤊ 0⤋
basically rather of a corporation subsidized plan and a corporation subsidized have faith protecting the supplies a 403b is a settlement between you and the corporation offering the plan. The account is in a have faith especially for you and is not any longer shared with absolutely everyone else. based upon the kind of plan that is you will possibly no longer have the comparable point of ERISA risk-free practices. because of the fact that is somebody settlement there are often bigger costs linked with it to account for the required revenues forces and the reimbursement of them. as much as now as limits bypass and distribution/mortgage recommendations? in many cases the bounds are the comparable and the distribution recommendations are the comparable yet maximum have not got mortgage provisions.
2016-10-17 08:56:15 · answer #5 · answered by estiven 4 · 0⤊ 0⤋
Ok, for starters, saying no to free money is just plain dumb.
403(b) plans are typically reserved for employees of public schools and tax-exempt organizations and are amazingly similar to 401(k) plans in that they allow participants to make a salary deferral contributions into a tax-sheltered retirement account.
Perhaps your associates are simply unhappy with their investment elections, but are you really going to listen to people that are telling their employer they don't want that 6% FREE extra money?
2007-06-15 05:05:57 · answer #6 · answered by Dave 2 · 0⤊ 0⤋