The New Commonsense Guide to Your 401(k): Rebuilding Your Portfolio From The Bottom up

Part VII. RETIREMENT PLANS BY OTHER NAMES

401(k) Plan Alternatives

Over the past thirty years, "401(k)" has become a household word, even a cocktail party topic. These plans have turned Americans who had never heard of a mutual fund into investors who hold conversations on the relative merits of target-date funds versus emerging-market funds versus large-cap growth.

What should you do, then, if you do not have a 401(k) plan? Millions of Americans do not have any kind of retirement plan at work. Millions more work for themselves and have some type of individual plan. Another huge group of Americans qualify for salary reduction plans at work that are similar to a 401(k) plan but with slightly different provisions. Most of these plans pre-date 401(k) accounts. They are called 403(b) plans, 457 plans, or sometimes TDAs or "tax-deferred annuities."

Such alternatives bear enough resemblance to 401(k) plans to make many of the general rules of thumb worth knowing, particularly those in the investment area. Many 403(b) plans at hospitals, for example, offer the same broad range of investment options that you would expect to find in a good 401(k) plan. Yet these plans have some quirky differences that require some extra work on your part if you are to get the most out of them.

Here are some of the things you should look into if you work at a nonprofit such as a hospital, a school, a charitable foundation, a government agency, or some other employer that uses a salary reduction plan other than ...