What you should know

When considering investing in a 403(b) program, there are several points you should investigate. If you already are in a TSA, you'll want answers to these questions so you can evaluate your account.

• Will I be penalized for pulling out my money? This is probably the most important question you can ask. If there are surrender fees in the first five, seven or 10 years, you should know that. If the vendor does not allow "premature" withdrawals or transfers, you want to know that, too. What if you switch employers?
  
  There are also things called "two-tier" annuities that charge huge penalties (up to 20 percent) if you take your money out in a lump sum rather than through annuitized payments. As a general rule, most advisors recommend avoiding two-tier accounts.

• What kind of investment choices will I have? The difference between fixed and variable annuities has been explained above. In variable annuities the underlying portfolio is mutual funds. If you are talking to an insurance agent, these will probably be called "subaccounts." You'll want to know the performance record of these funds and the comparative record of the annuity. How does each stack up against a popular, easy-to-find benchmark or index?

• What are the annual fees and how are commissions being paid? Here you want to know the sum of all annual fees. Those familiar with mutual fund investing may know that 12b(1) fees can be more corrosive to long-term investments than front-end loads. That's because the erosion of your earnings every year takes a greater toll than a single, larger, up-front fee. Same thing here. If the fees you'll pay each year are out of whack when compared to the typical mutual fund, stay away, You'll just be chum in the feeding frenzy of the sharks.

If you are buying from an insurance company, you need to know how the insurer is rated by the nationally known rating services: A.M. Best, Moody's and Duff & Phelps. The security of your investment is no better than the strength of the underwriting company. If your insurer declares bankruptcy, what happens to your annuity?