What investment options does a 403(b) plan typically offer compared to a 401(k)?

Historically, 403(b) plans, common at schools, hospitals, and nonprofits, were dominated by annuity products sold by insurance companies, many carrying high fees and surrender charges. Many 403(b) menus still include costly variable annuities alongside mutual funds, and the choices can be worse than a typical 401(k).

Because fees quietly erode returns, scrutinize each option's expense ratio and any annuity surrender period before investing. If your 403(b) offers a low-cost index fund option, that is often the best pick. Some employers offer both a 403(b) and a 457(b); comparing their menus can reveal the cheaper path. Morningstar research has long highlighted how high 403(b) fees can cost participants tens of thousands over a career, so favor the lowest-cost funds available.