AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner practitioner and have performed fee only investment management and financial planning services for the past 11 years.
Question I read your response regarding ETF's in a 403(b). I would like to do this also, but I was told that it is not legal. I looked for other opinions on the matter (that's how I came across your previous response). The only other thing that I had read was that you cannot invest in individual stocks within a 403(b). Since ETF's trade like stocks, but act like index funds, I am still not completely clear whether or not they are allowed in a 403(b) plan.
Please let me know your thoughts on the matter - and if ETF's are allowed, could you cite some document that I can tell my 403(b) vendor about? Thank you.
Answer My understanding is that only mutual funds can be part of the investment choices in 403b's, not ETF's. However, there may be more recent legislation that has changed this that I am not aware of. In either event, if ETF's are allowed in 403b's it is up to the custodian(s) of the 403b have ETF's on their platform. I have not seen them as of yet in the 403(b) world, which I am sure is for administrative reasons as much as anything. They are becoming available in certain 401k platforms. I hope this helps.
