Fund a 403b or in a taxable account?

[lovetobike]

I have an extra $1000-$1700 per month of disposable income. I have no debt except my primary mortgage debt. I've been fully funding my Roth IRA since 1998. I'm trying to decide if it is best to continue putting my extra money into my taxable account or if I should put it in my employer 403b. My employer contributes 9.29% of my salary to the account and I contribute 5% to the account from my paycheck. Between my 403b and my Roth, this is a little over 20% of my annual salary.

My reasons for keeping my extra $$ in the taxable account rather that fully funding my 403b are two-fold:
#1) if I invest it with my employer, my only options are to invest in TIAA-Cref in mutual funds;
#2) I can't access the money until I'm retirement age.

I believe I will be fully vested in my employer account after 5 years. So, is it better to max my 403b contribution, wait until that money is vested and roll it over to an IRA that I can manage on my own or should I keep putting $$ in my taxable account?

Is there anything else I should consider? BTW, DH and I are in a 28% tax bracket.

[yclept]

For the reasons you stated (availability of funds and broad selection) I suggest funding 401 type accounts only to the extent necessary to obtain the full employer match. If you are already getting the full match, and if you are already funding the Roth to the maximum allowed, I would suggest any additional available funds be put in a regular taxable account. It's generally true that one wants to defer taxes for the longest period possible if for no other reason than to make additional returns on what would otherwise have been taxes paid earlier. But, after all, you're going to pay taxes on the employer match deferred accounts when you withdraw them, so it's not a matter of avoiding tax altogether. It's just a matter of when they're paid. The actual amount of taxes paid depends upon one's income now versus in retirement and the tax rate now versus in retirement.
Most people have lower income in retirement than they did while working, which would argue for deferring the taxes with the 403. On the other hand, given the financial state of our multiple governments (local, state, federal), I can only see tax rates increasing.
The tax considerations are kind of a damned if you do, damned if you don't choice that will only become obvious over time.

[yclept]

I believe I will be fully vested in my employer account after 5 years. So, is it better to max my 403b contribution, wait until that money is vested and roll it over to an IRA that I can manage on my own or should I keep putting $$ in my taxable account?

Do you plan to leave this employer in 5 years anyway?
If not, is there a waiting period before you would be able to re-enroll in the 403? How much employer contribution would you be losing during that waiting period if it exists?

Generally speaking I think moneys in 401/403 type plans should be just considered money down a rat-hole -- then at 59-1/2 they hopefully become this wonderful fountain of wealth. But you have to do it to get the match. The match is everything. Hopefully there's someone at TIAA-Cref who's not totally incompetent managing the investments. If I were you I'd probably just leave it there for as long as you work where you are.
It sounds to me like you're going to have plenty of investments to manage on your own between the taxable account and the Roth to keep you busy. I found it harder (read more fearful) to manage my accounts the bigger they got. For me it became the constant struggle between deciding how much market exposure I want, whether that exposure should be long or short (or cash), and what instruments to use without getting too many eggs in one basket (a mistake I have made numerous times). In some ways having part of the portfolio on auto-pilot with a supposedly knowledgeable company relieves some of the pressure. If nothing else it gives one someone (besides oneself) to hate when things go wrong! Which they will.

[phil5185]

my only options are to invest in TIAA-Cref in mutual funds

I've never had TIAA, but I looked up TIEIX - it appears to mirror the SP500 Index, it would be an excellent choice (IMO).

So, is it better to max my 403b contribution, wait until that money is vested and roll it over to an IRA that I can manage on my own

I don't think you can do that - if it is like a 401k, the rules do not allow you to roll it to an IRA until after you retire.

There are 3 tax-status account types - posttax, pretax, and taxable. I diversify tax status, just as I diversify my investments. The reason is that Tax Code cannot be predicted (over the past 50 yrs my rate has been anywhere from 15% to 42%, cap gains anywhere from 15% to 40%, and all kinds of ever-changing rules. So, you don't want to find yourself 100% in the wrong fund at age 65, if you spread it you will only be 33% wrong. An example would be - quit taxing income and switch to a fed sales tax (about 25% in nations that do this). That would mean that your 'tax-free' Roth will be taxed at 25% when you spend it.

As for what to do - that depends on your current balance. If most of your money is in the taxable account and little in the 403b, I would put the extra income into the 403b. And vice versa.