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krow36

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  1. krow36

    Fanning The Flames Of The FIRE movement

    A FIRE article worth reading! Thank you Tony!
  2. This article left me a bit confused as to what Fidelity target date fund we should be recommending to folks. There are now actually 3 different series of Fidelity target retirement funds, two based on index funds and another using as many as 13 funds which are mix of active, index etc. funds. It turns out that Fidelity’s new Target Allocation Model Portfolios are only “available to advisors at broker-dealers, registered investment advisors, banks, and insurance companies.” This BusinessWire article has more information on this than the FinancialAdvisor article. https://www.businesswire.com/news/home/20181112005376/en/Fidelity®-Continues-Deliver-Industry-Leading-Launch-Lowest-Cost Fidelity Target Allocation Index-Focused Model Portfolios: uses very low-cost institutional index funds but not the zero cost funds. The funds’ ERs are a very low 0.04%. Of course the advisor fee will add perhaps 1% to that, depending on the size of the account? Fidelity Target Allocation Model Portfolios: uses "risk-targeted portfolios mixing active, factor, quantitative and passive mutual funds" with the goal of increasing the returns over that of the index-based target retirement funds. Up to 13 funds are used in each Portfolio, with ERs of 0.38% to 0.40%. https://institutional.fidelity.com/app/literature/flyer/9890548/fidelity-target-allocation-model-portfolios.html However for those of us on this forum, nothing has changed because Fidelity’s Freedom Index funds are still the low-cost index-based best Fidelity choice. The current ER is 0.14% for all these funds. https://www.fidelity.com/fund-screener/evaluator.shtml#!&ntf=Y&ft=BAL_TD%2CBAL_TI%2CBAL_TK%2CBAL_TG%2CBAL_TN%2CBAL_TH%2CBAL_TE%2CBAL_TA%2CBAL_TJ%2CBAL_TL&mgdBy=F&expand=%24FundType
  3. krow36

    Choosing 403B Plan, is it worth it?

    That link doesn’t work for me. I would avoid the OASBO 457 because the expense ratios are much higher than those of the Ohio Deferred Compensation. The OASBA 457 target retirement fund I looked at has an expense ratio of 1.11%. I couldn't easily find the admin fee and it's possible it's included in the fund's ER. Voya Solution 2055 Portfolio - Service Class The LifePath funds of the Ohio state 457 are funds of funds (also called target retirement funds) and very low cost with an expense ratio of 0.06%. As I mentioned above the 0.14% admin fee is very reasonable. I agree with Tony that one of these LifePath funds in the Ohio 457 is a great way for you to start investing. https://www.ohio457.org/iApp/tcm/ohio457/investments/fees/index.jsp
  4. krow36

    Choosing 403B Plan, is it worth it?

    If you use the google search on the bogleheads website, and enter "Ohio, 457, teachers" you'll get links to a number of interesting BH threads on the subject. The Ohio state 457 plan is definitely available to K-12 teachers. It should be on your district's 457 vendor list, but if it isn't, you should be able to get it added with minimum resistance. It's admirable that there is no admin fee for balances under $5000 and also that the 0.14% admin fee is capped at $220/yr. That means that for balances over $157,143, the admin fee will decrease, e.g. for a 200k balance the fee works out to 0.11% (220/200,000).
  5. krow36

    Choosing 403B Plan, is it worth it?

    The EZ Enrollment Form has a spot to specify the enrollee’s pension plan and one of the options is STRS (State Teachers Retirement System)! So maybe Ohio K-12 teachers are eligible to use Ohio Deferred Compensation? https://www.ohio457.org/tcm/ohio457/static/EZ-Enrollment.pdf It’s worth checking it out because the fees are a bit lower than those of the Aspire 403b or 457 plans. There is no admin fee for balances less than $5000! For balances over 5k there’s a 0.14% admin fee (capped at $220/yr) that is added to some very low expense ratios. The LifePath series of target retirement funds have a very low ER of 0.06%, and the Vanguard Index funds used for a very low-cost 3 or 4 fund portfolio are offered. https://www.ohio457.org/tcm/ohio457/static/OhioIPR.pdf
  6. krow36

    Choosing 403B Plan, is it worth it?

    Ohio does have an excellent state 457 plan that is called “Ohio Deferred Compensation”. It is open to state, county, some city, and state university and college employees but unfortunately I see no mention of school district employees. Just because the state plan isn’t on your district’s 457 vendor list doesn’t mean that it’s not possible to get it added. You can give them a call or an email. Aspire can be used for a 457 plan as well as for the 403b, if it’s on the district’s 457 vendor list. It does sound promising that your district is open to adding another vendor such as Fidelity or Vanguard. This can take months or even years and be well worth the effort, but in the meantime I think using Aspire would be a good idea.
  7. krow36

    Choosing 403B Plan, is it worth it?

    jwils118 has posted the same on the Boglehead forum where I posted an answer, so I'll post my same answer here. I think Lincoln Financial is different from Lincoln Investment which offers the very low-cost Participant Directed Platform, mostly to teachers in NJ. I think maybe the OP is converting the $40/yr admin fee into a percent of a low balance of say $5000, which would add 0.8% to a very low-cost ER 0.07%? Not ~1%, but not ideal. That should be incentive to contribute more and get that balance higher! After say 3 years, with a balance of $15,000, the admin fee is only 0.27%. Hopefully in the future, maxing the Aspire 403b will result in the admin fee being even more reasonable. Remember that Vanguard’s 403b plan for K-12 districts has an admin fee of $60/yr (but no added 0.15% to the funds' ER). Aspire is well-know to be a reasonably low-cost 403b vendor. I’m not familiar with D & E Financial, First Educators/ FEIC or GALIC/ Great American. The other vendors are well-known to be high-cost sellers of mostly annuity-based 403b plans. What state are you in? Many states have 457 plans that are low-cost and available to teachers. Your district should have a 457 vendor list.
  8. My wife assures me that we did max out my 403b but not hers, back in the late '70s, '80s and early '90s. We retired in '92. Other factors: kids or not? (not) working spouse with lower income? (yes) home owners or renters? (renters, still) lots of extra credits that increased my salary from the start (yes) enough years teaching that salary increased until it was maxed at 15 yrs (yes) frugal life style (yes)
  9. krow36

    The Pension Gamble

    The WA TRS 3 hybrid plan has a required employee contribution of 6% to the defined benefit part, and a minimum contribution of 5% to the defined contribution part. However, the employee can choose among about 6 different contribution schedules with the top rate being 15%. The schedule can be changed only once unless the employee changes districts. The defined benefit (pension) part results in a 1% of final salary benefit.
  10. krow36

    The Pension Gamble

    In addition to the states above, the following states have hybrid plans for non-teacher state employees as of about 2015: Georgia, Indiana, Michigan, Ohio, Oregon, Rhode Island, Tennessee, Utah and VA. So both lists are out of date. And we had that recent poorly written article on the soon to be Illinois state 457 plan that mentioned a hybrid IL TRS pension plan that is in the works. https://www.pewtrusts.org/~/media/assets/2015/04/hybrid-public-pension-plans_brief.pdf
  11. krow36

    The Pension Gamble

    Thanks Tony for posting the link to the Frontline program on pensions! It got me interested in doing some rereading on the subject: WA State’s TRS 3 plan which is a hybrid pension plan, part defined benefit (DB) and part defined contribution (DC). The following states have adopted hybrid teachers retirement plans for new hires: Indiana, Oregon, Florida, Ohio, Michigan, Rhode Island, South Carolina, Alaska, Washington and West Virginia. https://caldercenter.org/sites/default/files/wp-81.pdf It seems likely that states have been added to the list in the last 8 years. And rereading John Bogle’s 2011 book and the chapter on our retirement system: “I would argue that the shift from DB plans to DC plans is not only an inevitable move, but a move in the right direction in providing worker retirement security.” Bogle, John C.. The Clash of the Cultures: Investment vs. Speculation (Kindle Locations 4469-4470). Wiley. Kindle Edition. Bogle lists many advantages of DC plans over DB plans. Very interesting!
  12. krow36

    457b Vendors vs 403b Vendors

    If you click on any of the target retirement funds on the Vanguard link Tony provided, you'll get to the details. The 2025 fund is the "5 years to retirement".
  13. krow36

    457b Vendors vs 403b Vendors

    After retirement, most folks roll over their employer based retirement plans to IRAs. Both Tony and I did, for reduced fees, for better fund selection and for convenience. Doing it a few years before retirement also makes sense. Can you tell us what you've read that said that leaving in the employer retirement is the way to go? It just occurred to me that you may have read about horror stories where conflicted salespersons try to get folks to roll over their 401k etc. accounts into expensive, inappropriate accounts such as annuities. This does happen all too often, alas. Doing a rollover to an IRA at a low cost vendor such as Vanguard, Fidelity or Schwab is a different story. Rolling it over to a bank or to a for-profit brokerage firm such as Edward Jones would be a costly mistake in my opinion.
  14. krow36

    457b Vendors vs 403b Vendors

    The traditional IRA with US Bancorp is very likely subject to unnecessary high fees. I would move it to Vanguard where the fees are very likely a tenth as high. Empower's relationship with your old 401k is similar to Voya and the OR State 457. Empower is a subsidiary of a large insurance company. The organization hires Empower to be the record keeper and administrator, but the organization can determine the selection and fees of the offerings. If the fees (both expense ratios and admin fees) of the 401k are significantly higher than those of a Vanguard IRA (which is likely), then keeping the 401k is not a good idea. There may be a maintenance fee for the inactive 401k. Also the 401k may not offer low-cost index funds. If you moved the 401k to an IRA it would be labelled a "rollover IRA" which just means that the IRA was previously an employer based retirement account. I have read that 401k accounts have more protection from creditors than do IRAs. As Tony mentions, it is a good idea to simplify your various accounts with a single provider, if possible. The decision to move your tIRA and 401k can be put off and dealt with after you've established your 403b and are making contributions to it. Are you planning to make contributions for 2018? I think your understanding of traditional vs Roth is correct. I would go ahead and start with traditional. You can always change it some of each, or all Roth.
  15. krow36

    457b Vendors vs 403b Vendors

    Vanguard just announced that all their Target Retirement funds’ expense ratio as of 2019 will drop to 0.09% due using Institutional rather than Investor class! Hooray! This was on ScottyD’s website. http://teachersadvocate.blogspot.com I agree with Tony that a target retirement fund is all you need to get maximum diversification of all US and International stocks and bonds. And it rebalances for you when there is changes within the fund. It really makes it easy once you’ve picked your stock/bond ratio, which you can use to pick the fund (rather than using your retirement date to pick the fund). Because the 403b (and 457 and IRA) are tax advantaged, there is no tax consequence to making changes in the future. If you later decide that you are more conservative, you can change funds to reflect that change. Or if you decide to lower fees a bit and go with the 3 funds that Tony mentioned, you can do that, no problem. Kgreen4me, do you have an IRA, either traditional or Roth, and if so, what company is it with? Do you any 403b accounts? If so are they with your current district or a previous one? If you give us this information, it will help us make suggestions. Do you have an idea of about how much you can contribute to a 403b and/or a 457? Because you are over 50, you can contribute an additional “catchup” of $6000 to the basic $18,500 (for 2018—I’m not sure if it’s the same for 2019, or going up to $19,000).
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