Jump to content
bWise Forums


  • Content count

  • Joined

  • Last visited

Everything posted by krow36

  1. bluejay1975 has posted about her/his school district’s 403b457 plan on the Boglehead forum. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=234118 and PMs. This district is a member of a consortium of 39 districts and instead of each district having a number of vendors, now they all have only one—VALIC. The districts were able to reduce costs significantly and also increase participation. Each school in the district is assigned an advisor that is said to be salaried and not working on commission. The consortium is in Missouri and is called Cooperating School District Retirement Trust (CSD-RT). This website explains the new plan to employees: http://1hmfgi1zzk1c24sh788c5ct8.wpengine.netdna-cdn.com/wp-content/uploads/sites/5/2015/10/Frequently-Asked-Questions-CSD-Retirement-Trust.pdf Funds: http://1hmfgi1zzk1c24sh788c5ct8.wpengine.netdna-cdn.com/wp-content/uploads/sites/5/2017/05/CSD-Retirement-Trust-Investment-Options-03.31.17.pdf Vanguard Institutional Index Inst VINIX, ER 0.04% Vanguard Small Cap Index Admiral VSMAX, ER 0.08% Vanguard Total Intl Stock Index Admiral VTIAX, ER 0.07% Vanguard Total Bond Market Index Admiral VBTLX, ER 0.06% Vanguard Target Retirement funds, ER 0.13% to 0.16% also 22 other index and managed funds https://www.edplus.org/cms/lib/MO01928355/Centricity/Domain/101/Retirement Trust Employee Benefit That Benefits All.pdf This website promotes the consortium plans to district administrators. The Investment Management Fee as of 5/31/17 is 0.13% and there’s a $20 Annual Fee. A 3 Fund Portfolio could be had for a total of about 0.20% and $20. Using a Target Retirement fund would total about 0.28% and $20. This plan is about 2 years old and the average costs have been reduced from 1.57% to 0.45% plus $20, while participation has increased by $105M. I realize this can’t happen in states like CA and WA where the insurance lobby has bought laws that prohibit K-12 districts from having a single vendor. For the rest of the country, doesn’t this sort of organization look promising?
  2. TIAA, FIdelity and NEA (Security Benefit)

    It probably won’t be easy. First find out the name of the VALIC product. CA requires that all vendors list their plans and their expenses on 403bcompare.com. If the vendor’s plan isn’t detailed on 403bcompare, it can’t be used. These plans are usually generic plans that are also offered in other states. Hopefully 403bcompare will give an idea of the vendor’s fees in your district. The mutual funds that VALIC uses can be found here: https://www.valic.com/prospectus-and-reports/mutual-funds In the past, 403bcompare listed the funds and their expense ratios. Unfortunately that information now seems to be missing. VALIC 403b options from https://www.403bcompare.com/vendors/1117#/productlist Fixed Annuities Fixed-Interest Option, no surrender charge Long-Term Fixed Account, with surrender charges VALIC ProFlex Annuity, with surrender charges http://nesteggbuilders.com/pdf/broc/Valic-proflex-broc.pdf Variable Annuities Portfolio Director Choice Series 5 Fixed and Variable Annuity, with surrender charges Portfolio Director Combination Fixed and Variable Annuity, with surrender charges Mutual Funds Profile Retirement Program, Custodial fee = $40/yr, Management/Wrap fee = $100/yr, average ER = 0.89%, no surrender charges VALIC Group Mutual Fund Product, Management/Wrap fee = $100/yr, average ER = 0.66%, no surrender charges
  3. Aspire?

    Dan and Scott did an April, 2016 podcast #26, where they suggest that NEA started Direct Invest because of a discussion with Dan and Scott. (starts at minute 22.) You could say that 403bwise is directly responsible for Direct Invest.http://hwcdn.libsyn.com/p/5/8/e/58e99ec31b570c53/2016_26_ntsa_nea_blues.m4ac_id=11743849&destination_id=384439&expiration=1512763375&hwt=3cc3d176e1628e26b04e20d141dffcb3 Dan now says Direct Invest should not be used because that would “reward” SB. Does making use of SB’s Direct Invest financially benefit SB significantly? I don’t think so. Does it increase their ability to take advantage of their usual K-12 prey? I don’t see how because Direct Invest is internet based, not rep based. The low Admiral class ER fees go to Vanguard with the exception of the 12(b)1 fee of 0.01%. The administration fee of $25 per year is very low compared to other vendors (and is waived for accounts over 50k). Who is actually paying for such a low cost plan? NEA must be using some of the over 2M per year they receive from SB for the use of the NEA name on their expensive Valuebuilder products. The cost of running Direct Invest is supported indirectly by the many teachers paying very high cost of the other SB 403b plans with NEA attached titles. I say that using some of the >2M/year to support Direct Invest is a good use of those funds. I agree with Ed that if a 403b plan is very low-cost and has a small but adequate number of Vanguard Admiral class funds, we should consider it a good plan and worth using (and recommending).
  4. TIAA, FIdelity and NEA (Security Benefit)

    radase, in your new thread we learn that Fidelity is only available via Aspire ($40/yr +0.15%). That leaves TIAA and Security Benefit’s NEA Direct Invest. Dan is “dubious” about NEA Direct Invest. I see that there is two meanings to “dubious”.  Dan, are you saying you are dubious (hesitating or doubting?), or are you saying that the SB NEA Direct Invest is a dubious (morally suspect, of questionable value?) 403b plan? dubious 1. hesitating or doubting 2. not to be relied upon; suspect *morally suspect *of questionable value
  5. Tiaa Ny Times Article

    Dan and Scott's recent podcast on TIAA's problems: http://directory.libsyn.com/episode/index/show/teachandretirerich/id/6006291
  6. Tiaa Ny Times Article

    Gretchen Morgenson has a long article in the NY Times today on TIAA: https://www.nytimes.com/2017/10/21/business/the-finger-pointing-at-the-finance-firm-tiaa.html?_r=0 Maybe the article is not all that relevant to the K-12 403b world, in which TIAA isn't a big player. It is very relevant to the university 403b world. My wife has kept her 403b at TIAA, Traditional and CREF Stock Fund, although I’ve long thought that she should move it to Vanguard with the rest of our portfolio. It’s her decision of course. The Traditional is the kind that has restrictions on withdrawal and the CREF Stock fund has an ER of 0.43% (class R2). I find the TIAA statements very frustrating—I’ve been spoiled by Vanguard and Fidelity I guess. Insurance companies have challenges I guess. It looks like her Traditional is paying 3.6%/yr based on the last quarter. I don’t think she has ever talked to a rep, although there have been a number of offers as you’d expect. We’ve thought about making an appointment, but never got around to it. Since she’s set on TIAA, and those 2 funds, what’s the point? It’s less than 10% of our portfolio. So the NYTimes article isn’t all that relevant to her experience, other than the discussion of ERs.
  7. How do expense ratios work?

    Because your balance can change over the year, let's say the average balance was $100,000. A 1% ER would result in $1000 cost per year. If instead you were invested in an index fund with an ER of 0.05%, that fund would have cost you $50. So compared to a low-cost index fund, your fund with ER of 1% is costing you $950. That $950 goes to the mutual fund company instead of to you! Studies have shown that low costs is one of the best indicators of superior rate of returns. Vanguard has an excellent tool for comparing the costs of a non-Vanguard fund with that of a Vanguard fund: https://personal.vanguard.com/us/FundsCostCompare You can change all the inputs if you scroll down on the final page and recalculate .
  8. How do expense ratios work?

    A mutual fund holds a number of individual stocks, whose value is determined daily by closing values of the stock market. The mutual fund's expense ratio is the annual percent it reduces that value by, daily, to calculate the fund's net asset value (NAV). The value of your fund that you see on your on-line account is the number of shares you own times that NAV. In effect, you pay it daily.
  9. Which 403(B) Is Best?

    You are making progress! After Security Benefit processes your Direct Invest application form, you will be able to make progress with your district’s HR office. Because your district seems to be very uninformed about the AEA option, you may have to call SB and find out if there’s a problem with the district (and visa versa?). The very first step is getting the district and SB to agree about their 403b relationship. Yes, it’s ridiculous that this is not already all worked out, but in the K-12 403b world, it’s all too common that it’s not. I agree with Ed’s many points. It would make sense to concentrate on the SB Direct Invest 403b and an IRA and consider the state 457 plan later. Probably your 403b, his 401k and IRAs for you both will be more than enough plans for the time being. The 457 plan is somewhat opaque and I’d like to compare their funds’ rates of return with those of equivalent Vanguard mutual funds. Although they claim that there are no fees, there has to be fees that somebody pays?? The state could pick up the tab, but it would be unusual if the employees didn’t pay for at least some of the costs. If you want to start contributing to an IRA, you can do that on your own. Do you have $1000 to start with? Vanguard has a minimum of $1000 for their Target Retirement funds. If you don’t have that much saved up for your IRA, just save it up in your bank account and then transfer it to Vanguard. When the Vanguard balance increases to 3k, you can exchange the TR fund for any other Vanguard fund. By the way, do you have an emergency fund with say a half-years worth of living expenses set aside in a bank account? It's a good idea.
  10. Either Fidelity or Vanguard are excellent choices. Have you decided on an asset allocation--a stock to bond ratio? Perhaps something around 60/40 is reasonable for your age, at least to start with? It's a personal decision that only you can decide, and 70/30 and 80/20 could also be considered reasonable. How did you weather the 2008/2009 downturn? Both Fidelity and Vanguard have Target Retirement funds that include both stock funds and bond funds. They are labelled with the approximate year of retirement but you can ignore the date and pick one that has your desired asset allocation. These funds slowly get more conservative by adding more bonds and reducing stocks as the retirement date approaches. If you decide to use Fidelity, be sure to pick one of their "Freedom Index" funds, not one of their more expensive "Freedom" funds. You can also choose 3 individual funds to mimic the Target Retirement funds at either Fidelity or Vanguard. These funds have lower expense ratios than the TR funds, which is an advantage. You could start out with a TR fund and decide later to use the 3 separate funds after you learn more about investing. Total Stock Market Index fund Total Bond Market Index fund Total International Stock Market Index fund
  11. Please forget about VALIC and VOYA. They are grandfathered but are not available for new accounts. CPS now has 403b and 457 plans overseen by EMPOWER, and the 3 links above that you provided are to the funds available through EMPOWER. The ERs of the Vanguard Target Retirement fund are only 0.15% which is actually quite low. If you want the simplest, most diversified single fund, one of them would be an excellent choice. However the ERs of the Fidelity Total Stock Mkt fund of 0.09% and Vanguard Total Bond Mkt fund of 0.05% are lower. If you used a 70% stock/30% bond asset allocation, the weighted average ER would be 0.072%. For a balance of $100,000, that amounts to only $72 per year. So the difference in ERs between you first and second choices is not very significant. Have you downloaded the CPS 403b/457 plan application form yet? Is there an option to choose either a 403b or a 457 plan?
  12. I'm a northern California teacher. I'm struggling to understand it all and where to start (I did read your letter, but did not quite follow all of it. I'm afraid. I did want to give you a baseline for where I'm at). The list of vendors is daunting. I think they do it on purpose so whoever comes to your school and explains something that sounds logical, you go for it. Please copy and paste the list and show it to us. I currently put some money into a Roth-IRA and some into a 403b account. Both are managed by VALIC. I've been with VALIC for almost 10 years and am in my mid-30s. For the past couple of years, I've been thinking of getting out of VALIC because they are subsidiary of AIG. I had a VALIC 403b account also and regret I didn't get out sooner. It was a Fixed Account and payed about 3-5% back in the 1970s to 1990s when inflation was higher. The reason you should get out is to avoid VALIC's high fees. From reading other forums (though most are not specially about California, which is why I started here)... it seems like Vanguard and Fidelity are both highly recommended. Do neither of them have a "real" person? Is there a vendor with a representative that is recommended? As Steve has explained, the "real" person is expensive. The money to pay his salary/commission comes out of the 403b plan he sells you. By using a DIY internet/telephone based plan such as that of Vanguard or Fidelity, that money goes to your retirement plan. Can I get my money out of VALIC? How hard will that be for me to do by myself compared with a representative? Yes you can move your VALIC 403b to another vendor that is on your school district's list. Again, show us the list and we can help you pick the best vendor. Both Vanguard or Fidelity are excellent. Once you've decided on the new vendor, you fill out their application form and send it in. Once the account is set up, you can fill out any forms required by your district and its Third Party Administrator. It's not difficult to move your VALIC Roth IRA to another vendor. You get to choose the vendor so you can use the same vendor as your 403b account if it's Vanguard or Fidelity. It's not hard. The forms can be tedious to fill out, but we can help you if you ask. It takes patience and the 403b transfer often drags on for weeks or even months. The Roth IRA should be quicker. Saving for retirement is important to me and I want to be doing it the right way. Most books that I've found are not for our sector. Thanks for any help. Kiwi
  13. TIAA, FIdelity and NEA (Security Benefit)

    Dan, even ScottD is suggesting using NEA Direct Invest instead of Vanguard’s 403b when the balance is low. Yes, Security Benefit hawks mostly awful products, and NEA is despicable for attaching their name to ripoff products, but the NEA Direct Invest is worth using. I agree with Ed that TIAA is out of the running.
  14. FTJ FundChoice - Self Directed, or Advisor

    I've done it again!? Having trouble getting a quote that is within a quote. I see now that the + sign is for a "Multiquote". Sorry. What I was referring to was spending down the taxable account by using it for living expenses while maxing out the 403b and 457 plans and the Roth IRA. It does involve paying capital gains tax on the taxable account as it's cashed out, but that's at 0% in the likely 15% tax bracket and at 15% in the 15% tax bracket.
  15. FTJ FundChoice - Self Directed, or Advisor

    Your district has certainly done their employees a disservice by using a single vendor that adds an AUM fee of 0.90%, if that is the case! Whoever approved such an arrangement was either unaware of the critical importance of low fees, or wanted to benefit FTJ at the expense of the employees. You should complain and find out the procedure for changing to (or adding) a vendor that has low-cost index funds. FTJ FundChoice 403(b) Custodial Account in CA charges an AUM of 0.30%, and districts in CA have multiple vendors. It’s crazy that your district has a single vendor and yet charges 3 time as much! https://www.403bcompare.com/products/47#/fees It does appear that the 16 funds offered in CA are all load funds except one, so FTJ Fund Choice is an awful choice in CA as well as in Missouri! You might consider investing in a taxable account instead of such an expensive 403b or 457. For fixed income savings you could invest in I-Bonds and CDs. In the meantime you could work to get a low-cost provider for your district, or move to a district that already has one? It’s not that difficult to move money from a taxable account into an employer-based plan which you could do when you are able to contribute to a low-cost 403b or 457. I guess it depends on how serious you are about saving for retirement. I believe that the use of DFA funds always requires you to go through an advisor and you will have to pay for that privilege. I don’t believe that your tilts to “all-value/small/emerging markets” have a high probability of doing better than the basic 3 fund portfolio, just a low probability over considerable time. The drag of high fees will overpower any possible beta. The link to the PDF doesn’t seem to work.
  16. Fidelity, USAA or MetLife

    My guess: The Fidelity PDF is up-to-date as of Sep 30, 2017 and Morningstar and 403bcompare.com are using-out-of-date info? At the bottom, the PDF says “Expense information changes periodically”, and “Fidelity is voluntarily reimbursing a portion of the fund’s expenses.” I suspect that all Fidelity’s index funds have loss leader ERs thanks to Vanguard.
  17. Fidelity, USAA or MetLife

    Yes, you are missing that Fidelity has two series of target date funds. The Freedom funds use managed funds for the component funds and have ERs of 0.75%. The Freedom Index funds use index funds instead and have ERs of 0.15%. Both series are listed on 403bcompare.com which I think means that Fidelity makes both series available nationwide to their K-12 403b customers.
  18. Fidelity, USAA or MetLife

    I don’t think that the decision on a traditional vs a Roth IRA is as cut and dried as Ed says. Many investors value a Roth IRA because it adds an income source that is not taxed at distribution in retirement (or before?). You can find your income tax bracket by checking line 43 of your Form 1040 and use this website: http://www.moneychimp.com/features/tax_brackets.htm There are income limits on the deductibility of a traditional IRA and also there’s a higher income limit to be able to contribute directly to a Roth IRA. The backdoor Roth IRA method is a way of contributing to a Roth IRA regardless of income. The Boglehead Wiki has lots of information on the Roth IRA. Maybe it would be best to postpone the IRA until you’ve got your 403b and 457 accounts set up?
  19. Fidelity, USAA or MetLife

    Because the Freedom Index funds are only offered in the Investor class, the ER’s are about 0.10% more expensive than the 3 broad market index funds. If you’re willing to deal with a balance of the 3 funds based on your asset allocation, then that’s preferable. It’s not difficult. However if you want Fidelity to do the rebalancing for you, then the Freedom Index Investor fund is a reasonable choice in my opinion. Of course you can change from the 3 funds to the single fund of funds later. Fidelity Total Market Index Premium, FSTVX, ER 0.04% Fidelity International Index Premium, FSIVX, ER 0.06% Fidelity US Bond Index Premium, FSITX, ER 0.05% Fidelity Freedom Index 2035 Investor, FIHFX, ER 0.15%
  20. washateria recently posted on the 457 board about their Chicago Public School’s (CPS) 403b and 457 plans. The CPS plans are an impressive improvement over the usual multi-vendor, mostly annuity-based plans most K-12 (K-14?) districts are saddled with. The single provider for the CPS 403b and 457 plans is Great-West Life & Annuity Insurance Company (GWL&A). There are a small number of mutual funds offered, and no annuities. Index funds: 9 Vanguard Target Retirement 20XX Inv, ER 0.13% to 0.16% Fidelity Total Market Index Inv, ER 0.05% Vanguard FTSE All-World ex-US Index Inst, ER 0.10% Vanguard Total Bond Market Index Adm, ER 0.05% 9 managed funds , ERs 0.33% to 0.94% https://cpsretirementplans.gwrs.com/wrFundOverview.do?accu=CPSWR&groupID=93402-01&db=pnp How about fees? There are 3 fee levels: 1. There appears to be no additional fees for DIY employees using Online Investment Guidance. 2. There is a $25 annual fee for Online Investment Advice. 3. To have the account managed by AAC (a subsidiary of GWL&A), there’s a fee based on the account balance, starting at 0.1625% (<$100k) and decreasing to 0.0875% (>$400k) in 3 steps. https://cpsretirementplans.gwrs.com/preLoginContentLink.do?accu=CPSWR&contentUrl=preLogin.aboutPlan.invInfo&specificBundle=preLogin CPS is one of the largest districts in the country, and perhaps the low fee structure would not be possible in smaller districts? Of course states (CA, WA, etc.) with a law that prohibits a reduction in number of vendors would prevent this sort of improvement. Do you agree with me that a plan like this is interesting and worthy of discussion on 403bwise?
  21. Using Search, I see that Tony discovered this CPS 403b and 457 plan back in August, 2015. http://board.403bwise.com/topic/6011-choosing-a-supplemental-retirement-plan/?tab=comments#comment-32870 In January 2007, CPS’s 403b vendors were: AIG VALIC, ING, Horace Mann, Hartford, Metlife, CitiStreet, and Prudential. http://board.403bwise.com/topic/1850-chicago-public-schools/?tab=comments#comment-11936 VALIC and ING (VOYA) are still grandfathered in the current plan.
  22. TIAA, FIdelity and NEA (Security Benefit)

    Yes, the new providers are much better. If you use Fidelity's index funds, you'll have the lowest cost, most diversified 403b K-12 account possible. Using SB's NEA Direct Invest also very low cost. TIAA is somewhat more expensive.
  23. Kristy, welcome to the forum. Sorry for the delay in answering your post. This 457 board doesn't get checked as often as the 403b board. It looks like CPS has done a fantastic job of moving from VOYA and VALIC, which are grandfathered providers. That means that you cannot start a new account with them, but current accounts are allowed to continue. CPS now has a small selection of funds that include some great index funds. I think using the TSM and TBM funds you mentioned is a great way to go, as is using a Target Retirement fund. I couldn’t find any reference to an administration fee unless you wanted an advisor—there only seems to be each fund’s expense ratio for DIYers. The CPS website indicates with their heading that all their funds apply to both the 403b and the 457 plans. If you check out the application form you’ll be able to confirm it. I agree that the 457 has an advantage over the 403b if you can only fund one of them.