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Warren P.

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  1. Warren P.

    Can I Get Out Of My 403b?

    "The reason I am trying to find out if I can transfer it to an IRA, is ultimately I am thinking I want to put it into a Roth IRA so that I can use it to invest in property." In my opinion, your consideration of using your tax deferred 403b to transition into a taxable upon conversion ROTH IRA just to be able to invest in highly appreciated real estate is not a prudent move. There are possibly other issues with a conversion depending upon your age, the dates of your contribution, surrender charges, other than the one which already mentioned, and whether or not your proposed withdraw exceeds the principle which you had contributed. i.e. appreciation taxed as an additional 10% penalty for early withdraw Additionally, the 403b is with a great company that many would die for and these funds will most likely be a valuable asset once you retire. It's amazing to me that so many individuals go ahead and cash out their retirement plans/assets and loose sight of their long term goals. This may not be your case, but it has been an AMERICAN Trend. Immediate gratification presents itself again. Cashout and hop on the new hyped market trend, get that bigger, better, faster car, and keep up with Jones. By the way, they are probably deep in debt! "From your feedback, it doesn't sound like that is going to happen until I am hopefully already retired." I hope you heed the feedback. Respectfully, Warren P.
  2. Warren P.

    Vanguard, Service And Fiduciary Responsibility

    Hi DG, Keep up the good work to try to resolve your situation. it will come only by your fortitude and passion. I went through a very similar situation with our nonprofit; high expense, annuity based, poor support, an unreasonable TPA, and little decision maker support. My recommendation is to contact Vanguard, and see if they have your Corporate Tax ID number on file with a former employee's account(403b). If so, your organization may already have a separate non-qualified plan in place. If this is so just ask for the plan number and an application and behold, you've got your second plan available to you, non-qualified yes, but a low cost $15 per year expense per investment option plus the underlying fund ER. If your organization does not have a plan in existance with Vanguard, find out what it will take to set up a separate non-qualified 403b plan through the company (both Vanguard and your nonprofit) This may be an around the fence and behind the barn approach, but it worked for us. Many of our staff now have two plans, one a somewhat more expensive ERISA quaified 403b plan that handles the employer match as well as a separate non-qualified 403b with what I feel are better investment options and lower ER's. Suggestion: Do your reseach and make it easy for your CFO and fidutiary committee to buy into your proposal. It must be a WIN-WIN! Comparing dollars lost to expenses with dollars retained speaks alot. Respectfully, Warren P.
  3. Warren P.

    Changing Plan Providers: Approved

    This note, as requested by Scotty D, is a follow-up to a previous series of threads beginning back in 2002 or earlier. A very brief summary is in quotes below. *************************************************** July 24, 2004 Good day all, It's a great day for our participants and many thanks to all contibutors of 403bwise. If it were not for this forum and its kind contributors, many of our employees will now have more financial assets in thier retirement years. Thank you! After many months of research, due diligence, and negotiations, our organization has finally terminated our expensive annuity based 403b and rolled assets into a more reasonable fee structured 401k plan. Our new plan will have 1/3rd the fee structure of the previous plan and offer a simple mix five of pre-designed portfolios (low fee[1.10-1.42 ER] and no compound wrap fees) as well as a diverified mix of no-load index funds (.41 ER) The plan will also be supplemented with one-on-one investment education as well as semi-annual group education to ensure participants clarity in thier choices of investment with respect to time horizons and risk management. Separately, a previous thread that had appeared here many months ago(I do not recall the contributor) had indicated that if an individual had participated or signed up with Vanguard through a 403b vehicle, others could also sign on, as the plan or the company was registered and/or qualified. I took a stab at this with my employer and they told me that our company does not have an account with them and they are not willing to open another plan. Of course, we don't have the assets to conform to the Vanguard minimums as I had already sent for an application and spoke with thier retirement benefits department. Frustrated, I decided to approach Vanguard again some months later, and asked if a plan or previous plan had been opened under our Federal tax number. The Representative was happy to assit and looked up our in thier database, sure enough there was an account that had been opened in the early 70's but had been idle for many years. I asked if I could open an account and if this would satisfy the required access for other participants within our company. The answer was"yes" all i would need to do is to request an individual application, he offered the account number and we now have Vanguard as an alternative 403b, in addition to our new ERISA 401k. Yahoo... :0)) It's been a long road. Thank you to all. I look forward to assisting others make WISE moves in the future. Respectfully, Warren P.
  4. Warren P.

    Changing Plan Providers: Approved

    ARRGH, Following up from from an earlier post.( As promised) >>>>I have met with the advising firm and they appear to have our "best interests" in mind, although past experience leaves me somewhat nervous, as we all know the sales pitch. <<<< Well, so much for appearance! After negotiating with our new Gift Annuity investment advisor and entering into a contractual agreement, the advisor has "conveniently" decided that they don't want to participate in assisting us with our 403b ERISA Variable Annuity restructure. This was, in my opinion , due to entering in to an agreement without the I's dotted and T's crossed. Once the Gift Annuity contract was signed and their fees guaranteed, within two days they( the Advisor) decided it wasn't in their best interests to assist us with our poor retirement plan or alternatives. Their seems to be a consistant putrid smell in the financial industry that still has has not abated, dispite all the current hub-bub from the SEC and Spitzer. What has happened to ethics in this industry? Frustrated and disappointed, I am. When is the Benefits industry actually going to stand up and really be BENEFITIAL! Warren P. Back to the ol'drawing board! ;~( DC-It seems double negatives, aren't, not necessarily negative.
  5. Warren P.

    Changing Plan Providers: Approved

    Joel, Thank you for the advice. I'll follow-up with benefits link .com and continue to monitor 403bwise forums for guidance. Of course, I will post the responses on this site as well. Respectfully, Warren P. P.S. Daniel Clark, I look forward to your wise knowledge and expert opinion in this area.
  6. Hello all, Some years ago, with the the assistance of this sites contributors, I embarcked on the long and tedious task of addressing our ERISA 403b annuity retirement plan. With the fine advice and guidance received on this website and forum, our Board of Directors has approved the change of providers and a change in Third Party Administrators, due to poor fee structures within the plan and unresponsive action by our TPA.* Our current scenario is as follows: Our Board has decided it has not the resources to manage intelligently the 403b and has hired an Investment Advisor firm to renegotiate our current situation. The firm does not have a direct relationship with any investment company. (???) The Boards decision was based on reducing fidutiary liability for the nonprofit, and I'm sure themselves as well, and to improve(lower) the cost structure within the plan and to provide ongoing responsible eduction to the participants. The Advisor will develop an Investment Plan Document, and will renegotiate our current situation with an alternate firm as well as other fidutiary responsiblities that are inherent with retirement plan management. I'm somewhat hesitant about this! After doing my "due diligence" and forcing members of our organization to address the issues of expense ridden annuities, I feel we may end up back on the same old boat as I was not involved with the selection process. I have requested that I participate in the discussions of the new plan provider selection process and review the transition from current to future providor. My questions: 1) Is this acceptable or prudent? Or is this something that I should stear clear of? 2) If acceptable, what should the parameters of my involvment be? Typically, do participants have a say in the choices of plan selection and funding vehicles? As a realized functional fidutiary, is it imperative that I do get involved in the process? I suppose my concern is that when perpetuating the initial awareness of plan fee issues, I had stirred up the pot, so to speak, and may have also put the fear of **insert diety** in some of our finance committee members. 3) With regard to a fairly young plan (4 yrs) that has a 10 year early withdraw penalty, can we negotiate our way out or typically is it the norm to start an additional plan and wait until the penatly phase lapses then transfer funds? 4) Can anyone offer me other advice on advising the advisor? 5) Has any one else gone through this action? I have met with the advising firm and they appear to have our "best interests" in mind, although past experience leaves me somewhat nervous, as we all know the sales pitch. This is in no way a stab at all advisors, as many are very well qualified and perform substantial quality of service to individuals and organizations alike. Respectfully, Warren P. *See discussions May through August for the most recent posts.
  7. Warren P.

    403(b) Plan For A Nonprofit

    Martha, Minimum limits and small plans may hinder your search at Vanguard. We have a small staff, as a 501©3, and were turned down by Vanguard, due to a smaller initial contribution than permitted and too few contributors/participants. Be cautious of not BEING SOLD the products that are offerred in the marketplace. You may want do some research on this site(403bwise.com) and you'll find some informative methods for preparing an RFP. Maybe other posters could offer other resources or products that might assist you. Respectfully, Warren P.
  8. Warren P.

    New Heros In 403b Reform Movement

    The Q & A's are flying! IMO, I believe that Dan Clark has given all of us concise action steps that will help you get your organization in the right direction. My interpretation of the logical and reasonable procedure of initiating the "Reform Movement" within an organization thus far is: Get the official plan document or a signed copy and understand what the document states. This is the only document that will give you details of the contract. If you have multiple providors you get each plan document so as to understand how the deferred benefits package works together. You must also establish whether your company's plan is subject to ERISA compliance. After these are in hand and understood you begin with: The first step is to get the fiduciaries to recognize thier repsonsibility to the employees. Provide them with examples of your current situation compared with a better benchmarked alternative. The second step is to establish the structure of the currently expensive plan, its impact on the employee, and identify liabilities to not only the organization but to the fiduciaries, and especially to the fiduciaries. Third step may be to encourage the decision makers to create or realize, that they DO have options and you can provide them with some of those options. The forth step will probably be something like; they will be overwhelmed and need and seek some outside advice from legal or financial expert or recognize that you can provide them with alternatives. Somewhere along the line an investment plan should be established and the Request for Proposal process should begin after identifying the the specific parameters of your RFP. I'm not sure where it goes from here, but maybe someone else can offer a logical series of events that MUST take place first. Then move on to the second... In my brief experience with these issues, it is that change is difficult(and time consuming) for all of us, but if we move in a logical and methodical direction, we'll end up nearer to our goals. Resectfully and patiently, Warren P.
  9. Warren P.

    New Heros In 403b Reform Movement

    Follow up: "As a consumer, if you have not other choices for your 403b, max the Roth IRA, petition to get low cost companies on your list and/or go the after tax route but avoid those horrible annuities from large insurance carriers like the plague. Those fees are carefully hidden for a reason." Steve Schullo You're right! The fees are hidden for a reason. Part of that reason is the employer/district/plan sponsor or a combination of all them is afraid or embarrassed of the the fact that they are passing on costs of running a plan that the employees will pay with thier own contributions. The employer and the vendor doesn't want the participant to know what they are paying for. After taking some of the recommendations presented by this website and you, the forums contributors, our legal team is "on notice" and the finance team is now more aware of thier fiduciary responsibilities. As a result, we are now providing, effective immediately, a detailed "full disclosure" of the fee structure to participants within the plan. This is a small step, but a step none the less in educating participants of the impact on thier accounts so they can individually make an educated decision as to where to invest for retirement. Additionally, the finance committee is now reviewing our current plan, its impact on the organization and the participant. This was accomplished by the recommendations and direction that many of you had provided. Thank you to all. 1.) Especially useful in affecting this preliminary change were the recommendations emphasizing REQUIRED FIDUCIARY DUTY and the acting in the EMPLOYEE'S and COMPANY"S best interest. Pointed out by Dan Clark. 2.) The preparation of support materials that illustrate, VISUALLY, the impact of plan fees. I used not only the upfront major plan fees, but separately illustrated the wrap fees within bundled "lifestyle" portfolios, the 12b-1 fees, the sub-asset transfer fees. What was especially enlightening to all, was the irony that the AIC charges, that are the most visual to the participant, are reflected in the performance of the individual investment choices.(performance table: 3mo., YTD., 1 Yr., 3 Yr., 5 Yr., 10 Yr.) The part that WASN'T REFLECTED in performance was all the participant fees and other miscelleneous fees. After representing all of these expenses, the disclosed returns, as represented by the plan, were wiped out completely in all time frame performance periods. All growth was negative to the participants, no matter what investment choice they had contributed or for what time period they had invested. Net return was negative, not even considering inflation or taxes due upon withdraw. The result of this presentation had a major impact on those present. Visibly shaken, they were. A series of conversations ensued with our legal representatives and policies are now changing. The decision makers decided to release all fee structures to participants as an interim measure to reduce liability and to readdress the deferred compensation issue and providor contact. Thank you again, to all. Your contribution's on this forum have helped alot of people who don't even realize where they have been or where they were headed. Hopefully, our efforts will empower others to initiate change and encourage a more financially sound future for all. Respectfully, Warren P. PS. After 3 years of my whining unsuccessfully to our director and CFO about fees within this plan, the above steps, as recommended by others on this forum, proved successful in getting the message across.
  10. Warren P.

    Vanguard Costs

    Edd, Nice work on diversification! It's been a while since I've signed on to Diehards.org, but I would recommend going through morningstar.com and go to the "discuss" area on thier navigation toolbar. From there you can sign up free/register and then post on the "Diehards forum" it similar to a mirror site of DH.org. Same format and mutual content of posting. Diehards.org has a bit of a different search function than Morningstar and contains links to some great resources. As to Vanguards fee for 401k's 403(b)'s and other company plans, I believe this is just cookie cutter policy for Vanguard. Warren P.
  11. Warren P.

    Vanguard Costs

    Edd, Edd, This may not be the answer that seeking to your post, but I'll offer an another twist: After an evaluation of your "Personal Investment Plan" and your investment horizon, you may want to consider investing directly in a "Roth IRA" (post tax contributions)with the Vanguard Group. There are no annual fees except for low balance fees on some various funds and a minimum balance fee for small accounts. I started with one fund and after thirteen months no low balance fees. :^) This also may add more diversification with your investment vehicles. Additionally, your pincipal, interest, and capital gains will grow tax free. (Unless they repeal tax law) Since you have paid tax already, you may access your origonal contributions after five years without penalties. There are numerous calculators out there that can provide comparisons of investment vehicles between pre-taxdeferred, taxable, and Roth. You may be suprised! I learned the hard way several years ago the benefits of diversification. When it comes to putting all of my chickens in one house I know the chance's are temptingly high the house may be raided by the foxes. Result, I'll yield fewer eggs and even fewer . Diversify, diversify, diversify! Respectfully, Warren P. PS. Caution, beware of the farmer too!
  12. Warren P.

    Disclosure And Reporting...

    Garry, As to online prospectus. None available. I have asked the Rep. to copy our plan document and it to me. He will do this tomorrow. As to questions about fees they get really bumb and dumber. Warren P. PS Sorry about the double post.
  13. Warren P.

    Disclosure And Reporting...

    Thank you Garry, for the Speedy reply. Yes, I'm on the line today! The mysterious name is Manulife Financial out of Toronto, Canada. I've been given a contact name in the regional offices in Walnut Creek, California, although she is out of the office in a meeting. I've been trying to get through but to no avail. Warren P.
  14. Warren P.

    Disclosure And Reporting...

    Thank you Garry, for the Speedy reply. Yes, I'm on the line today! The mysterious name is Manulife Financial out of Toronto, Canada. I've been given a contact name in the regional offices in Walnut Creek, California, although she is out of the office in a meeting. I've been trying to get through but to no avail. Warren P.
  15. Warren P.

    Disclosure And Reporting...

    Good day All, I am in conference with my providor and have been trying to get the various fees disclosed on the particpants statements. I of course, want to have this so as to support the assertion that our plan is expensive to the participant. The finance committee will also review these statements and make a decision as to what is portrayed. Unfortunately, the response from the insurance/fund providor is that there are few fees and the employees only need to know of the AIC and maybe Asset charges. I know that there are M&E fees as the product is an insured Variable Annuity. There are commission fees, management fees. The statement from the Rep. states that they are adjusted in in the NAV. I KNOW THIS! That is why I want the fee structure disclosed! How do I get them to come forth and give full disclosure? How do I get them to include this information(printed) on participant statements? FYI-I've held up the quarterly summaries until I get the information printed on the statements. Respectfully, Warren P.
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