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wakeman01

Getting Out Of Valic?

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I just retired 2 weeks ago with a Valic 403b. I found the 403bwise website yesterday, and as I look through the topics here I see that many of the postings say that Valic's fees and charges are much too high. So I tried to find out just what the Valic fees are but couldn't find them anywhere on the Valic website. From what I've read here it seems the smartest thing for me to do would be to transfer my 403b plan to Vanguard. I'm kind of new at investing so I thought maybe someone here might be able to answer a question for me. My question is ... How hard will it be for me to do a 403b transfer, and what kind of problems could I expect to run into if I try to do such a transfer?

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Guest Joel L Frank

I just retired 2 weeks ago with a Valic 403b. I found the 403bwise website yesterday, and as I look through the topics here I see that many of the postings say that Valic's fees and charges are much too high. So I tried to find out just what the Valic fees are but couldn't find them anywhere on the Valic website. From what I've read here it seems the smartest thing for me to do would be to transfer my 403b plan to Vanguard. I'm kind of new at investing so I thought maybe someone here might be able to answer a question for me. My question is ... How hard will it be for me to do a 403b transfer, and what kind of problems could I expect to run into if I try to do such a transfer?

 

 

Retirement/severance of employment from the employer/sponsor of the 403(b) plan is one of the triggering events that permit you to rollover your Valic 403(b) to a Vanguard IRA.

 

I urge you to effectuate this Eligible Rollover Distribution and then get back to us for some investment advice. How much money is involved? Are you receiving a defined benefit pension? What is your current employment status? How old are you? Are you married? Your spouse's age? Children?

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Hello

 

How can you be new to investing and have a 403b plan at retirement? I am not trying to be smart or anything-just curious.

 

 

Tony

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Retirement/severance of employment from the employer/sponsor of the 403(b) plan is one of the triggering events that permit you to rollover your Valic 403(b) to a Vanguard IRA.

 

I urge you to effectuate this Eligible Rollover Distribution and then get back to us for some investment advice. How much money is involved? Are you receiving a defined benefit pension? What is your current employment status? How old are you? Are you married? Your spouse's age? Children?

 

 

Thanks for the advice. I contacted Vanguard and they said they would be able to handle the transfer of my Valic-403b to Vanguard without any problems. But I'm not sure what Vanguard funds to use, so I haven't gone ahead with the transfer yet. I'm 75, married, and on the State Retirement system so probably won't be needing to withdraw money from the 403b for a while. There's about $100,000 in the 403b.

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Hello

 

How can you be new to investing and have a 403b plan at retirement? I am not trying to be smart or anything-just curious.

 

 

Tony

 

Hi Tony. I just signed up 20 or 30 years ago when a Valic financial advisor came and gave us a presentation of their 403b program. I didn't really know anything about investing, but it sounded like a good idea to make some kind of preparation for retirement. They just took some money out of my check each month for the 403. The advisor seems to have done a pretty good job of diversifing the account, and he drops by about every two years to tweak it. But that's about all I know about investing. I don't know what fees I've been paying, but I am glad that I went ahead and at least started a 403 plan way back then.

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Guest Joel L Frank

Hello

 

How can you be new to investing and have a 403b plan at retirement? I am not trying to be smart or anything-just curious.

 

 

Tony

 

Hi Tony. I just signed up 20 or 30 years ago when a Valic financial advisor came and gave us a presentation of their 403b program. I didn't really know anything about investing, but it sounded like a good idea to make some kind of preparation for retirement. They just took some money out of my check each month for the 403. The advisor seems to have done a pretty good job of diversifing the account, and he drops by about every two years to tweak it. But that's about all I know about investing. I don't know what fees I've been paying, but I am glad that I went ahead and at least started a 403 plan way back then.

 

 

This is the general position of people who have a 403(b) or any other form of long-term savings--pre or post tax. They do not consider themselves investors but rather savers. The sharks would say wakeman01 would have nothing in his/her account if it was left to a line up consisting of just de minimus cost funds because there is no commission based sales force pushing the program. So a $100,000 balance is much better than a zero balance. How's that for arrogance?

 

To this I say just look at the participation rate of the k-12 403(b) Plan in New York City. The sole investment lineup is administered by the Teachers' Retirement System of the City of New York. This is strictly a de minimus cost plan funded solely by the voluntary salary reductions of the members of the TRS. Who pushes it? The teachers' union and the TRS on their respective websites/newsletters. Each of them also conducts retirement savings seminars. The participation rate was 70 percent as of June 30, 2011.

 

I challenge the NTSAA to identify, for us, a salary reduction only k-12 403(b) plan in the nation with a higher rate of participation.

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Guest Joel L Frank

Hello

 

How can you be new to investing and have a 403b plan at retirement? I am not trying to be smart or anything-just curious.

 

 

Tony

 

Hi Tony. I just signed up 20 or 30 years ago when a Valic financial advisor came and gave us a presentation of their 403b program. I didn't really know anything about investing, but it sounded like a good idea to make some kind of preparation for retirement. They just took some money out of my check each month for the 403. The advisor seems to have done a pretty good job of diversifing the account, and he drops by about every two years to tweak it. But that's about all I know about investing. I don't know what fees I've been paying, but I am glad that I went ahead and at least started a 403 plan way back then.

 

 

This is the general position of people who have a 403(b) or any other form of long-term savings--pre or post tax. They do not consider themselves investors but rather savers. The sharks would say wakeman01 would have nothing in his/her account if it was left to a line up consisting of just de minimus cost funds because there is no commission based sales force pushing the program. So a $100,000 balance is much better than a zero balance. How's that for arrogance?

 

To this I say just look at the participation rate of the k-12 403(b) Plan in New York City. The sole investment lineup is administered by the Teachers' Retirement System of the City of New York. This is strictly a de minimus cost plan funded solely by the voluntary salary reductions of the members of the TRS. Who pushes it? The teachers' union and the TRS on their respective websites/newsletters. Each of them also conducts retirement savings seminars. The participation rate was 70 percent as of June 30, 2011.

 

I challenge the NTSAA to identify, for us, a salary reduction only k-12 403(b) plan in the nation with a higher rate of participation.

 

wakeman01,

 

What state is sending you your State Retirement System retirement allowance?

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What state is sending you your State Retirement System retirement allowance?

 

 

My retirement is with the Lousiana Teacher's Retirement System. I spoke to the Valic adviser today and told him I was considering moving the account from Valic to Vanguard. He made a suggestion. I have a portion of the funds in Valic's fixed fund which currently pays 2% but has no fees. He suggested that when I transfer my Valic 403b over to Vanguard, I should consider keeping the Valic account open by holding some money in the fixed fund because there are no fees for that part of the account. I'm thinking that although 2% is pretty paltry, it is probably better than I could get in a money market account. So I'm thinking I should leave two or three thousand in the Valic 403b and transfer the rest into a Vanguard account. Is that a good idea?

One other question ... when I transfer the 403b to Vanguard, does it have to remain as a 403b, or could I make it into an IRA instead?

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Guest Joel L Frank

It cannot become a 403(b) with Vanguard because Vanguard was not on your former employer's list of approved vendors. It must be an IRA with Vanguard. You tell us you have about $100,000 in your Valic 403(b) and cannot make up your mind if you should rollover the entire amount to Vanguard or just $97,000-98,000. Are you pulling our collective leg?

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Guest Joel L Frank

Hello

 

How can you be new to investing and have a 403b plan at retirement? I am not trying to be smart or anything-just curious.

 

 

Tony

 

Hi Tony. I just signed up 20 or 30 years ago when a Valic financial advisor came and gave us a presentation of their 403b program. I didn't really know anything about investing, but it sounded like a good idea to make some kind of preparation for retirement. They just took some money out of my check each month for the 403. The advisor seems to have done a pretty good job of diversifing the account, and he drops by about every two years to tweak it. But that's about all I know about investing. I don't know what fees I've been paying, but I am glad that I went ahead and at least started a 403 plan way back then.

 

 

This is the general position of people who have a 403(b) or any other form of long-term savings--pre or post tax. They do not consider themselves investors but rather savers. The sharks would say wakeman01 would have nothing in his/her account if it was left to a line up consisting of just de minimus cost funds because there is no commission based sales force pushing the program. So a $100,000 balance is much better than a zero balance. How's that for arrogance?

 

To this I say just look at the participation rate of the k-12 403(b) Plan in New York City. The sole investment lineup is administered by the Teachers' Retirement System of the City of New York. This is strictly a de minimus cost plan funded solely by the voluntary salary reductions of the members of the TRS. Who pushes it? The teachers' union and the TRS on their respective websites/newsletters. Each of them also conducts retirement savings seminars. The participation rate was 70 percent as of June 30, 2011.

 

I challenge the NTSAA to identify, for us, a salary reduction only k-12 403(b) plan in the nation with a higher rate of participation.

 

 

Here is another challenge to the NTSAA: Go to Court and argue that the City of New York's k-12 403(b) Plan is closed "to all willing vendors" and as a result has only a 70 percent participation rate and in order to increase participation, the investment line-up should be expanded to include commission-based funds.

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It cannot become a 403(b) with Vanguard because Vanguard was not on your former employer's list of approved vendors. It must be an IRA with Vanguard. You tell us you have about $100,000 in your Valic 403(b) and cannot make up your mind if you should rollover the entire amount to Vanguard or just $97,000-98,000. Are you pulling our collective leg?

 

 

I was not pulling anyone's leg. I am going to go ahead and transfer from Valic to a Vanguard IRA. However I thought it makes sense to keep some of my 403b or IRA in a fixed fund that is independent of economic conditions. Valic currently pays 2% interest with no fees on the fixed part of my account. I currently have about 10% of the 403b account in the fixed cash fund. So I was thinking that I should at least continue to hold that part of my 403b with Valic. Why is it not a good idea for me to do that?

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I was not pulling anyone's leg. I am going to go ahead and transfer from Valic to a Vanguard IRA. However I thought it makes sense to keep some of my 403b or IRA in a fixed fund that is independent of economic conditions. Valic currently pays 2% interest with no fees on the fixed part of my account. I currently have about 10% of the 403b account in the fixed cash fund. So I was thinking that I should at least continue to hold that part of my 403b with Valic. Why is it not a good idea for me to do that?

 

 

I am currently in the process of doing the same transfer. Only difference is my 403b is currently with AXA Equitable. My rep just gave me the same line today about leaving some of my money in the guaranteed interest account which is paying 3% in my AXA contract. My guess is they don't get dinged with a account closure if they convince you to leave some money there. For simplification I want it all over at Vanguard.

If your not sure what Vanguard fund you are going to use ask the person doing your transfer about their consultants that help with that. I already knew I was going with the Vanguard Target Retirement 2010 fund so I never actually spoke to the consulting group.

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Guest Joel L Frank

It cannot become a 403(b) with Vanguard because Vanguard was not on your former employer's list of approved vendors. It must be an IRA with Vanguard. You tell us you have about $100,000 in your Valic 403(b) and cannot make up your mind if you should rollover the entire amount to Vanguard or just $97,000-98,000. Are you pulling our collective leg?

 

 

I was not pulling anyone's leg. I am going to go ahead and transfer from Valic to a Vanguard IRA. However I thought it makes sense to keep some of my 403b or IRA in a fixed fund that is independent of economic conditions. Valic currently pays 2% interest with no fees on the fixed part of my account. I currently have about 10% of the 403b account in the fixed cash fund. So I was thinking that I should at least continue to hold that part of my 403b with Valic. Why is it not a good idea for me to do that?

 

 

Valic and the other annuity vendors never expected real interest rates to go down to less than zero. The other end of the spectrum was the late 1970s and early 80s when Valic was paying 12-15 percent as a result of hyperinflation. Your 2 percent is indeed a reflection of the economy---it would be lower if not for your contract minimum, which is 2 percent---subtract inflation and you're below zero but not as below as someone earning .25 percent from a bank.

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Sounds as if you and I are in similar situations. I think you are correct in suspecting that the rep wants to avoid getting an "account closure" hit if he can convince me to leave some money in the no-fee fixed fund. Still 2% interest (or in your case, 3% interest) sure beats Vanguard's money market which is apparently less than 0.25%. I realize that 2% interest doesn't even keep up with inflation, but I thought it might make sense keep at least some of my IRA in an account that would not be affected if the stock market should take another 40% hit as it has already done a couple of times in the last 20 years. It does seem that it would be simpler to move it all to Vanguard. I have an appointment to talk with their consulting group tomorrow and I will ask thier advice on that. I kind of like your idea of going with their Target retirement fund.

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