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I'm currently investing in a 403(b) with LSW/ValuTeach.

 

I'm wanting to surrender and take all of my money and go to another investment company.

 

Right now, the agent who enrolled me in the account says that the account has no fees and is risk free.

 

I started out investing $150 into this account monthly and then they met with me last year and said if I was investing more I'd have way more money by retirement (which I get so started investing $160). It is an SP Platinum plan. My statements read that the money is going into S&P 500 at 100%. I don't know exactly what my money is being invested in. I also don't know what "premium tax" means and why it doesn't list a number or at least says 'none/o.oo'.

 

This account has been opened since Oct. 2014 and has about $6k in it as of now.

 

I think I could do better with another investment company, but I'm concerned about the tax penalties....however, if I move now I could get through the penalties and make better investments with my money.

 

Thanks for any help you can offer!

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FNLUCK

 

Welcome to the board.

 

 

Right now, the agent who enrolled me in the account says that the account has no fees and is risk free.

I think You are being lied to. Please read GRW's thread. I have never heard LSW/ValuTeach. I will have to google it.

 

I think you are not sure what you are invested in and thats a huge red flag. The 500 Index is not a bad place to invest depending on your age and how much you are paying in fees but no stock fund is risk free .Could you please list the full name of the company you are working with and the specific names of the fund or fund(s) you are invested in?

 

You are probably right you might do better in another company. Please list all the choices your school system offers. Usually this information is on your school system website under benefits or some similar heading.

 

One thing the advisor got right is that if you only have 6K in the account since 2014 you probably are not investing enough and you need to try and increase your contributions BUT NOT IN A HIGH FEE PLAN!!

 

Please supply the asked for information and we will help get you to a better place. Also include you age.

 

Tony

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www.valuteachers.com

It looks like ValueTeachers is a very slick organization that sells 403b annuity plans. Here’s what their website says you can do if you join the team and are successful at selling their products:

Travel the World

ValuTeachers is committed to taking our top leaders around the world to extraordinary five-star resorts and experience life changing events.

The qualifiers earn exclusive privileges beyond the ordinary and are elevated to a global luxury ambiance. Our trips build one-of-a-kind, special, extraordinary memories.

Destinations

  • 2001 - Canada
  • 2002 - Las Vegas
  • 2003 - Los Cabos
  • 2004 - Ireland
  • 2005 - Spain
  • 2006 - Italy
  • 2007 - Hawaii
  • 2008 - Portugal
  • 2009 - Alaska
  • 2010 - Tuscany
  • 2011 - Greece
  • 2012 - Prague
  • 2013 - The Baltics
  • 2014 - New York City, France
  • 2015 - Hawaii, San Francisco
  • 2016 - Canada, New England

http://www.valuteachers.com

The cost of these trips is payed for by the teachers who buy the 403b products from this outfit. The website doesn't give any specifics on fees or actual plans or the offered funds. They are annuity-based.

 

FnLuck34, please take Tony's suggestion and show all the vendors on your district's 403b's list. Also please tell us what state you live in as there might be a decent state-wide 457 plan available to your state's teachers. Also, are you contributing to an IRA, either a traditional or a Roth?

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Right now I'm invested into two retirement plans.

 

The first plan is with my state through TRS (State of Alabama Teacher's Retirement Plan). It is a mandatory plan that deducts 7.5% of my paycheck monthly. I have to be vested into the state of Alabama for 10 years of service and be 62 when I can request retirement and get my payout OR I give 25 years of service and retire at any age after that 25 years and get my payout for retirement...which will be adjusted for my final year of income (which will be the highest income I'd make for my career).

 

The second plan I am in is the one with National LIfe Insurance Company/National Life Group of Southwest. They are the company that ValuTeach is affiliated with and who holds this account. I clicked around all over the site to find out exactly what funds my money is going into and it just guides me to a 'annuities" definition page. For information, I'll have to call, which I plan to do.

 

I'm 33 and I believe that if I start making better investment decisions starting now I could have a better retirement plan without feeling like I've missed the opportunity to invest and get the most out of savings.

 

I have my son invested in a college savings plan and it's only been a year of investing in his plan and it has grown a lot. I went to investigate the group that the plan is associated with and the plan invests with Vanguard. The rate is 0.15%. I also did more research when it came to putting my son in this plan and was guided to a list of states with the best 529Plans.

 

I signed up for ValuTeach twice in my career. The first time was back in 2009 when I first started teaching. These are the people who came out to the schools and I didn't and still really don't understand the investment world, but I knew enough to understand that I would need supplemental retirement to go along with my state retirement. Since they showed up, I signed up.

 

Then I get a new job back in 2014 and again ValuTeach is the company that shows up to this new school district and once again I sign up and start up this account.

I'm not sure who all has shown up as an investment option for this district I am currently in and on my district's website there's no real information and I'd have to ask payroll who all they offer for investment.

I know BB&T has shown up to sell their stuff .....banking, retirement, etc.

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Right now I do not contribute to a Traditional or Roth IRA. I strongly know this needs to change. My budget is limited and I need to get readjusted in my investments.

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FNLuck

 

What other choices 403b or 457b  does your school system offer?  Can you copy and paste the total list please. Probably you are stuck with your Alabama plan as it is associated with your pension. But we may get you to a better plan if we know what else is available to you.

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I"ve sent for a list of our other vendors. Payroll should get back with me soon.   

So basically when I get this list I'm looking for options that fall outside of an insurance company, correct? I've already spoken with LSW/ValuTeach and they couldn't give me any information about the funds or where my money is being invested. 

I can't transfer this over into a Roth IRA. So I have to find a vendor with a low expense rate to transfer over to into another 403b plan.  I wish I had of done more research before I got into this plan.  I went with the quickest and easiest way, but now that I'm learning more I feel overwhelmed and upset that I didn't ask more questions about things. I also feel like the school system as let me down by not giving me all my options and why was this the only company I had access to all this time. 

Speaking with Vanguard today about trying to transfer my 403b to them and I was informed I'd still have to find out if they are an approved vendor with my school system.  

 

Would you recommend starting a retirement plan with a company like Betterment and Wealthfront? I'm currently researching Roth IRAs. 

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Quote

 

So basically when I get this list I'm looking for options that fall outside of an insurance company, correct?  

 

 

Correct. Lets wait until you get that list and then we can stake out a plan for you and discuss your other questions. Also might you know if you have access to a 457b plan?  You can't  just pick any company you want in a 403b-457b. It must be on your approved company list. A roth or regular IRA is a different story you can invest with anyone you want up to the limit allowed.

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It sounds like your son isn't investing in a plan, it sounds like you're investing in a 529 plan that you intend to spend on your son. Have I got that right? I'm sure others can offer information on 529 plans because I'm fairly ignorant on that topic.

Here are 3 things I think are relevant to what you've posted so far:

  • You really need to figure out what your best 403b and 457b vendors are before you can know your optimal path forward.
  • As long as you remain employed (unless there is a loophole I'm unaware of) you cannot roll the 403b/457b into an IRA.
  • If you're single you can contribute $5,500/year to an IRA. If you're married you can contribute $11,000 to an IRA. Using a Vanguard IRA you can build an excellent portfolio with rock bottom costs...almost certainly lower than anything you'll find in a 403b/457b.

Statistically speaking, any vendor that is on campus is probably one you'll want to avoid. The best 403b vendors that I'm aware of are:

  • Vanguard
  • Fidelity
  • Security Benefit's NEA DirectInvest (not any other plan they offer though)
  • ASPire
  • PlanMember Direct

...the first 3 are definitely better than the last 2. There may be a few others out there that I'm forgetting (I think Lincoln may offer a self-directed program of some kind if you live in a particular region). However, if you see one of those 5 then you have a reasonable path forward.

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It looks like AL does have a state-wide 457 plan for teachers! It’s run by the state retirement system and it’s called RSA-1 Deferred Compensation Plan
http://www.rsa-al.gov/uploads/files/RSA-1_Member_Handbook_bookmarked.pdf

Quote

 

Investment Options 
RSA-1 funds are invested under the same authority and restrictions that govern investments made by the Teachers’ and Employees’ Retirement Systems. The RSA-1 Deferred Compensation Plan offers the option to invest in bonds, stocks, and/or short term investments (STIF). The funds in the RSA-1 bond, stock, and short term investment options are not self-directed; rather they are invested as a pool. 

The RSA-1 bond portfolio is invested in various debt instruments greater than one year such as corporate bonds, U.S. agency obligations, government national mortgage association securities, and commercial paper. 

The stock portfolio is invested in an S&P 500 Index Fund, which consists of 500 large capitalization stocks. 

The STIF option provides liquidity and preserves capital by reducing exposure to market volatility. Typically, short-term investments encounter less market risk than do stocks and bonds because of their short duration. Therefore, they usually provide a lower rate of return than investments in those categories. 
Investments under the STIF option could include high-quality money market securities, U.S. Treasury bills or notes, and U.S. government agency notes with a maturity of one year or less. 

 

I couldn’t locate the expense ratios of the 3 “portfolios”. I’ll look for them later. This 457 does look promising. 
 

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http://www.aasbo.com/uploads/7/4/4/7/74479591/kit_gallup_aasbo.pdf
No Fees for RSA-1! 
* The Retirement Systems of Alabama is a public entity. Unlike other plans, there are no administrative fees, commission fees, transaction fees, etc. with RSA-1. 

* All of the money deferred from your salary and all the investment earnings are placed into your account and invested by RSA-1. 

Keeping track of your RSA-1 account 
* Monthly returns for the three investment (accounts) are posted on the RSA website. 


I can't seem to find monthly returns on the RSA website. We should compare them with Vanguard's 500 Index to get an idea what underlying fees really are.

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You have certainly  come to the right place for help!  Tons of good advice already.  Hopefully the school will have a better option, but it looks like you have a 457 option available.

 

The good news is that you are young and have already caught on to a bad product.

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14 hours ago, FnLuck34 said:

I"ve sent for a list of our other vendors. Payroll should get back with me soon.   

So basically when I get this list I'm looking for options that fall outside of an insurance company, correct? I've already spoken with LSW/ValuTeach and they couldn't give me any information about the funds or where my money is being invested. 

I can't transfer this over into a Roth IRA. So I have to find a vendor with a low expense rate to transfer over to into another 403b plan.  I wish I had of done more research before I got into this plan.  I went with the quickest and easiest way, but now that I'm learning more I feel overwhelmed and upset that I didn't ask more questions about things. I also feel like the school system as let me down by not giving me all my options and why was this the only company I had access to all this time. 

Speaking with Vanguard today about trying to transfer my 403b to them and I was informed I'd still have to find out if they are an approved vendor with my school system.  

 

Would you recommend starting a retirement plan with a company like Betterment and Wealthfront? I'm currently researching Roth IRAs. 

The 5 vendors that Ed listed are lowest cost and hopefully you'll find one or more on your district's list. I suggest you stop your contributions to the LSW/ValuTeach 403b and concentrate on the big picture. Stop kicking yourself for your past decisions and write them off as educational experiences. We have ALL made poor financial decisions in the past that have cost us many $1000's! Your $6,000 can just sit at LSW/ValuTeach while you figure out your options. 

Before you contribute to a 403b or a 457 plan, you should consider contributing to an IRA. That is either a traditional IRA that allows tax deferment until you take a distribution in retirement. Or a Roth IRA which is bought with taxable money but then it and its growth are never taxed again. The reason the IRA should be used before a 403b is that you get to select the provider and can choose a good very low-cost one such as Vanguard or Fidelity. Every year you can contribute up to 5.5k an IRA, 6.5k if you're over 50. I would not recommend you start an account at Betterment or Wealthfront. 

If your income and expense are such that you can only contribute about 5.5k for retirement, then you don't need a 403b or a 457 at this time. This is not ideal and hopefully you will be able to increase your retirement contributions in the future. 

However you do need a 403b that is lower cost than LSW/ValuTeach to hold your 6k. It's also possible that the state 457 plan can accept a transfer of your 403b money. 

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I agree with Krow and Ed

 

You must get away from that horrid  403b plan you are in first and foremost.That outfit seems built to help the sales team more than the investor. Do things in small steps. Since you don't seem to be investing all that much( but good for you that you are saving as much as you can) , I would focus on a Roth or better yet in your circumstances a traditional IRA with very low cost Vanguard or Fidelity  index funds. Please make sure you allocate wisely as too much of a stock orientation could cost you in a downturn. A mix of bonds and stocks would be smart. Perhaps a 70 % Stock-30% Bond allocation would be wise or maybe better yet a Target Fund matched to your retirement age.

When you get to the point that you can save more that the IRA limit, then would be the time to investigate your state 457b plan which seems decent and available. Also don't forget, your wife can also contribute to an IRA.

Of course we still are interested in seeing your provider list.

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