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So here's the email I got back from HR at my school district. Wow, they seem to offer only insurance agencies as options for investing. With the exception of a 457 offered through our Alabama Education Association.  
Where do I go from here?   
 
 
"The only other investment groups we offer through payroll deduction are:  American General Life Insurance Company and Nationwide (offered through AEA).  We do not have a payroll slot for Vanguard.  We do have some slots for a Plan 457 but I don't think you transfer your 403 plan to a 457.
 
I hope this information is of help to you."

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22 hours ago, krow36 said:

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. 

I'm having the same thoughts with this money I have now invested with LSW/ValuTeach. I want to move it, but for now it's probably best to save myself some headache since it's here in the middle of the school year and I have many other things to consider. 

Over the summer I will take time to find a way to move it if I can. 

So at this point I need to focus on opening my Traditional IRA.  Like I said before I was looking at some online spots that I had looked into through Nerdwallet and other sites about "Best IRAs".........

What I need to start this......low-cost, low minimum start up....I will start to invest the $160 that I've stopped with LSW/ValuTeach into this Traditional IRA.

My husband just started his new truck driving job so we are in between his last paycheck and my paychecks. Once he's bringing in his income regularly again, then I will start investing $200. I do want to be able to contribute more to this new retirement. As time goes, I want to increase the contributions of course. 

These are some of the reasons why I thought Betterment or Wealthfront would be good. 

Which investments firms would be better? Thanks. 

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2 hours ago, FnLuck34 said:
So here's the email I got back from HR at my school district. Wow, they seem to offer only insurance agencies as options for investing. With the exception of a 457 offered through our Alabama Education Association.  
Where do I go from here?   
 
 
"The only other investment groups we offer through payroll deduction are:  American General Life Insurance Company and Nationwide (offered through AEA).  We do not have a payroll slot for Vanguard.  We do have some slots for a Plan 457 but I don't think you transfer your 403 plan to a 457.
 
I hope this information is of help to you."

Can you provide a link to the "Nationwide (offered through AEA)" 403b offering? Sometimes insurance companies offer mutual fund options as well as annuities options. And sometimes the teacher unions are involved in a low-cost 403b plan (NJ and CA come to mind). It's worth checking out as a possibility.

What does the email mean: "We do have some slots for a Plan 457". . .? Are there providers on the 457 list? If so who? Are the "slots" actually openings where another provider can be added?  

 

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Hey guys, 
I thought this posted on Friday when I sent it to this website, but it did not. I did get information about our investment options through my school district. Looks like the choices all involve some insurance  company. Which I'm very shocked by at this point. HR informed me of having the state's 457 Plan, BUT cannot transfer my 6k into that account. HR sent the following email to me that is below. 
 
At this point, I've stopped paying anymore money to LSW/ValuTeach and I"m trying to figure out a way to move my money to another vendor. Since that seems like a huge time consuming process and it's in the middle of the school year, I might have to wait until this summer to start digging into how to move my money OR at least get into a better plan offered through the district. Though I don't think it'll be smart to go with any of those insurance companies. Which means I'll have to start over with the investments and start off with the state's 457 Plan. 
 
I'm definitely wanting to open a Vanguard account or another account for a Traditional IRA. I do want to increase my contribution to my new retirement savings plan, but for right now I just want to start back investing with the amount I was doing with LSW/ValuTeach. I'd like the option to open my new IRA with no minimum amount needed to open the account...for example, I'd have to put $500-$1,000 into the account to start it.  
The way I'm tracking myself with my income I'll be able to increase my contributions to my new retirement account to $200 dollars a paycheck for the upcoming school year with my pay scale increasing, but right now I want to start investing my $160 into a traditional account as soon as possible. 
 
My husband just started a new trucking job and his company invests their 401k Wells Fargo. I'm trying to convince him to start contributing at least $50 a paycheck to his employer's plan and they match it up to 6%. The blessings of being a truck driver is that he gets paid every week!    If only education was so awesome in that way! *Eye Rolls* 
 
EMAIL FROM MY DISTRICT'S HR/PAYROLL: 
Quote

 

The only other investment groups we offer through payroll deduction are:  American General Life Insurance Company and Nationwide (offered through AEA).  We do not have a payroll slot for Vanguard.  We do have some slots for a Plan 457 but I don't think you transfer your 403 plan to a 457.
 
I hope this information is of help to you.

 

 
 
cleardot.gif

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1.  I agree with Tony stop contributing to the 403 b and start a roth IRA with vanguard.

2.  You mention your husbands company offer a 6% match thats free money so take advantage of it

 

Rich

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On 11/1/2017 at 9:41 AM, FnLuck34 said:
So here's the email I got back from HR at my school district. Wow, they seem to offer only insurance agencies as options for investing. With the exception of a 457 offered through our Alabama Education Association.  
Where do I go from here?   
 
"The only other investment groups we offer through payroll deduction are:  American General Life Insurance Company and Nationwide (offered through AEA).  We do not have a payroll slot for Vanguard.  We do have some slots for a Plan 457 but I don't think you transfer your 403 plan to a 457.
 
I hope this information is of help to you."

Here’s the Alabama Education Association (AEA), website:   http://www.myaea.org/benefits/financial-benefits/
Under Retirement, I see the following:
NEA® Retirement Program – “Participate in the NEA® Retirement Program, a supplementary retirement savings program specifically designed to help NEA members reach retirement goals.” This program uses Security Benefit, not Nationwide.  https://www.neamb.com/finance/nea-retirement-program.htm

NEA used to have 403b plans with Nationwide, but Nationwide sold their NEA Valuebuilder accounts to Security Benefit (SB) in 2000 for $72M.  SB is an insurance company that sells mostly very expensive annuity-based 403b plans. SB pays NEA about $2M a year for the privilege of attaching the NEA logo to their plans, aimed at the K-12 market. As Ed has mentioned, Security Benefit now offers an NEA Direct Invest with very low-cost Vanguard funds. This is an internet based 403b which bypasses the local reps. This is the only SB 403b plan that any of us here at 403bwise would recommend.

It’s a mystery why your HR office refers to a Nationwide AEA 403b?The AEA website links to the Security Benefit and then to the NEA Direct Invest plan. This would be an excellent 403b plan to hold your $6,000 and to contribute to when you can. I suggest you contact the HR office and explain that the AEA is a branch of the NEA and you should be able to use a Security Benefit 403b.

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On 11/16/2017 at 7:44 PM, krow36 said:

Here’s the Alabama Education Association (AEA), website:   http://www.myaea.org/benefits/financial-benefits/
Under Retirement, I see the following:
NEA® Retirement Program – “Participate in the NEA® Retirement Program, a supplementary retirement savings program specifically designed to help NEA members reach retirement goals.” This program uses Security Benefit, not Nationwide.  https://www.neamb.com/finance/nea-retirement-program.htm

NEA used to have 403b plans with Nationwide, but Nationwide sold their NEA Valuebuilder accounts to Security Benefit (SB) in 2000 for $72M.  SB is an insurance company that sells mostly very expensive annuity-based 403b plans. SB pays NEA about $2M a year for the privilege of attaching the NEA logo to their plans, aimed at the K-12 market. As Ed has mentioned, Security Benefit now offers an NEA Direct Invest with very low-cost Vanguard funds. This is an internet based 403b which bypasses the local reps. This is the only SB 403b plan that any of us here at 403bwise would recommend.

It’s a mystery why your HR office refers to a Nationwide AEA 403b?The AEA website links to the Security Benefit and then to the NEA Direct Invest plan. This would be an excellent 403b plan to hold your $6,000 and to contribute to when you can. I suggest you contact the HR office and explain that the AEA is a branch of the NEA and you should be able to use a Security Benefit 403b.

Thank you so much for providing this information. I've come to the conclusion that my HR isn't up-to-date on this area. It's only one person and she's giving me information that only refers me other sites. I feel like I'm learning that it's the environment where it's just 'go with what they send'.....as in these are the people who have the slots in our district so go with them. I had to go digging for information that was not provided for me through my district. Especially concerning the RSA-1 through my state, that I'm currently filling our papers to enroll in, and now this SB Direct Invest........no one from the state OR our district comes in and tells us any of this stuff at the beginning of the year.  I had to go asking questions and demanding what was offered in order to find more. 

Now that I'm learning all of this I definitely intend to help new hires and new teachers coming in to better understand how important it is that he/she investigates and see what more is offered before agreeing to just sign up with whoever they send to the teacher's lounge. 

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I found this on the Alabama Education Association site.  I know I have the information for SB through NEA, but would this also be a good company to go with for retirement? I have the 6k in ValuTeach that I'm trying to rollover into another 403b plan.   Thanks for your help! 

 

Financial Benefits

Financial Planning
  • TIAA-CREF Investment Program – Collateral Financial Advisors, LLC, a registered investment adviser (RIA), offers you independent, unbiased investment advice designed to help you realize your retirement savings goals. Their partnership with TIAA-CREF, a leader in K-14 retirement programs, gives you access to a low cost approach to retirement savings.

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13 minutes ago, FnLuck34 said:

I found this on the Alabama Education Association site.  I know I have the information for SB through NEA, but would this also be a good company to go with for retirement? I have the 6k in ValuTeach that I'm trying to rollover into another 403b plan.   Thanks for your help! 

Financial Benefits

Financial Planning
  • TIAA-CREF Investment Program – Collateral Financial Advisors, LLC, a registered investment adviser (RIA), offers you independent, unbiased investment advice designed to help you realize your retirement savings goals. Their partnership with TIAA-CREF, a leader in K-14 retirement programs, gives you access to a low cost approach to retirement savings.

I think the Security Benefit NEA Direct Invest 403b plan is much superior to what you might get using TIAA funds. When you go through an adviser, you will pay significantly more than with a DIY plan like SB NEA Direct Invest. 

 

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1 hour ago, FnLuck34 said:

Thank you so much for providing this information. I've come to the conclusion that my HR isn't up-to-date on this area. It's only one person and she's giving me information that only refers me other sites. I feel like I'm learning that it's the environment where it's just 'go with what they send'.....as in these are the people who have the slots in our district so go with them. I had to go digging for information that was not provided for me through my district. Especially concerning the RSA-1 through my state, that I'm currently filling our papers to enroll in, and now this SB Direct Invest........no one from the state OR our district comes in and tells us any of this stuff at the beginning of the year.  I had to go asking questions and demanding what was offered in order to find more. 

Now that I'm learning all of this I definitely intend to help new hires and new teachers coming in to better understand how important it is that he/she investigates and see what more is offered before agreeing to just sign up with whoever they send to the teacher's lounge. 

Yes, it looks like you have an opportunity to improve the 403b and 457 options for your district. It's the rule that school districts do not offer any guidance or vet the offerings of the vendors. If no employee has asked for the State 457 plan, it doesn't get added to the district's vendor list. Your district does sound incompetent to refer to Nationwide rather than SB for the AEA endorsed plan. 

Have you looked at the SB Direct Invest 403b application form yet? You may have to convince the HR office that you are allowed to use the SB Direct Invest. After you have an account with SB, you will have fill out paperwork for the transfer of your $6000. 

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Ok, so here's the update: 

I have submitted by application to SB to start up a Direct Invest 403b. I have sent emails to my HR to let them know I want to deduct money from my paycheck to this vendor. I'll inform you later of what all they have to say. 

I enjoy the accessibility I have to seeing what I'm investing in and my options. SB provides a spread of various options and I can see the performance and profile of those options I choose to invest with....so I'm glad I was told about this. Thanks to all of you who helped with guiding me to this site. 

Also, my husband has set up his 401k with his company and is now contributing to it...his was way easier to set up than what I have to go through, lol. Go figure! 

My other question now is.....should I also invest with my state's Plan 457 through rsa-1?  I'm wondering if I should just pool all of my money into SB and keep increasing what I contribute to that one retirement plan OR should I have another plan, like the 457, to see how it performances compared to the SB retirement? 

I don't know if I should put all of my eggs into one basket or spread my eggs out to other places. Is having more than one account better or worse or doesn't matter? Thanks for your help! :) 

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I haven't read this whole thread so I apologize if I'm repeating information.

FYI, it sounds like your family has at least 4 options for accounts that give you a tax benefit: IRA, 403b, 457b, and 401k.

With regards to 403b vs 457b, if you could exceed the $18,000/year cap ($18,500 in 2018) then I'd suggest contributing to both. However, it sounds like you can't, which means the question isn't if you should contribute to both; the question is which you should contribute to. I'm not familiar with your state's 457 so I can't answer that question but I know you can build a fully diversified portfolio at Security Benefit for about 0.07% and a $35/year fee (waived when your balance hits $50,000). It is possible the state plan is better but there isn't too much room for improvement.

When you invest, your eggs never go in one basket, but the baskets we're talking about when we say that are specific stocks or specific market sectors...for the most part, we're not talking about types of accounts. Personally, we invest all of our money in the account that gives us the lowest costs, best tax situation, and a diversified portfolio. If we have more money then we invest it all in the 2nd best account, and then in the 3rd, and so on.

It was a red flag for me when you talked about making decisions based on past performance because it indicates that you may be missing some foundational principles of investing that'll save you lots of money. I could probably write at length on this topic but here are the cliff notes (ask questions and I'm happy to get into more detail):

1. Past performance does not predict future performance. If anything the best way to pick a future loser is to pick last year's top performer.
2. The single best way to pick a future winner is to pick the fund with the lowest cost.
3. Nobody can predict how markets will behave. Not me, not you, and not the super smart PhDs with tons of money and complex models. So any time you contemplate making a decision based on the idea that you know something about the future...STOP!
4. Diversification is key. That means a few things. You should own total market index funds because they consist of thousands of stocks spread across every industry. You should have foreign stocks and domestic stocks and you should hold enough bonds so that when stocks crash by 50% (as they regularly do), you can handle it both financially and psychologically.
5. A 3 fund portfolio (domestic total market index fund, international total market index fund, bond total market index fund) is the cheapest option and requires a litle bit of maintenance on your part.
6. A single fund-of-funds internally holds the individual total market index funds but it does the maintenance for you and costs a little extra.

...this isn't a complete run down, my Investing 101 page might be useful to you though.

...also if you list the 401k options I'd be happy to provide my opinion. Remember, it is important to think of your portfolio as the summation of every account. Thinking of each account as a stand-alone portfolio can lead to higher costs and additional complexity.

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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.
 

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11 hours ago, EdLaFave said:

I haven't read this whole thread so I apologize if I'm repeating information.

FYI, it sounds like your family has at least 4 options for accounts that give you a tax benefit: IRA, 403b, 457b, and 401k.

With regards to 403b vs 457b, if you could exceed the $18,000/year cap ($18,500 in 2018) then I'd suggest contributing to both. However, it sounds like you can't, which means the question isn't if you should contribute to both; the question is which you should contribute to. I'm not familiar with your state's 457 so I can't answer that question but I know you can build a fully diversified portfolio at Security Benefit for about 0.07% and a $35/year fee (waived when your balance hits $50,000). It is possible the state plan is better but there isn't too much room for improvement.

When you invest, your eggs never go in one basket, but the baskets we're talking about when we say that are specific stocks or specific market sectors...for the most part, we're not talking about types of accounts. Personally, we invest all of our money in the account that gives us the lowest costs, best tax situation, and a diversified portfolio. If we have more money then we invest it all in the 2nd best account, and then in the 3rd, and so on.

It was a red flag for me when you talked about making decisions based on past performance because it indicates that you may be missing some foundational principles of investing that'll save you lots of money. I could probably write at length on this topic but here are the cliff notes (ask questions and I'm happy to get into more detail):

1. Past performance does not predict future performance. If anything the best way to pick a future loser is to pick last year's top performer.
2. The single best way to pick a future winner is to pick the fund with the lowest cost.
3. Nobody can predict how markets will behave. Not me, not you, and not the super smart PhDs with tons of money and complex models. So any time you contemplate making a decision based on the idea that you know something about the future...STOP!
4. Diversification is key. That means a few things. You should own total market index funds because they consist of thousands of stocks spread across every industry. You should have foreign stocks and domestic stocks and you should hold enough bonds so that when stocks crash by 50% (as they regularly do), you can handle it both financially and psychologically.
5. A 3 fund portfolio (domestic total market index fund, international total market index fund, bond total market index fund) is the cheapest option and requires a litle bit of maintenance on your part.
6. A single fund-of-funds internally holds the individual total market index funds but it does the maintenance for you and costs a little extra.

...this isn't a complete run down, my Investing 101 page might be useful to you though.

...also if you list the 401k options I'd be happy to provide my opinion. Remember, it is important to think of your portfolio as the summation of every account. Thinking of each account as a stand-alone portfolio can lead to higher costs and additional complexity.

Thank you for this information. I am reading over your Investing 101 page. I definitely need all the help I can get when it comes to investing and understanding investing. I'm officially with SB now and my HR did send me word that they have a slot for SB and as soon as I send them their paperwork with my deduction information they can start the deductions :D Yay!  So I will start contributing to this new investment this month. 

I will ask about the 401k options that my husband has. When I was looking through his packet for benefits, I remember it saying that Wells Fargo is the provider for the retirement options. 

This experience has been an eye opener and has forced me to put in a lot of work into finding out what it takes to gain control over where my dollars are going toward my retirement. I understand there are risks no matter what.  What triggered this is the fact that I didn't know I had options. Knowing that these options were out here all along...wow. This is good information to learn about because I've had younger teachers asking me if ValuTeach/LSW was worth the investment and having limited knowledge on this I never felt like I could give a complete answer of 'yes'.....I really didn't know. 

I'm trying to better understand diversification. These are couple of fund options that I'm considering through SB. Some of the other options have a higher expense ratio.  What's the best way to determine what's too high?   

Vanguard 500 Index

Prospectus

Profile Page (PDF) 

 

Vanguard Growth Index

Prospectus

Profile Page (PDF) 

 

Vanguard Intermediate Term Bond Index

Prospectus

Profile Page (PDF) 

 

Vanguard Mid Cap Index

Prospectus

Profile Page (PDF) 

 

Vanguard REIT Index

Prospectus

Profile Page (PDF) 

 

Vanguard Small Cap Index

Prospectus

Profile Page (PDF) 

 

Vanguard Total International Stock Index

Prospectus

Profile Page (PDF)

 

Vanguard Total Stock Market Index

 

 

 

Invesco Mid Cap Growth

Prospectus

Profile Page(PDF) 

 

Invesco Small Gap Growth

Prospectus

Profile Page (PDF) 

 

Janus Growth and Income

Prospectus

Profile Page (PDF) 

 

Perkins Mid Cap Value

 

T. Rowe Price Retirement 2040

Prospectus

Profile Page (PDF) 

 

T. Rowe Price Retirement 2050

Prospectus

Profile Page (PDF) 

 

T. Rowe Price Retirement 2060

Prospectus

Profile Page (PDF) 

 

T. Rowe Price Retirement Income

 

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As a general rule a fund-of-funds (target date or fixed allocation) should cost roughly 0.15%. SB charges 0.8-1.0%, which is way too expensive to settle for.

As a general rule a domestic stock or bond fund should cost about 0.05% and an international fund should cost about 0.10%. Luckily for you SB has:

1. Vanguard Total Stock Market for domestic stock.

2. Vanguard Total International Stock Market for foreign stock.

3. Vanguard Intermediate Term Bond for US bonds.

The “total market” indicates you own the entire market, complete diversification. Vanguard does have a total market bond fund, but SB doesn’t offer it...so the Intermediate Term fund is a good substitute. It is slightly, and I emphasize slightly, more risky, but it is still cheap and high quality.

These are the three funds I’d choose if I were building my entire portfolio at SB.

...however, you may find that your spouse only has access to cheap domestic funds in their 401k (which is the case for us). In that case it might be wise to let them load up on domestic while you load up on international. These are the reasons why you must consider your portfolio as a summation of all accounts.

...also just an FYI, the S&P 500 represents the biggest 500 companies in the US. These companies make up a massive portion of the US market and the mid/small size companies perform similarly to the big companies. So if you were ever forced to (as I am), the S&P 500 fund is a fine replacement for a total market fund. If you look at a graph of total returns over a decade or so, it is basically impossible to tell them apart. 

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