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25 minutes ago, krow36 said:

you could ask your district to add Fidelity and/or CalSTRS Pension2 to the 457 vendor list.

Krow, do you know why Vanguard doesn't offer a 457b or why SecurityBenefit's NEA DirectInvest isn't available as a 457b?

It is unfortunate that aside from some state run 457b plans, the only low cost vendor seems to be Fidelity.

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43 minutes ago, EdLaFave said:

I'm ambivalent on this topic.

 

I have seen plenty of lists with too many bad choices that did not have any of the better choices. Most if not all are insurance companies. I have to disagree with you half way on that one but I do see your point.  Still, even if Vanguard or Fidelity is on a list of dozens of choices what makes you so sure your average teacher investor will know which ones are the coal and which ones are golden? To many teachers Vanguard or Fidelity would be just another name in the crowd.

I think auto enroll would be what most districts should do probably in a target fund. The problem is the outsides forces would challenge that decision and of course it would be led by the insurance lobby. The insurance lobby would, through their salespeople, then put a bug in the teacher's ear saying they are being denied direct financial advice. Everyone wants a piece of that 403b pie and that's what makes the whole thing so rotten.

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1 hour ago, tony said:

To many teachers Vanguard or Fidelity would be just another name in the crowd.

Yup, it would be beneficial for people who know something or ask for help. This would be an inferior approach, but perhaps not the most inferior approach.

1 hour ago, tony said:

I think auto enroll would be what most districts should do probably in a target fund. The problem is the outsides forces would challenge that decision and of course it would be led by the insurance lobby. The insurance lobby would, through their salespeople, then put a bug in the teacher's ear saying they are being denied direct financial advice. Everyone wants a piece of that 403b pie and that's what makes the whole thing so rotten.

If you could get a district to think it is a good idea (assuming they have the authority to implement auto-enroll), then I think you could overcome predatory institutions' objections. It is so clearly the superior solution and the auto-enroll feature negates the standard objection from "advisers" that self-directed plans result in most people not contributing anything.

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1 hour ago, EdLaFave said:

Krow, do you know why Vanguard doesn't offer a 457b or why SecurityBenefit's NEA DirectInvest isn't available as a 457b?

It is unfortunate that aside from some state run 457b plans, the only low cost vendor seems to be Fidelity.

Ed, I don't know why Vanguard doesn't offer a 457 plan but we can speculate. It's probably related to the same reasons they contracted with Newport Group to run their smaller (K-14?) 403b plans. That is, their costs per participant. The K-14 457 plan market must be much smaller than the 403b market, so less economy of scale?

As for SB's Direct Invest, I guess neither SB nor NEA think it's worth bothering with. We can only guess at the real motivation behind the 403b Direct Invest. I think of it as a plan subsidized by the expensive SB (so-called value builder?) plans that the NEA name is attached to. Without that 2M+/yr subsidy that NEA gets from SB, there would be no SB Direct Invest. 

 

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As I mentioned, your list of 457 providers does not include a low-cost index fund provider. They are all expensive insurance companies. However,  your 403b list does include CalSTRS Pension 2, which also offers a 457 plan. It should be relatively easy to get your district to add them to your 457 vendor list. They SHOULD be on the list already!

The CalSTRS Pension 2 plans are good plans with excellent Vanguard index funds, so you shouldn’t hesitate to use it for your 457. It is run by the same organization as runs your state teachers pension.

You could use the following funds in the 457:

Vanguard Total Stock Mkt Idx Instl Pls (VSMPX), ER 0.02%

Vanguard Total Bond Market Index Adm (VBTLX), ER 0.05%

I suggest you use an international stock fund in your other accounts as they are more expensive actively managed (not index) funds in the Pension 2 plans.

Also consider the Easy Choice (target retirement) funds with a date close to your retirement date. They are a bit more expensive but have the advantage that they do the rebalancing for you. 

CalSTRS adds 0.25% management fee to each fund’s ER, but there is no flat dollar admin fee as there is with Fidelity and Vanguard.https://www.calstrs.com/sites/main/files/file-attachments/p2_fee.pdf

 

Adding Fidelity to the 457 vendor list might be slightly more difficult but certainly worth a try, considering they are already on the 403b list. They are significantly lower-cost than CalSTRS. I would call them and get their input before talking to the district.

I would not roll your old 457 account into an IRA. 457 plans have an unique advantage over IRAs and 403b accounts in that you can make withdrawals at any age after you quit. The other plans have a 10% penalty for withdrawals before age 59.5 (there are some special exceptions). It's possible this could be useful in the future, who knows? 

So be patient and leave your old 457 plan where it is until you have a low-cost vendor available. If you post the funds you are using and also other funds available in the old 457 account, we can see if that can be improved? Please include the fees (expense ratios, etc.)

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@krow36Hi Krow. Yes, the Pension2 does have a 457, but it isn't available to us. I had a rep from there get in contact with my district to no avail. The problem with my "old 457" is, I have until my dad is 70 years (about 6 years) to roll it over because the account was originally his and he was the employee. My "old 457" is 100% Asset Allocation (Aggressive Portfolio), which I don't have rights to contribute.

I will pursue my district to add a lost cost vendor. What would you do if they don't? I do have some time before I have to roll over the 457 account.

Thanks!!

 

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Ed asked why Security Benefit and NEA don't include a 457 plan, only their 403b plan. I was making some guesses as to why. So NEA Direct Invest is a 403b option for Shannon (but we prefer VG or Fido), but it's not a 457 plan option. SB's 457 offerings are only their expensive stuff.

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1 hour ago, Shannon said:

@krow36Hi Krow. Yes, the Pension2 does have a 457, but it isn't available to us. I had a rep from there get in contact with my district to no avail. The problem with my "old 457" is, I have until my dad is 70 years (about 6 years) to roll it over because the account was originally his and he was the employee. My "old 457" is 100% Asset Allocation (Aggressive Portfolio), which I don't have rights to contribute.

I will pursue my district to add a lost cost vendor. What would you do if they don't? I do have some time before I have to roll over the 457 account.

Thanks!!

 

OK, Shannon, that's different. If your 457 is an inherited 457, you don't have that "no-penalty withdrawal at any age" benefit. I think you must take "Required Minimum Distributions" but I need to do some reading on inherited 457 accounts. When did you inherit the 457? Have you made any withdrawals yet? I don't understand your comment about your dad being 70? Can you provide a link to a website that covers the "70 age and time to roll it over" ideas? 

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@krow36 I have not made any withdraws from this account. They told me in 5 years I have to start withdrawing (when my dad is 70.5). I inherited the account in 2011after my mom's passing, which was her account (spilt accounts after divorce). My dad is still alive and he was the City of LA employee who the account was through. I don't have a link, it was info I was told by the account representative. 

Hopefully this make a little more sense?

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Holy smokes, I'm staying out of this one. My head is spinning. I will let Krow , Ed, and others get the headache. Shannon, I am trying to follow your two threads and I'm kind of lost from all the details.  After you get everything straightened out I would strongly suggest you try keep things as simple as possible by having all your investments situated in the same target fund if at all possible regardless if you invest in a Roth, 403b, traditional IRA or 457. Hopefully you will be able to consolate or transfer all your accounts.

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WOW, this is a bit complicated! I haven’t found anything on inherited 457 that came from a divorce settlement (the employee being under 70.5!). I think this is a job for a professional, which none of us here are. Maybe one will join us? Hopefully the folks running the City of LA 457 plan (VOYA) have it figured out. But maybe we can help you understand some questions to ask VOYA and we can learn something ourselves? There are 2 other forums that both have experts on retirement plans where you (or we) could ask questions if you have them.

To summarize:

Your mother received a part of your father’s 457 in a divorce settlement. She died 11 years ago and you inherited the 457.

  1. You haven’t said it is a Roth 457 but if VOYA says the taxes have been payed, then it has to be a Roth 457. You should confirm this. Do you get statements or have an online account? You should at least get the former.
  2. You’ve been told by VOYA that you must start taking a distribution by the year that your living father is 70.5. I’m not sure if the  Required Minimum Distribution will be based on his age, or on your age? 
  3. It just so happens that it’s 5 years until your dad is 70.5. I was confused because there is a 5 year rule that applies to distributions inherited IRAs (and maybe 457 plans?). So the 5 year rule doesn’t apply in this case.
  4. It’s not clear to me yet that you should move the inherited 457 anywhere, including to an IRA at Vanguard. It would be best to postpone that decision I think. You are paying 0.36% in fees on the fund now which isn’t rock-bottom but it’s not too bad, and certainly much better than any of your district’s current 457 vendors.
  5. The Aggressive Portfolio Profile for the City of LA 457 plan is 80% US and Int’l stock funds and 20% bond and stable value funds. The 0.36% fee includes the management fee as well as the expense ratio. https://cityofla457.gwrs.com/preLoginContentLink.do?accu=CityOfLaWR&contentUrl=preLogin.InvestmentInformation.A&specificBundle=preLogin

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14 hours ago, krow36 said:

 

WOW, this is a bit complicated! I haven’t found anything on inherited 457 that came from a divorce settlement (the employee being under 70.5!). I think this is a job for a professional, which none of us here are. Maybe one will join us? Hopefully the folks running the City of LA 457 plan (VOYA) have it figured out. But maybe we can help you understand some questions to ask VOYA and we can learn something ourselves? There are 2 other forums that both have experts on retirement plans where you (or we) could ask questions if you have them.

To summarize:

Your mother received a part of your father’s 457 in a divorce settlement. She died 11 years ago and you inherited the 457.

  1. You haven’t said it is a Roth 457 but if VOYA says the taxes have been payed, then it has to be a Roth 457. You should confirm this. Do you get statements or have an online account? You should at least get the former.
  2. You’ve been told by VOYA that you must start taking a distribution by the year that your living father is 70.5. I’m not sure if the  Required Minimum Distribution will be based on his age, or on your age? 
  3. It just so happens that it’s 5 years until your dad is 70.5. I was confused because there is a 5 year rule that applies to distributions inherited IRAs (and maybe 457 plans?). So the 5 year rule doesn’t apply in this case.
  4. It’s not clear to me yet that you should move the inherited 457 anywhere, including to an IRA at Vanguard. It would be best to postpone that decision I think. You are paying 0.36% in fees on the fund now which isn’t rock-bottom but it’s not too bad, and certainly much better than any of your district’s current 457 vendors.
  5. The Aggressive Portfolio Profile for the City of LA 457 plan is 80% US and Int’l stock funds and 20% bond and stable value funds. The 0.36% fee includes the management fee as well as the expense ratio. https://cityofla457.gwrs.com/preLoginContentLink.do?accu=CityOfLaWR&contentUrl=preLogin.InvestmentInformation.A&specificBundle=preLogin

Hey Micheal!

Shannon: here is his Michael Devault's connection information: http://board.403bwise.com/profile/6-michael-devault/ He knows all of this compliance stuff!  

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