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oldgaloot

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  1. Rev. Ruling 90-24 also did not allow for future contributions to go to the vendor that was receiving the capital transfer---it only allowed for balances to be transferred. The same transaction can now be achieved provided your Plan enters into an information sharing agreement with the vendor that receives your capital transfer. Thanks for the reply. Because I'm still an employee and contributing, this would not be a good option for me. The Lincoln rep comes in Tuesday. I'll ask about the fees/expenses for the plan we are on, and whether Lincoln offers a custodial account in place of the annuity. That might be the best I get out of my employer, as they have had a deer in the headlights look about the "add another vendor" option.
  2. Yes, the name was Robert Architect. I got an email reply but they said that they reply by telephone and I did not supply that information so I re-sent with the relevant info. I'll report back.
  3. Thanks for this reply. I'll specifically ask the Lincoln rep about a custodial account. Certainly I am going to ask for very specific information on fees/commissions, etc. As far as getting an information agreement with Vanguard out of my organization... I think it will be a tough row to hoe. The plan administrator knows nothing (e.g., I had to explain to her what an annuity was)... If I asked for a copy of the "plan" I'm sure the reply would be to call the Lincoln guy. I'm sure no one in the org (plan administrator or director or whomever) thinks they need to know anything about this stuff at all. But if they don't agree to add Vanguard as a vendor I will probably ask for the information sharing agreement.
  4. I'm starting a new topic post here regarding getting out of a high-cost plan. I had thought I might be able to do that through the old Rev. Ruling 90-24 but that got superseded by the statutory changes and the final regulations. But a "mini-course" I took through the IRS website http://www.stayexempt.org/Mini-Courses/403b_Employers/403b-tax-sheltered-annuity-plans-employers.aspx implies that what was permitted under Rev. Ruling 90-24 -- that is, placing one's 403(b) assets into something not currently offered by the employer's plan -- is still allowed, provided the employer and the new custodian enter into an information sharing agreement, and provided the new investment does not violate anything in the employer's plan. See slides 17 and 18. Another search took me to Rev. Proc. 2007-71, section 6.4 of the model language that implies that 403(b) assets can be moved to a custodial account, provided that information sharing is set up -- but that entire section also implies that the new custodian is not receiving regular contributions. I have an inquiry into the IRS (there's actually a person named at the end of Rev. Proc. 2007-71). In the meantime, if anyone has any insight, I'd appreciate hearing it.
  5. More on this. We had a partial staff meeting. Before the meeting the plan administrator found out that the Lincoln rep does the Form 5500 for us for ~$200. The thought is that he would not want to do it anymore if Lincoln was competing with Vanguard (for example) for our 403(b) business. The accounting firm that does our Form 990 gave a ballpark estimate of $1000 to do the Form 5500. The roughly $800 difference, if that's in fact what it would end up being, is giving the management of my non-profit some heartburn. I think that price is kind of whacky for a 2 page form, but I'm not an accountant. I, as the person advocating for adding a custodial account vendor to the plan, provided the following information on expenses. Lincoln expenses: Annual Account Fee -- $25 (they say they may waive it but there are no details on how/when they do). Mortality and expense risk charge: 1.002% The investment options (funds) charge management fees and expenses also, ranging from 0.53% to 1.93%. Therefore, total account fees range 1.78% to 3.18%. Vanguard: Annual Account Fee -- $15 (waived if account holder has 50K or greater in assets with Vanguard) That's 0.15% The funds have management fees and expenses that average 0.2% and are almost always less than 0.5% (There may be a $15 fee in some funds if the assets in that fund are less than 10K, but it seems that might be waived if electronic delivery of documents in arranged or if total assets with Vanguard) Therefore, total account fees are 0.65% or less, a savings of at least 1.1 - 2.5% a year, more likely at least 1.5%. I did not get much of a reaction -- I don't think people think about the compounded drag that result after being in high-expense plans for years. Someone suggested bringing in the Lincoln rep and see what else they may offer besides a "variable annuity." Because we are a very small non-profit (around 20 employees), I'm guessing that the annuity will be the only option. That meeting is next week and I'm learning all I can about 403(b) plans, and something I learned today I will put in another post.
  6. oldgaloot

    Form 5500

    I posted earlier (May 2012) about by very small non-profit's 403(b) plan (Lincoln Multi-Plan Variable Annuity) and my efforts to ask the employer to add a low-cost alternative (LCA; sorry, I use a lot of acronyms)like Vanguard or Fidelity. I thought I would have to go through a comparison of fees to sell the idea, but I did not. They expressed the thought that it was a good idea. Then there was a hiatus as the Executive Director was out of the country for a bit, and the plan admin did not follow up by calling Vanguard (that was the next step). But she called Vanguard and was more or less sold on the idea that adding an LCA alternative to Lincoln was OK. But now a new glitch has come up. The IRS requires Form 5500, and right now the local Lincoln rep fill it out for us for no additional charge (I'm not going to say "free" because the guy is probably making a bundle w/o doing squat right now). It's doubtful he will still want to do it if folks bail on his product and go with the LCA. So the plan administrator calls up the accounting firm that does our Form 990 (the usual form that non-profits have to file) and the guy says the additional charge for filling out Form 5500 (all of 4 pages, with the first page simply the name and address) would be "less than $1000." ! I don't know what accountants charge by the hour but it would seem that if an accountant had the numbers in front of them from both Vanguard and Lincoln on the number of participants, $, etc., all the stuff the Form 5550 requires, that it might take 15-30 minutes tops.... If it truly costs that much, then it's unlikely that my org will offer an LCA. We are going to ask the org's Treasurer if he has any ideas, and another staffer recommended that we get in contact with a former Board member who is a financial planner... Any ideas? Are there accounting firms that help non profits out with stuff like this? We are near Seattle. Thoughts? Thanks!
  7. OK, I finally talked to the plan administrator here at the org, and she admitted she knows little about it (I had trouble convincing her that it was an annuity until showing her the front page of the prospectus which says "variable annuity"). They went with Lincoln about 14 years ago on a recommendation from someone that had a Lincoln 403(b) via a school district. She said she was going to talk to the Lincoln guy and learn more about it. I'm sure he's going to give her glowing stuff about it, but I've learned how hard I can push around here. I was all smiles and head-nodding. I may just give Vanguard a call tomorrow myself and see what I can learn. Maybe someone there can give me comparable cost numbers. Anyway, it's a start. Thanks to all who participate on making this site what it is -- I wouldn't have gotten this far without you.
  8. 3% after the first year. The employee handbook does not identify a plan administrator or someone in the org that is supposed to administer the plan or know what is going on with it. Before I start poking around here at the org, however, I would like to have some low-cost option to compare to Lincoln's Multi-Plan Select variable annuity.
  9. Thanks for the replies, Tony and Steve. It's odd in that there are no "ticker symbols" for the funds in which I can invest. My thinking is that they are regular old funds, but Lincoln adds "VIP" to the name in order to hide the fact that they won't credit my investment the same as if I was in the "real" fund. For example, I have some of my money in the "Fidelity VIP Contrafund". The link you provided indicates that the performance of that plan was One year -1.18, 3 year, 19.13, 5 year 0.28, 10 year 5.57 since inception 8.99 Here's what I find for Fidelity Contrafund FCNTX 1 Year* 4.27% 3 Year* 18.87% 5 Year* 3.15% 10 Year* 7.54% Life* 12.16% So there's a pretty big drag on how much my money can grow. Not sure why the 3 year was higher for Lincoln's edition, but the rest are lagging. I'll look into the other fees and report back. Thanks again for your insight. No ticker symbols denote insurance products. They is a long political history about that; insurance companies don't have to be regulated by the SEC nor agents have to be fiduciaries. You don't want to look at past performance to construct a portfolio. I believe you know what a diversified portfolio looks like: large, mid, small, international and a bond fund to rebalance. All indexes, or close to indexes as possible (low turnover). What is the percentage match? And, have you asked your employer to add Fidelity, Vanguard, TIAA CREF? If so, what did they say? Steve I haven't asked yet because I'd like to get some comparable data between what's offered and what else is out there. But Vanguard and Fidelity are burying their information on their websites (if it is available at all). For example, in the prospectus for the MultiPlan Select (the Lincoln plan that is our umbrella, with a number of different "funds" to choose from" it has this: This Example is intended to help you compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include contractowner transaction expenses, contract fees, separate account annual expenses, and fund fees and expenses. The Example assumes that you invest $10,000 in the contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year and assumes the maximum fees and expenses of the contract and any of the funds. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: 1) If you surrender your contract at the end of the applicable time period: 1 year 3 years 5 years 10 years $1,086 $2,059 $2,834 $4,880 2) If you annuitize or do not surrender your contract at the end of the applicable time period: 1 year 3 years 5 years 10 years $485 $1,456 $2,431 $4,880 There is more information on exactly what the charges are (e.g., each fund has some charge associated with it, but those vary as to the fund). And there is the whole Deductions from the VAA We apply to the average daily net asset value of the subaccounts, a mortality and expense risk and administrative charge which is equal to an annual rate of 1.002%. which I am guessing is what makes the thing an annuity (insurance). I can't seem to find any info at Vanguard or Fidelity on costs except a phone number to call for a consult. Haven't looked at TIAA-CREF too closely.
  10. I will check out the total expenses in the prospectus and report back. I need to do that if I'm going to make a case to the boss. I think my investment choices are the ones that were in the link you had -- similar to well-known funds but have been "Lincolnized". I do get a match, but that only takes a bit of the sting out of the high expenses. But it shouldn't make any difference to the employer once they have thrown in the match. Then it's my money... and I'd rather have a lower cost option. Thanks again for your interest!
  11. Thanks for the replies, Tony and Steve. It's odd in that there are no "ticker symbols" for the funds in which I can invest. My thinking is that they are regular old funds, but Lincoln adds "VIP" to the name in order to hide the fact that they won't credit my investment the same as if I was in the "real" fund. For example, I have some of my money in the "Fidelity VIP Contrafund". The link you provided indicates that the performance of that plan was One year -1.18, 3 year, 19.13, 5 year 0.28, 10 year 5.57 since inception 8.99 Here's what I find for Fidelity Contrafund FCNTX 1 Year* 4.27% 3 Year* 18.87% 5 Year* 3.15% 10 Year* 7.54% Life* 12.16% So there's a pretty big drag on how much my money can grow. Not sure why the 3 year was higher for Lincoln's edition, but the rest are lagging. I'll look into the other fees and report back. Thanks again for your insight.
  12. I'm a newbie at this. I have worked for a nonprofit for 7 years and have contributed to the 403(b) plan that was set up. I had thought that it was simply some vehicle that allowed a match by the employer and I was given a menu of mutual funds to invest in. I find out upon actually reading the prospectus that it's a variable annuity (the Multi-Plan Select offered by Lincoln Financial Group). I think I would rather invest in mutual funds straight up w/o the annuity and life insurance end of the deal. I was reading The Only Investment Guide You'll Ever Need (2010 updated edition) and the author, Andrew Tobias, implies that I can get someone else to be the custodian for the account (if my plan allows transfers, and Tobias says that almost all do) and make my contributions to the new custodian and I get out from under the maintenance fees, etc (although I will certainly get socked by surrender fees). I called Vanguard to talk with one of their retirement reps and she says that I'm stuck with the plan my employer offers and that I only have such an option if I leave that employer or retire (then I can go with whomever to be the new custodian, after paying all the hefty surrender fees etc.). If that's so I am going to talk to my employer about getting some changes to the plan that are more friendly to the employee, but making management changes at this organization has been difficult in the past -- it would be so much easier if I could get out by myself. Tobias gives a big shout out to this website, which is how I found it in the first place. So am I reading Tobias incorrectly, was the Vanguard rep wrong, or was the law changed at some point (I saw somewhere else on this site about someone talking about 90-24 horrors after the law was changed in 2007 (or 09))? I'd love to get out of my current variable annuity. Can I? Thanks Mark
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