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krow36

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  1. Ed, the OP states that the relative is with a charter school, not a public school district. Charter schools are often private, non-profit organizations that have a single vendor 403b plan. A "governmental 457" is not available to private schools. We don't know what 403b plan AXA is using, or their fees, or even whether the school matches contributions. If the charter school's pay scale is modest which is often the case, I think it's likely that the relative will be in a low tax bracket. I think using either a traditional or a Roth IRA is very reasonable in this case. I agree that if AXA waived the surrender fee on separation from employment, an expensive variable annuity could be considered over a short period of time, a few years. I don't think that's likely, but we would have to know the plan name and check its prospectus to know for sure. If the relative could max the 403b over 2 years, that might be worth it. I don't think contributing only 2k or 3k/yr would be worth it, and I'd prefer it to into a brokerage account. I think your disparagement of a taxable brokerage account is perhaps unjustified. The modest amount of taxable dividends that a fund like Vanguard's Total Stock Market fund generates should not a significant problem for someone likely to be in the 12% bracket while at the charter school.
  2. The answer to Tony's question is important: can she contribute more than $6000 to retirement plans? If not, then skip the 403b. Does she have an emergency fund for unexpected expenses? If her school is a public school, it's possible she can use the excellent NY state 457b plan. It is available to NY public schools although the school may not be utilizing it. Are you certain that Equitable (aka AXA) is the district's only 403b vendor? That's unusual for a public school district, but possible. The Equitable Series 201 is a variable annuity that has high fees: the lowest fund expense ratio is about 0.6%, most are around 1% or more, and there's a 1.20% admin fee. There's a 5% surrender fee that lasts 5 years. So we strongly urge against it.
  3. What is the vendor that your 403b is using now? You need to consider all the fees, especially each fund's expense ratio.
  4. krow36

    Zero fee ETFs

    You're right, I missed that. It's sort of amusing how a few vendors are trying to make a big deal about beating Vanguard to the bottom on fees on index funds. A bunch of Jonnie come latelys! What took them so long?
  5. krow36

    Zero fee ETFs

    I think Fidelity was the first with zero expense mutual funds a year or 2 ago. https://www.fidelity.com/mutual-funds/investing-ideas/index-funds?imm_pid=700000001009773&immid=100820&imm_eid=ep35516329205&gclid=EAIaIQobChMIvvTMlbfL6wIVryCtBh3P7QvgEAAYASAAEgJC-_D_BwE&gclsrc=aw.ds
  6. Eggbread, in addition to finding out the surrender fee from Equitable, you need to get their form for moving your 403b balance from them to Vanguard. They issue a numbered form to you that has to be completed and returned by a set date, maybe 30 days? Folks have had to start over when their turn-in date was passed. Their form will have to be signed by your third party administrator (TPA) and maybe Vanguard (I can't remember).
  7. I retired in 1992 and since Roth accounts didn’t start until 1997, I didn’t have to make any decision on Roth vs traditional contributions. We have converted some traditional IRA to Roth IRA. We don’t have your problem of a high tax bracket as we took early retirement after 16 years. With 2 pensions and social security, possibly large deferred contribution accounts could well put you in a higher income tax bracket in retirement than you are in currently. Especially after age 72 when RMDs start. I think it might be prudent to use at least half Roth for the 403b and 457 accounts. You can reassess every few years as the tax code changes. Another consideration is saving in a taxable account vs a Roth account. They both have the same initial tax cost, but with no further tax, the Roth beats taxable. I should have mentioned that Security Benefit has NEA Direct Invest which is lower cost than the state DCP. Is SB on the district 403b list?
  8. I am a retired WA state teacher. I understand that you are favoring the state deferred compensation 457 plan rather than contributing more than the minimum to the defined contribution part of the TRS plan 3 hybrid plan. Both use the same funds with the same fees. That sounds reasonable to me. Are you firm on using a Retirement Strategy fund? They are certainly diversified, but the total fees are about twice those of the 2 basic US stock and bond index funds. US Large Cap Equity Index fund, all fees including expense ratio: 0.1313% WA State Bond fund, all fees including expense ratio: 0.1373% As for whether there are lower-cost 403b vendors on your district’s list, that depends. I think you can narrow the low-cost 403b vendors that are lower cost than the WA state 457 plan to Fidelity and Vanguard. Are they on the vendor list?
  9. Hmmm. The Vanguard rep either didn't get your question right, or was misinformed. If your AXA 403b is with your current employer, you can transfer, in a trustee to trustee exchange, to any 403b vendor that is on your employer's 403b vendor list. AXA charges a surrender fee, depending on which AXA annuity you have. For Series 201, it's 5% for contributions made less than 5 years ago. If your AXA 403b was with a previous employer, you would be able to roll it over to an IRA. There is no limit on the amount you can roll over into an IRA. You are right, there is an annual limit in the amount that you can contribute to your IRA, currently $6000, $7000 if over age 50. Several years ago, Vanguard contracted the running of their 403b plans for smaller organizations to Newport Group. All it means is that they will handle the 403b administration details, but it’s a Vanguard 403b. All 403b plans involve salary reduction agreements that allow your contributions to be deducted from your salary each pay period.
  10. This is being discussed in the 403bwise FB Group. It's a large private school organization and the 4 vendors are competing. I suspect they are not using the generic offerings that are made to public school districts. There's an employer match of 3% to 7% so I guess it's a ERISA 403b.
  11. Rich, welcome to the forum. Yes, the IRS allows a 403b from a prior employer to be rolled into a 457b plan if the 457b plan allows it and the 403b balance is put in a separate account. The 403b balance can be invested in the 457b funds, but it remains a 403b. Colorado has a state low-cost 457b plan and hopefully that is where she wants to move her 403b balance. I'm confident that the CO 457b allows transfer of of 403b balances from prior employers.
  12. How close to 59.5 are you? I would view the no penalty for early withdrawal as a form of insurance, hopefully not used, but you never know. Are you employed with a current 457b that you could roll the old one into? A 457b account may have stronger creditor protection than an IRA, I don't know. Are you employed and have a 403b? You can make penalty-free distributions from your employer's 403b at age 55. I made use of this when I was unexpectedly offered retirement at age 56. If the admin fee and expense ratios of the ICMA-RC 457b are high, that would probably cause me to roll it over.
  13. I don't know of issues with 403b specifically, as far as taxes and heirs are concerned. Almost everyone transfers their 403b balances into an IRA after retirement, or should. The rules for inheriting any retirement account (403b, 457, 401k, IRA etc.) were changed recently. A non-spouse beneficiary may no longer stretch the taking of distributions over their lifetime. Instead of having Required Minimum Distributions every year, the beneficiary has 10 years to empty the inherited account. It doesn't matter when during those 10 years, it just has to be empty at the end. If the account is a traditional account, the beneficiary needs to consider when it's best to take the tax hit. An inherited Roth account doesn’t have any tax due on distribution, but still needs to be empty at the end of 10 years. https://www.nerdwallet.com/blog/investing/inherited-a-roth-ira-heres-what-to-do-now/
  14. That's great that you were able to get Vanguard added to your district's 403b vendor list! Is your wife teaching in NJ, where the LI PDP is available to any district that has LI on their vendor list?
  15. Tony, thanks for the kind words. Coming from you, the one most responsible for keeping this forum going these days, they are appreciated! I've been spending time helping on the 403bwise Facebook Group, and it seems very successful in spreading the word. The Group is developing a number of knowledgeable teachers that are organizing on a district and building level. There are lots of zoom sessions with Dan and Scott as well as frequent posts by them. There are teachers showing up for help just about every day! I don't use FB myself, but this FB Group is effective. I think this forum is a much better medium for conferring and storing information, but the FB Group is preferred by today's teachers.
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