Jump to content

krow36

Members
  • Content Count

    764
  • Joined

  • Last visited

Community Reputation

0 Neutral

Recent Profile Visitors

3,228 profile views
  1. Tony, here’s why I think the VOYA administered 403b plan is a very good plan. It has these Vanguard funds: Total Stock Market, ER 0.04% Total Int’l Stock Market, ER 0.11% Total Bond Market, ER 0.05% The only admin fee is 0.17% This school district has a single vendor low-cost 403b and 457 plan! VOYA is the record keeper and administrator but the funds offered and their ERs and the admin fee must be the result of the district using a fiduciary advisor. It’s not perfect—I’d like to see target retirement fund offerings from Vanguard (or Fidelity’s Freedom Index funds) because TR Price Retirement 2010 has an ER of 0.78%. Maybe in the future?? JaneDoe has her 403b contributions in a expensive Horace Mann plan and the VOYA 403b is the district’s only plan. Assuming she stays with the district, she needs the VOYA 403b to hold her HM balance. I agree that she should pursue the VA state 457 for possible future contributions. It’s a wonderful plan. It may even be available to her currently as I don’t think she has asked about it yet? I could be wrong on that. If it’s not currently available, like you, I think it can be added with a modest effort.
  2. Last Tuesday you posted 2 emails from your advisor that stated that you could move your HM 403b balance to either an IRA or to a 457 plan. Yesterday your advisor repeated that you can transfer the 403b to a IRA. Tony and I think this is not possible if the 403b is with your current employer unless you are over age 59.5. This applies to both the IRA and the 457 plan. Either transfer is possible if the 403b is with a previous employer, or you quit your employment with your 403b plan’s sponsor. In any case, even if you could move the 403b to an IRA, there’s a disadvantage. If you leave employment at age 55, you are able to take 403b distributions at age 55 without a 10% early distribution penalty. With an IRA you must be 59.5 to take distributions without 10% penalty. The district’s VOYA 403b plan is a very good one, MUCH better than your HM 403b plan. That’s all you need. What really matters is making the maximum contribution to a good plan, and moving your HM balance to that good plan.
  3. Tony's suggested 40/20/40 is a good one also. Are there target date funds available in the VOYA 403b? If they are low-cost, I agree with Tony that they would be an excellent hands-off choice. You're welcome, glad it helped clear up question. So I guess you are starting contributions to the VOYA 403b when you meet with the rep today? And ask about the procedure for transferring the HM 403b to your VOYA 403b? You could also ask about the VA state 457 plan. Sounds good to me! Like Tony, I admire your determination to understand your retirement account options. Please continue to ask questions if you have them.
  4. The Net Fund Exp. is the expense ratio that you will pay on each fund. Sometimes the net ER is reduced from the gross ER for various reasons. Your district's 403b looks very straight-forward to me, and I would expect that you will not be required to pay extra for an "advisor", but you may have that option. Is there a PDF or handbook that discusses fees? There should be. Look around the website. A 75/15/10 asset allocation seems very aggressive to me. How would you feel if another serious recession reduced your equity funds by 50% as happened in '08-'09? You may think that you should be very aggressive because you think you are behind in retirement savings? That can backfire. The way to catch up is to save more, and to use a stock/bond ratio that you can live with when the future downturn happens. To be an investor is to experience scary downturns, sooner or later. Selling in a downturn is "buying high and selling low", which guarantees loosing money. The asset allocation is a very personal decision and it's VERY difficult to know how you will react to a big downturn sometime in the future. I think it makes sense to be something between aggressive and conservative, maybe a stock/bond ratio of between 80/20 and 60/40? It's controversial how much of equities should be international equities, all the way from 40% to 0%. The late John Bogle, the founder of Vanguard and the first to offer index funds, allowed that 20% was OK but actually preferred 0%. Vanguard currently uses 40% in their target retirement and LifeStrategy funds. It's up to you and you can change it in a 403b or 457 account without any tax consequences, so don't worry about it. I use 20% of equities in international in our portfolio. Maybe 70%/30% stock/bond and 20% of equities in international? So 14% (.7*.2=.14=14%) international equities, 56% US equities and 20% bonds? The 3 Vanguard funds you chose are great ones and the ones we recommend if possible.
  5. VOYA's fee of 0.17% is very reasonable and shouldn't keep you from using the district's 403b. Granted $2.54/month ($30.48/year) for your husband's 457 plan is lower cost, especially as the account balance grows. Remember, if you continue teaching at your district, you need a low-cost 403b account to hold your HM balance. I took a brief look at the VA hybrid pension that your husband has. It’s interesting to see there are 2 different 457 accounts possible. The "Hybrid 457 Deferred Compensation Plan" pension allows employee contributions of up to 9% from a required 5%. This is optional further 4% is matched by an employer match of up to 2.5% to a 401a account. In addition to the pension plan, he can contribute up to 19k in 2019 to the "Commonwealth of Virginia 457 Deferred Compensation Plan". I think there can be an employer match of up to $20/pay period. And in addition, he can contribute up to another 19k to a 403b account, as you mentioned he is doing. Your school district is allowed by the state to offer the Commonwealth of Virginia 457 Deferred Compensation Plan to their employees. This is stated in the VA Plan 1 Pension Handbook, page 19. https://www.varetire.org/pdf/publications/handbook-plan-1.pdf You should be able to get this 457 plan added to your district’s vendor list. Follow Tony’s advice on getting this done. This may take a while and in the meantime, you have an excellent VOYA 403b plan to contribute to. After it’s established, you can organize a trustee to trustee transfer of your HM 403b account balance to your 403b VOYA account.
  6. Large cap refers to large capital value of companies. It’s based on the value of all the company’s issued stock. So the large cap companies are the very largest in value, the mid cap companies have lower value, and the small cap companies are those with the lowest value. You can google the terms and find the exact definitions, in terms of billions of stock value. If you invest in a Total Stock Market Index fund, you are investing in all 3 caps, based on value. The mid and small caps together make up about 20% of the total value of the stock market, and that’s included in the TSM index fund. The Horace Mann equity funds were actively-managed funds, which means the the fund managers were buying and selling stocks, trying to pick the winners and avoid the non-winners. This trading results in trading costs, and also those fund managers are expensive. These expenses are reflected in the higher fees of HM’s expense ratios. Passively managed index funds use the index to determine the stocks in the funds. There is no trading to try in outperform the index. There are no expensive managers’ salaries to pay for. This results in index based mutual funds being, by far, less expense than actively-managed mutual funds. It has been found that index based funds outperform actively managed funds about 80% or more of the time in a single year. Over time, index funds out perform over an even higher percent of the time.
  7. This looks very promising! The "Net Fund Exp %" is that fund's expense ratio. That's the number you need to know. The Vanguard Total Bond Market index fund with ER of 0.05% would be an excellent choice. What are the other funds offered? In addition to a bond fund, you need a stock fund, hopefully Vanguard's Total Stock Market Index fund, and possibly an international stock index fund. That would cover all the major investing areas, and you would be very diversified.
  8. Your district can add or remove vendors from their 403b and 457 lists. Those vendors removed can be grandfathered in, so that they can continue to be used if already established. But no new accounts with Prudential could be started. Although Aspire is good, Fidelity is excellent and the low-cost leader in 403b plans. Their Freedom Index funds are completely diversified and do rebalancing for you. All in a single fund. Both the Fidelity and Aspire plans are internet based, with no local rep to hold you hand. With a target date fund like the Freedom Index fund, a local rep is not really needed in my opinion. It looks like the American Funds Target Date 2050 R3 fund has an expense ratio of 1.07% which is very high. https://www.capitalgroup.com/individual/investments/fund/rcitx The Fidelity Freedom Index fund has an expense ratio of 0.12%. https://fundresearch.fidelity.com/mutual-funds/summary/315793869 Their annual custodial fee is only $24. I would stop contributing to the AF 403b. Then contact Fidelity and set up a 403b account with them. After it’s started and you are contributing to it, contact Fidelity for the form for transferring your AF 403b balance to your Fidelity 403b. An AF transfer form may also be required and this whole process can take a month or more.
  9. You are making progress on the VOYA plans, but you don’t know what the actual mutual funds are, or their expense ratios. Are the funds those listed in “Mutual Funds” under PRODUCTS in the VOYA website linked to your district’s 403b/457 webpage? https://www.voya.com If so, you need to find out which class of funds you can use. The overall cost of the VOYA 403b or 457 may be lower than that of your current Horace Mann 403b, but it may be much higher than the state run VA 457. I’ve assumed that your HM account is a 403b plan, not a 457 plan. Is that correct? I don’t think you can roll your HM 403b into an IRA unless you are over age 59.5 or you are no longer employed by the 403b’s “sponsor” (your school district). While you are still employed by your school district, I don’t believe that the 403b can be rolled into a 457 plan, only to another of the district’s 403b plans. If the 403b plan was with a previous employer, then a rollover to a current 457 plan is allowed. This was discussed in this 2017 thread. https://board.403bwise.com/topic/6375-exchange-rollover-transfer-from-a-403b-to-a-457bis-this-poss/ My advice if you stay employed at your school district is to find out the VOYA 403b funds and their ERs. If they are lower than those of HM, change vendors and transfer the HM balance to a VOYA 403b. Follow Tony’s advice and get the state 457 added and then contribute to that plan instead of to the VOYA 457. If you retire soon, roll the HM 403b into an IRA at Vanguard.
  10. I’m guessing that you are in the “Group Variable Annuity” with Horace Mann Life Insurance Company. https://www.403bcompare.com/vendors/1014#/productlist If you click on that, and scroll down to Fees and Charges, you’ll see: Surrender Period* Surrender Percentage 1 5.00% 2 5.00% 3 5.00% 4 5.00% 5 5.00% 6 0.00% *Expressed in contract years I think this means that if you last contributed over 5 years ago, there is no surrender fee. I think it’s calculated on the year’s end balance. If you haven’t made contributions for the last 3 years, then you would owe the surrender fee on contributions the balance for this year and last year. I don’t know exactly how it’s calculated but you can ask HM to give you what the fee would be at this time. On VOYA fees, I think you will have to get them from a VOYA rep because your school district may have negotiated the fees. Here’s how I looked up the funds available and the ERs of the different classes of each fund. https://www.fauquiercounty.gov/government/departments-h-z/human-resources/benefits/retirement gets to your school district’s webpage on 403b/457 plans https://www.voya.com goes to their website for your district. Scroll down to “Mutual Funds” under PRODUCTS. Click on Equity Opportunities to see the stock mutual funds available. The VOYA Large-cap Growth Fund has a net ER of 1.04% and a sales load of 5.75%. If you click on the Fund Fact sheet, you’ll see the various classes, A, C, I, R, etc. You need to find out which class you can use. On being able to use the VA state-run 457 plan, ask your district HR if it’s available. It should be but if it’s not, call the VA 457 and ask them how you go about getting it added to your district’s 457 vendor list. Hopefully Tony will give you some first-hand hints because he has done this for his district.
  11. Your selections of US equity funds are diversified which is good although I don't think the JPMorgan fund is not necessary. I used 403bcompare to look up the Horace Mann fees: in order, the first 3 have expense ratios of 0.35%, 0.78% and 0.53%. The Dreyfus fund was not on their list. There's a admin fee of $25/yr and a 1.25% mortality and expense fee. There's a 5% surrender fee that lasts for 5 years. You need to know the VOYA fees before deciding to transfer your Horace Mann balance to VOYA. Are you still contributing to the HM 403b? The big question is whether the VOYA 403b allows you to use a custodial 403b(7) account that is mutual fund based, rather than a 403b annuity based plan? The custodial 403b(7) plan will not have an M&E fee or a surrender charge, although it's possible their mutual funds could have front-end or back-end loads (fees). Because your district has a single vendor, they may (should) have bargained for a lower cost 403b plan from VOYA than the standard plan available to multivendor school districts. It should certainly include a custodial account choice. You will have to find out from VOYA what plans are offered and what the fees are. Like Tony and Steve, I'm a retired teacher, so I certainly understand your wish to retire. After you retire, you will be able to move your 403b accounts to a traditional IRA at Vanguard. Tony was able to get the low-cost VA state-run 457 added to his district's 457 vendor list. Both you and your husband should be able to contribute to it, rather than to a high-cost 403b.
  12. Have you asked the district's TPA (TSA Consulting Group) for the plan number? I think it’s likely that all Security Benefit options have the same plan number. But maybe not? The district or the TPA can’t tell you which of the SB options you should use. In any case, ask a SB rep, and don’t be surprised if they claim to have never heard of NEA Direct Invest. Hang in there!
  13. I certainly admire you for your efforts to improve your district’s 403b plan! I wonder if you shouldn’t feature the graph more prominently in your presentation? After all, it shows the result of the present state of the K-12 403b world, doesn’t it? Maybe start out with the graph and ask the audience, which would they prefer? Maybe say, how can this be?? What’s going on? Explain that the magic of compounding the 6% assumed growth is also compounding the costs. The difference between the top and bottom graph of $158,083 is due to the compounding costs. That difference is going to the insurance company instead of to the teacher. I think that if you could get this point, and only this point, over to the audience, that would be great! The 2nd paragraph is a tough one to condense down to the important basics. It’s worth a chapter! I think it could be improved, maybe by emphasizing the 2 basic types of 403b plans? I’m not sure that the 3rd paragraph on the SEC investigation deserves the space. It doesn’t seem to relate very strongly to any of your goals. The WSJ article will have the subscription wall. I wonder if your audience is no more informed about the 403b than most of the district’s teachers. You might be throwing way too much information at them? Do they all know about the vendor lists? Although reducing the number of annuity vendors is an admiral goal, it seems to me to be too difficult to have as a beginning goal. Likewise the fiduciary requirement. If you focused on proposition 1 and 3 (especially fee disclosure), you’d be less likely to overwhelm your audience. Even just that will be a challenge I suspect. Maybe the 403bcompare.com website is worth a mention? Nitpick: 403b, not 403B? Scott prefers the correct 403(b) but I'm too lazy to use that on the forums. I guess it might be better for a handout though.
  14. Have you considered selling just the funds with long-term cap gains this year so that the space in the 12% bracket doesn’t go to waste? I didn’t explain what I meant very well, sorry. I was just trying to make the point that maxing out your tax-deferred accounts and the Roth IRA before contributing to a taxable account for retirement is usually recommended. Of course there are lots of other reasons to save in a taxable account. Your plan to max out your 403b, half traditional and half Roth is great!
  15. I think your proposal makes sense. Hopefully you can sell in your brokerage account without having to pay any (or not much) capital gains tax? If your income plus any capital gains don't push you out of the 12% bracket, your capital gains will be taxed at 0%. If you're currently contributing to the brokerage account for retirement, instead I would max out the 403b before adding to the taxable account. Is the 0.45% administration fee the same for each of the 6 vendors in the Consortium? I don't think the 0.45% admin fee should influence you decision to max out the 403b account, or to go Roth on half of your contribution.
×
×
  • Create New...