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krow36

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  1. krow36

    Lisa

    I've never heard of an insurance company requirement to have a large sum of money held by them. Is the $50,000 held in a 403b account? Are you referring to a TIAA Traditional account which earns 3 or 4% and which can have restrictions on taking distributions. Some versions require distributions over a 10 year period. Have you talked to TIAA about taking distributions?
  2. Your Equity Indexed Annuity (EIA) is a very complex insurance product that is VERY hard for anyone to fully understand. It is sold as a way to get the benefit of stock market returns while avoiding the downturns that the market experiences from time to time. Although I think you won’t loose your contributions, the positive market returns are severely restricted. Only part of your contributions are tied to market gains, there’s a limit on how much market gain is allowed, and stock dividends are not counted. So while the rate of return of the full S&P 500 Index has averaged over 13% over the last 10 years, and is over 20% some years, the return of an EIA is usually in the 2% to 3% range. You haven't lost your contributions, they haven't grown like they would have if they had been invested in a custodial (non-annuity contract) account.
  3. Roberta, welcome to the forum. I'm glad you finally found us! The products of NLG are usually their Fixed Index annuity or Equity Index annuity, the same sort of thing I think. I know a bit about them and will cover that, but first, please tell us the 403b and 457b vendors that your district allows you to use. You may be able to find the list by just googling "your district, 403b plan". Your HR office should have it, or refer you to their third party administrator (TPA) who usually maintain the lists. Hopefully we can find a low-cost non-annuity vendor on the list, and suggest a transfer of your NLG balance. You may have to pay a surrender fee to transfer out, but it's possible you have had the account long enough to avoid the surrender fee? You should call up the 800 help #, not the local rep, and ask for the surrender fees on all your a NLG accounts.
  4. As you know, the backdoor Roth IRA process is a good way to get around the income limit to making a direct Roth IRA contribution. If the alternative is putting the 6k (or 7k if >50) into a taxable brokerage account, it's a no-brainer. But if you can use the 457b to get a fixed income of 2%, I think I'd go for that. Rolling it out to an IRA after age 59.5 would make sense. Here's a good tutorial on the backdoor Roth process: https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/
  5. I think the answer to your question depends on whether your 403b and 457b are both with low-cost vendors. If they are, even if you sure you will continue until you are 60, it might be good insurance, just in case. After age 59.5, the 457b looses its advantage over the 403b. It's usually best to roll both the 403b and 457b into an IRA after you retire after 59.5. The 457b does have an advantage over the 403b during the last 3 years before the age of "normal retirement". You can contribute double the usual amount. If that is something you might want to do, then switching your contributions to a low-cost 457b makes sense. Paying somewhat higher fees for a few years is not as damaging as it is for longer periods. Your title implies that you are considering transferring your 403b account into the 457b account. You probably know that's not possible if they are both with your current employer. I'm guessing you meant changing your contributions?
  6. What are the fees on the 457? Administration fee and fund expense ratio? Are you planning on retiring early? The backdoor Roth IRA is great but be sure you get the Form 8606 done correctly. There’s lots of guidance on the internet.
  7. I think there's a volatility drag that your averaging of the yearly rates doesn't take into consideration. A 50% loss of 100k results in a 50k balance. A subsequent 50% gain on the 50k only gets you back to 75k. If you compare the rate of return of TSM and Small cap Index over 5 and 10 years, TSM comes out a bit ahead, about 1%. As you say, the past doesn’t necessarily predict the future!
  8. Warsad, I'm guessing your wife is a teacher with Houston County school district because "Houston" was on one of the pages you supplied. If that's the case, I was not able to find what administration fee AIG was charging the district. I found mention of the AIG 403b and 457b plans, but no details, which is disappointing, although not unusual with AIG. The list of funds included some excellent Vanguard funds, including their 500 Index fund with an ER of 0.04%. I also saw VG's Total Bond Mkt Index fund and their Developed International Stock Mkt Index fund with low ERs. So the question is, what is the admin fee.
  9. The Callan Period Table of Investment Returns shows how the returns of the various asset classes varies from year to year. https://www.callan.com/research/2020-classic-periodic-table/ It makes sense to me to concentrate on the Total Stock Market fund and not bother trying to guess what will outperform it. The 3 Fund Portfolio also is very diversified and adding a small cap index fund is a bet that may or may not pay off. I’ve been investing (and retired almost) for over 30 years and don’t have one of the Lazy Portfolios, but often wish I did. Our funds are mostly index funds and I try to keep the asset classes balanced close to that of TSM (growth/value, large cap/small cap). I’ve often seen TSM, which I have a lot of, beat the return of many of my funds. I don’t think you need to factor your pension into your asset allocation. Your pension is not a certainty. Hopefully not, but it’s possible that you won’t be able or want to work for a full pension. Your pension will factor in to when it and your investments will support you in retirement. Your asset allocation should be based on years to retirement, and your risk profile. How nervous are you when the stock market drops 50%? Most of don’t know how we’ll react until we experience it, so that’s something to think about.
  10. Maureen W, I have no knowledge of your PA pension, and you should rely on information from the pension. It certainly deserves thorough study. A 4% interest on your contributions sounds to me like it at least covers current inflation. The pension probably has a handbook or other publications that explains how the pension is calculated. I'd find out if the state contributed to the pension while you were contributing, and if so, will that be included if you take out your balance. Does the pension have a COLA? Does the pension include a health insurance benefit? I don't see any harm in asking for the Request for Retirement Estimate. Also I'd check out the instructional video for creating your own estimates. I think you need some numbers in order to understand the pros and cons. I guess you realize that if you roll the 44k into a Roth IRA, that will add 44k to your taxable income? If you look at their Authorization for Direct Rollover, you will see if there's an option to roll to a Roth IRA, or only to a traditional IRA. If you rolled it into a traditional IRA, it would remain tax-deferred. If you then converted the tIRA to a Roth IRA, that would add 44k to taxable income. The conversion could be spread over several years. This process isn't related to the annual contribution, either direct or indirect using the backdoor. There's no annual limit to how much you can convert from a tax-deferred account to a Roth IRA. No, you can't roll it to a 403b unless you have current employer who has a 403b that accepts rollovers.
  11. Bob, if you google "backdoor Roth IRA" you will find lots of information on how it works. If there is any balance in any traditional IRA account on Dec 31 of the year of the conversion from a non-deductible tIRA to a Roth IRA, that balance in taxed in what's called a pro-rata way. The result is that contributing to a non-deductible tIRA and then converting to a Roth IRA results in a tax bill on a portion of the tax-deferred tIRA balance. A frequent solution is to roll any tIRA funds into an employer retirement account (401k, 403b, 457b). Roth IRAs are not part of the pro rata calculation. All this is necessary because there is an income limit for making a direct contribution to a Roth IRA. You can google that also.
  12. A traditional IRA with Fidelity or with Vanguard will interfere with the backdoor Roth process. The IRS considers ALL traditional, rollover and SIMPLE IRAs to be all one traditional IRA. You can't hide them at different vendors. Even if Maureen W is vested, she should consider that the benefits of a small pension whose purchasing power has decreased due to inflation may not be worth waiting for. She might be better off rolling it into an IRA and investing it.
  13. You're welcome! Feel free to ask questions! Spread the word with your colleagues that they have an excellent low-cost vendor available. Aspire is a reasonable-cost vendor also, but most of your colleagues will have signed up with Equitable, AIG, Horace Mann and Nat'l Life Group etc. They are the vendors that haunt the school's hallways, whose annuity products are commission based. Fidelity and Aspire are internet based.
  14. OK, that's great. Fidelity Investments is probably the very lowest-cost vendor for 403b and 457b products! Their admin fee is only $24/yr. They have excellent index funds. This is the Fidelity 403b website for employees of non-profits: https://nb.fidelity.com/public/nb/ready2enroll/planoptions Plan Basics explains their 403b details. Investment Options lists the mutual funds available. I suggest you use only their index funds, either what’s called a 3 Fund Portfolio like below, or a single Freedom Index 20XX fund, ER 0.12%. Fidelity® Total Market Index Fund, FSKAX, ER 0.015% Fidelity® International Index Fund, FSPSX, ER 0.035% Fidelity® U.S. Bond Index Fund, FXNAX, ER 0.025% The 3 funds or a Freedom Index 20XX give you maximum diversification.
  15. Maureen W, welcome to the forum! I think the solution to your 403b is to roll it into your Roth IRA account. I would get the transfer form from the 403b's vendor. You can probably roll it directly into your Roth IRA, but if not, roll it to the traditional IRA, and then convert it to a Roth IRA by the end of the year. For the backdoor Roth, what counts is the tIRA balance on Dec 31 of the year of the conversion. I would consider doing the same thing with the PSERS, maybe done in a different year than the 403b roll over?
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