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Everything posted by krow36

  1. I didn’t answer your question did I? Morningstar says that the Growth of 10K graph does not take loads into consideration. I couldn't find anything about whether the Growth of 10K table in the Performance section used loads or not. I think it's highly likely that loads are not used there either. http://www.morningstar.com/InvGlossary/growth_of_10000_definition_what_is.aspx “The returns used in the graph are not load-adjusted.” I'm impressed with the Vanguard tool for comparing the costs of 2 funds. You can control the inputs, loads included. It tells you the percentage of outperformance needed by the higher cost fund in order for it to equal the performance of the lower cost fund. And you can compare the result over time using a load or not.
  2. Try using Vanguard’s “Compare Fund Costs” tool. https://personal.vanguard.com/us/FundsCostCompare You start out comparing a Vanguard TR 2045 fund with an American Fund’s TR 2045 fund. It compares the costs over a period of time you select, and an assumed rate of return that you select. The class of the AF TR 2045 fund the tool uses does not have a load, but scroll down on the result page and correct the load to 5.75% and the ER to 0.72%. Using 10 yrs and 6% rate of return and a 5.75% load, I found that the AF fund would have to earn 6.92% (rather than 6%) to have the same return over 10 yrs. The AF website shows the TR 2045 fund’s return either based on its NAV, and also including the load: https://www.americanfunds.com/individual/investments/fund/aahtx You can compare those returns with those of the Vanguard TR 2045 fund and I think it’s clear that the AF TR 2045 fund has underperformed the Vanguard TR 2045 fund. Does this help?
  3. Is your pension calculated on your 3 (or 5?) last years of salary as is usually the case? If so, what effect does having a year of much lower salary have on your pension payout? Even if the lower salary lowers your pension, it might be worth it to stay teaching in case the situation changes and you are able to return to your fields at full pay? That's assuming you really do want to teach at least another year. I've often thought that the problem with having choices, is that it forces you to make decisions, one way or another! Arrrggg!
  4. My 40/60 portfolio is up 6.6% YTD according to Vanguard.
  5. I retired after teaching 18 years (only got retirement credit for 16 as 2 were overseas), over a 20 year period. I found parts of teaching rewarding, fulfilling and enjoyable and parts were exhausting. I was at the top of the salary scale (equal to 100k/yr today) and left a lot on the table when I retired. The only reason I was able to retire is that the state wanted to save money and temporarily lowered the age and years employed requirements. I've NEVER regretted retiring at age 56 and neither has my wife. It's a very personal decision. My colleagues thought I was making a mistake.
  6. I'm sorry to hear that you've been RIFed (Reduction In Force). It sure adds stress to an an already stressful job. It doesn't seem right that they can't make your .5 time into a block. Does your union think that's OK? I have an idea of how you feel. I was RIFed 6 out of my first 9 years of teaching. We were given the RIF paperwork about this time of year, with several months of the rest of the school year to mull it over. Not great for morale. Although determining who got RIFed was determined by seniority within each subject area, it still seemed personal, emotionally. Because I was a science teacher, I thought there was a fairly good chance that I would be rehired sooner or later. That turned out to be the case, but . . . . Some years I substituted several weeks or months before getting a regular job. Some years I was rehired just before school started. Some years I was rehired late in the summer. A move to a different school was involved in 4 out of the 6 RIFs. It's hard to know when it comes to school budgets, but in schools I've been with, there were changes in staffing made during the summer, and even after school started. Nobody knows for sure if all your colleagues will show up, or if more kids than expected will turn up in Sep. Maybe you should just hang in there with the .5 job offer and see what happens over the summer?
  7. I don’t think we have enough background on the PA teacher pension and 403b/457 plans to be able to understand your situation. A bit of googling indicated that it’s complicated. Reading in the PSERS document below, it looks like PSERS offers a state-wide 403b to teachers. It’s a 3rd option for new hires under Act 5’s 2 hybrid pension plans, and is “allowed” to be offered by the TPA that administers the new 401a to teachers in pension plans prior to Act 5. Is that actually happening? Is the requirement that the district allow 4 403b vendors mean the 4 TPAs, and only those 4 TPAs, all are allowed to offer a 403b? Or are the 4 vendors chosen from the 8 shown in the bar graph on page 6? Does the pension board determine the funds and fees? Can you give us a link to the funds and fees? WA state’s teacher pension plan offers the same funds and fees to both hybrid pension and to the state 457 plan. It uses low-cost index funds.
  8. There are no "bonehead" questions here--we look forward to any questions. Whatever question you ask, there are probably other folks with the same question, lurking, just waiting for you to ask a question! We think it's best to look at all your retirement investments as a whole. That means in addition to your 403b account, you should also consider your other retirement accounts such as IRAs, your taxable account, your spouse's retirement accounts, etc. Do you have a preferred asset allocation, the ratio of stock funds to bond funds? If you are 5 years from retirement, you might consider an asset allocation of about 60% stocks and 40% bonds. However this is a very personal decision and you might reasonably choose one that's anywhere between 40% and 80% stocks. Do you invest in international as well as US stock funds? Do you have a pension? If so, consider that you may not need to take withdrawals from your 403b or IRAs until well into retirement? So you will be investing for a longer period than just 5 years. Will you be 59.5 when you expect to retire? Your easiest choice of a good low-cost Vanguard fund for your 403b is one of their Target Retirement funds. I suggest you decide on an asset allocation, for example 60/40, and pick the TR fund with that asset allocation. TR funds gradually become more conservative over time, so if it's 60/40 now, in 5 years time your fund might be 50/60. Here's the TR 2025 fund which is now 65/35. https://investor.vanguard.com/mutual-funds/profile/VTTVX Another very easy choice would be one of Vanguard's Life Strategy funds. These funds don't change their asset allocation over time. The LS Moderate Growth fund stays at 60/40. https://investor.vanguard.com/mutual-funds/lifestrategy/#/ If you only want a US stock market fund, we prefer Vanguard's Total Stock Market fund. You can't get a fund that is more diversified, based on companies' value in the US stock market.
  9. This link provides the Security Benefit Direct Invest phone # that has worked best for other posters. https://board.403bwise.com/topic/7056-security-benefit’s-nea-directinvest-number/ I would call SB up and find out exactly what they need. If they are already on your school district's 403b vendor list, they should have your employer's plan document. Find out if SB is indeed on your district's vendor list. There's nothing about the NEA Direct Invest 403b that would require anything from the district different from SB's other expensive plans. I think the plan number is a number that the district or the Third Party Administrator assigns to each vendor, although perhaps it can be assigned to each vendor's plan? If the latter, perhaps no one in your district has opted for NEA Direct Invest, so it doesn't have a number yet?? If your district uses a TPA, ask them for the SB plan number. If not, ask your district. Sometimes the TPA's or district's websites provide the plan number. Don't get discouraged. You are in this for the long haul. NEA DI is worth pushing for!
  10. Your welcome, and thanks for reporting back! We're glad it went smoothly. I don't think you can make a real mistake, whether you contribute to the 403b only, or contribute to both the Roth IRA and the 403b. Hopefully as your salary increases, you'll be able to max them both eventually.
  11. Tara Siegel Bernard, a personal finance reporter, recommends apps for budgeting, investments and helping little ones as young as 6 understand the value of money. https://www.nytimes.com/2019/03/13/technology/personaltech/spending-is-as-easy-as-pushing-a-button-the-hard-part-keeping-track.html
  12. No, no, no! I know enough to no that I don't know much. Just a few things I've picked up from the Boglehead forum, and doing our own taxes (with TurboTax). We do have a taxable retirement account so that can complicate our taxes. Roth IRAs started in 1998 and by then we had been retired 6 years. We did do some conversion of traditional to Roth that first year. They allowed the tax hit to be spread over 2 years which was nice. Maybe we should have done more conversions? Maybe not? Hard to know. The 40k that I converted to a Roth IRA is now 189k. Not bad for an asset allocation of 40 to 50% equities---about 9% over 20 years? I doubt very much that we will ever take a distribution from our Roth IRAs. We have no kids but have a niece and nephew who are the beneficiaries.
  13. The Backdoor Roth comes up a lot on the Boglehead forum. Ed did a great job of explaining it. The final step is dealing with the Form 8606, which keeps track of things so that there's no double taxation. This year, Ed will use a 2018 Form 8606 to report the contribution to a non-deductible tIRA. Next year he will use a 2019 Form 8606 to report the conversion to a Roth IRA. Why bother with a Backdoor Roth IRA instead of putting the 6k in a taxable account? There's no further taxes on the Roth IRA! The taxable account produces taxable dividends every year and capital gains when it's sold. It's a no-brainer.
  14. Ed, perhaps you've read this article by the WCI? https://www.whitecoatinvestor.com/0-income-tax-retirement/ As always the comments are interesting also.
  15. For 2018 tax year, it's a 12% income tax bracket. Due to an oversight by Congress, the top of the 0% cap gains bracket is slightly lower, but let's ignore that and assume it's the same. If your taxable income, excluding what might qualify for the 0% cap gains rate is: A. over the top of the 12% income tax bracket, your cap gains and qualified dividends will not be taxed at 0%, but at 15%. B. under the top of the 12% income tax bracket by 10k and you have 30k of cap gains and QDI, 10k will be taxed at 0% and 20k will be taxed at 15%. Here’s the IRS cap gains worksheet for figuring out whether your cap gains will be taxed at 0%, 15% or higher. https://apps.irs.gov/app/vita/content/globalmedia/capital_gain_tax_worksheet_1040i.pdf It’s a very non-intuitive worksheet, at least for me, but I think you can look at your income tax records and figure out what’s going on. There are a number of excellent BH threads on this subject, including this one: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=251561&p=3971176#p3970451
  16. Are you assuming that your wife retires when you do but does not start her pension until later? From what you've written previously she enjoys her teaching career and plans to go into administration! If you file MFJ, you have to include her income along with any cap gains, right? Remember that the cap gains are added to all other non-cap gain income, to see which cap gains tax rate applies*. If you have no earned income and the wife's taxable income is 70k, and you have 20k of cap gains, only about 9k will be in the 0% cap gains tax bracket. The other 11k will be in the 15% cap gains tax bracket. * I learned this the hard way, paying 15% on some cap gains that I thought would be taxed at 0%.
  17. OK! Please let us know how setting up the Fidelity 457 goes, and how the 457 transfer from SB to Fido goes. Good luck on the SB surrender fees!
  18. I'm glad that the loads have been waived on your SB 457. I agree that those ERs are way too high. Did you ask them to calculate what your surrender fee would be? I believe that Fidelity offers the same fund selection and fee structure to both their generic K-12 403b and 457 plans. The 403bcompare.com website gives Fidelity's funds and fees. This website is run by the CA teachers pension system and is accurate for CA. Most vendor plans for the K-12 403b market are generic plans used in other states. https://www.403bcompare.com/products/68 I would recommend that you use only Fidelity’s super-low-cost index funds. The custodial fee is $24/yr. Fidelity® Total Market Index Premium, FSTVX, ER 0.02% Fidelity® International Index Premium, FSIVX, ER 0.05% Fidelity® US Bond Index Premium, FSITX, ER 0.03% Or you could use one of the index target retirement funds Fidelity Freedom® Index 20(XX) Investor, ER 0.14%. You would pick out one that has the stock to bond ration you prefer. Or you can just use your expected retirement date.
  19. Yes, this is bad! The first thing I would do tomorrow is to stop your contributions to this 457. The loads are like a sales tax, levied when you buy these funds. It's a one-time fee which will be levied each payday if you are contributing to all those funds. However, it's possible that the numbers you got from M* are not those that this plan uses. To be sure, you should verify the loads and ER numbers with Security Benefit. I think it's likely that the M* numbers are those you are paying. SB is not known for giving investors a break on fees! Because you started with this account 14 years ago, your actual surrender fee is complicated and you should ask SB to calculate it for you. It is likely a "rolling surrender fee", which I believe applies the fee to each year-end balance. So there would be no fee to w/d the year-end balances for years 1 through 7, year 8 (6 yrs ago) would have a fee of 1%, etc. Assuming that your contributions over the last 6 years have been fairly constant, the average fee for those last 6 years might be about 4%. The overall surrender fee for your full account might be only about 2%. These charges are guesses on my part, but SB must inform you of their value and explain them if you request it. If 2% is close to it, I would plan to transfer it all to a Fidelity 457. Remember you are paying at least 1.0% in ERs (depending on the balance in each fund) every year. In addition, these actively-managed funds have other costs that reduce their growth, such as trading costs. I think that Fidelity's super low-cost Total Index funds will outperform the funds in your list, although I haven't bothered to look them up. A load fee is never reasonable these days. In our view on this forum (and other forums I'm familiar with) paying a load for a mutual fund is nuts. As for ERs, you will pay about 0.04% to 0.10% for the Fidelity or Vanguard index funds you need for a 3 fund portfolio. I think Fidelity's 403b admin fee is $24, Vanguard's is $60. That's it! There is no admin fee for IRAs at Fido or VG. There are many studies that have confirmed that low fees are the best predictor of fund outperformance over time.
  20. We subscribe to our local newspaper and to the NY Times M-F. I find the eNYT easier to read due to the small font of the print edition. I also subscribe to the eNewYorker. I agree we need to support good journalism by paying for it! Tara and Ron's articles have been outstanding. I keep checking the My Money section always hoping for another of their articles. I like the Jeff Sommer articles on investing also, for instance: https://www.nytimes.com/2015/05/10/your-money/fees-on-mutual-funds-fall-thank-yourself.html?mabReward=wR3&moduleDetail=recommendations-1&action=click&contentCollection=Your Money&region=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&configSection=article&isLoggedIn=true&src=recg&pgtype=article
  21. 1. You can not roll the 457 to a 403b unless you leave your employer. 2. If you tell us the name of the Security Benefit 457, we/you may be able to find the fees using 403bcompare.com if it's a similar plan. Is the plan an annuity-based 457 or a mutual fund based 457? The title may help you with this. 3. You are very fortunate in having Fidelity as an option. It has excellent low-cost index funds. There's absolutely no doubt in my mind that a Fidelity 457 can be much lower-cost than a SB 457. Good luck on the surrender fees. 4. I would open an 457 account with Fidelity. Find out how much lead time your district needs to stop the contributions to SB. Start contributions to the Fido account. Talk to Fido about transferring your SB account to them. The paperwork can take weeks or more and may involve paperwork from both parties, signed by you and them. It can be frustratingly slow, so patience is needed. A contribution to a low-cost IRA, either traditional or Roth, at Vanguard (or Fido) is an excellent option. Opening a Vanguard 403b is a great option, but the $60/yr fee makes it a bit more expensive than an IRA or the Fido 457. All 3 are great options. I'd max the 457 first because of the flexibility in distribution if you quit your employer before age 55. Then the IRA, finally the 403b.
  22. As Ed mentioned, NY state teachers have access to the excellent state-run, very low-cost 457 plan (also called a Deferred Compensation Plan): https://www.nysdcp.com/tcm/nysdcp/static/Brochure_NYSDCP_Education_Kit.pdf?r=1 Although your district may not have this vendor on a 457 list, or have a list, it may be possible for you to get it added. You could call up the NYSDCP and ask them about adding it to your district's options. Other posters have been able to get the NYSDCP added in this way. Although 403b plans are often (usually?) very expensive, and often sold as annuities or expensive mutual fund plans, the Security Benefit NEA Direct Invest plan is an excellent, very low-cost 403b plan. It is internet and phone based, not local rep based. Lots of folks that post here and on Bogleheads forum are using it. Please study Ed's link.
  23. RuthD, welcome to the forum! I agree with your points a, b and c. We don't know enough about you to know for sure about d, but I suspect you are correct. How big will your tax-deferred accounts be when you retire? Will you need to make withdrawals in retirement, or will you pension be adequate? If you do not make withdrawals until age 70.5 when Required Minimum Distributions (RMDs) are required, have you estimated the size of the accounts? That would give you an estimate of the size of the RMDs which will add to your taxable income. When do you plan to take Social Security? That will add to your income. Rather than make Roth 457 contributions during your working years of peak taxable income, it makes sense to make traditional contributions during those years, as you are doing. Then in early retirement when income is usually lower, do some conversions of the traditional 457 (or 403b) to a Roth IRA. This plan fits in with delaying SS which results in an 8% increase for every year of delay. So I'm guessing you are probably correct in continuing to contribute to the traditional 457 and 403b. Do you contribute to a Roth IRA? It's not a bad idea to have some tax diversification. I hope you are maxing the NYC 403b that pays 7% on a fixed value fund!
  24. Does your district have no 457 plan vendors? If so, it's possible that the school administration needs to have a written and signed 457 plan for their employees, and that they don't have it. From your screen s of the 403b vendor list, the district is using a third part administrator (TPA). Was that who you asked about the 457? If not, see what the TPA says. I’d give the NY state plan a call back and see if they can help you get the district to cooperate. You could also find out who makes the decision about 457 plan. It’s probably not the HR person that you talked to.
  25. The "funds" in a 403b annuity are indeed different from the mutual funds in a custodial 403b7 account. The insurance companies often call them "sub accounts" instead of funds. They are based on mutual funds but have higher expense ratios (ERs) due to costs added by being offered by the insurance company. In addition, the 403b annuity will have a "mortality and expense" fee of at least 1% and probably an administration fee of maybe $35. The total fees frequently add up to over 2%! This compares the the SB NEA Direct Invest plan using the 3 Vanguard index funds where the total fee adds up to about 0.07% (if the balance is over 50k so that the $35/yr fee is dropped). The difference between an annuity-based 403b and a mutual fund-based custodial account 403b is not just due to a sub account/mutual fund difference. It's all the extra fees in the annuity.
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