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Everything posted by krow36

  1. 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.
  2. 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!
  3. 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.
  4. 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.
  5. The 403b(7) designation means that it a mutual fund based 403b plan, called by the IRS a "custodial account". Prior to the 403b(7) law, all 403b plans were annuity plans offered by insurance companies. Being self-directed is not a factor. Security Benefit has 403b(7) plans that are sold by local reps and are very expensive, with fees over 2%. SB's NEA Direct Invest is the only low-cost custodial account they have.
  6. Dan and Scott tell the story on Episode 26 of their April 2016 podcast. By chance, Dan met an NEA Members Benefit official at bus stop in MD where he was living. Some time later, Dan and Scott met with him for dinner. They tried to convince the official that NEA should be offering teachers a low-cost 403b plan, not the very expensive “NEA Value Builder” products. Several years later the official called Dan and asked advice on fund offerings in the low-cost plan. Dan and Scott do not know for a fact that they were instrumental in the establishment of NEA Direct Invest, but it seems highly likely to me. You can listen to this story starting at minute 21 of Episode 26. http://teachandretirerich.libsyn.com/page/2/size/26 I don't doubt that the lawsuit also figured into reasons that NEA and Security Benefits decided to create a very low-cost 403b option.
  7. The low-cost state 457 plan are usually added to the district's 457 vendor list because an employee has asked for it. Of course a district that was looking out for their employees would have added it, but unfortunately that's not usually the case. Neither the district HR office nor the TPA are usually aware of the importance of low-costs. Any low-cost option is only added to the list due to employee pressure. Sometimes it doesn't take much, sometimes persistence is needed. The exception might be the NEA Direct Invest option. Security Benefit's main business is selling very expensive annuity and mutual fund 403b plans to unsuspecting teachers. However NEA, the national teachers union, has sponsored the ultra-low-cost Direct Invest plan. NEA also allows the NEA label to be attached to other very expensive Security Benefit 403b plans. Security Benefit pays NEA several million a year for the use of the NEA label. NEA Direct Invest most likely exists because Dan (owner of 403bwise) and Scotty (CFP and contributor) talked to an NEA official. All the low-cost 403b plans are internet and phone based, NOT local rep-based. Unfortunately teachers seem to think they need a local rep, mistakenly thinking the rep is looking out for their best interests.
  8. I think you were misinformed. The NY State 457 plan is being used by many NY state teachers who post on this forum and on the Boglehead forum. You should check on your district's 457 list of vendors. If it is not on the list, it likely possible to add it without much resistance from the district or TPA. Give the plan a call and they can helpful.
  9. LiT, I agree with Steve and you that the NEA Direct Invest plan is excellent and your only low-cost option. That assumes that you choose the Vanguard index funds as discussed in the link that Steve provided. The target retirement funds and other actively-managed funds are too expensive. Are you aware of the excellent 457 plan run by NY state?
  10. I'd give them at least a week and then call and ask for a progress report. Some posters have used email to communicate, and you might ask them about that. Good luck!
  11. Steve, thanks for the link. It's great to see that Simon has returned to the K-12 403b problem again. Although M* pushes a subscription, it doesn't cost anything to sign in for a Basic "subscription". That gets past the pay wall.
  12. TonyZ, it's great that Security Benefit is on your district's 403b vendor list. The target retirement funds in SB DI are too expensive, so you should go with the 3 Vanguard funds that Ed uses. If you decide you want to contribute to a 457 plan as well as to a 403b plan, Lincoln Investment is a very good choice for a NJ teacher.
  13. It's a personal decision. Some folks have no interest in managing their investment and to them it's worth to pay about 0.05% to 0.10% more in ER fees. Some folks don't trust themselves to manage it, although it's not difficult, and help is always available here. If you use a 3 fund portfolio of VG index funds, it's very likely that the rate of return over time will be will be slightly higher due to the slightly lower fees. Probably the difference in rate of return would be less than 0.10%, but I would not expect a 2-3% difference. For example, I would guess that the 3 funds (using 70/30 ratio) might have a rate of return over 10 years of maybe 8.4% and the TR 2030 fund 8.3%. I'm making up the numbers, but that's the kind of difference I'd expect. So you could go with the TR 2035 (~18 years from now) fund, or with the TR 2030 fund. Why don't you look up the stock/bond ratio of the TR 2035 fund? Remember there's no problem converting your balance in a TR fund to the 3 fund portfolio in the future after you're more familiar with investing and want to have the absolutely lowest fees possible. Low fees do save you money. Of course the big factor in your retirement balance is how much you contribute. The effect of your continuing contributions dwarfs the effects of an extra fee of 0.10% !
  14. Target Retirement funds come with various years in their title, which represent the estimated retirement year. You can use the retirement year, or you can decide what stock to bond ration you want, and choose the TR fund with that ratio. For instance, you might be a young teacher just starting out and may guess you would retire in 2055. That has a stock to bond ratio of about 90 to 10, which you may decide is too aggressive. You might decide that a ratio of 70 to 30 is more appropriate for you. If you look at the M* sites on the various TR funds, you'll find that the Vanguard TR 2030 fund fit's the bill. Vanguard TR funds an expense ratio of 0.14%, which is a bit more than the VTSAX fund, but low enough. They do the rebalancing for you as the market goes up and down. They also slowly become more conservative, adding bonds and reducing stocks as you get closer to retirement. You can change your mind and pick a different fund(s) later if you want, without any tax consequences, because the funds are in a 403b account.
  15. On the Aspire website, after you get to “403b”, select “Fund Search”. Select “Find a fund family” and choose Vanguard. Scroll down and select for example Vanguard Total Stock Mkt Idx Adm (VTSAX). When you click on VTSAX, you will get the Morningstar website that tells you that the expense ratio (ER) is 0.04%. You can get this same webpage by googling VTSAX. Under Aspire's Resource Center menu, go to FAQ. Scroll down and find “What are the fees to participants?” Take some time to check other parts of the FAQ. There's a lot of useful information there. The only fees you will pay are Vanguard’s ER and Aspire’s 0.15% and the $40/yr. Instead of VTSAX, you may want to use a target retirement (TR) fund which combines both stocks and bonds and keeps them balanced over time. Tell us your age, investment experience and years to retirement and we can help you pick one of the TR funds.
  16. Guys, Thank you, I had to do more reading and researching but I’m starting to get it now and understand what you are saying about it being easier to roll it over into an IRA if there aren’t other options. Hold on! You can't roll over your 403b to an IRA unless you quit your current employer. You can roll it over to another 403b vendor if the vendor is on the district's 403b list. I spoke with a co-worker who moved from Axa to Aspire using our districts TPA so I know my district has it available but they never told anyone. I looked it up online on Aspires website and my school district is there. Excellent! I have a few more questions and thank you in advance. We love questions! Hey, most of us are teachers, or retired teachers! I’m reading the application as we speak. How do I get my money over? Would it be a transfer or roll over? The first thing you should do is establish an account with Aspire. If you haven't done so already, you should stop contributions to your AXA 403b. Once the Aspire account is established, you should start contributions. Your TPA will have a form to fill out for that to happen, but you need to establish the account with Aspire first. After that's taken care of, you can work on transferring the AXA balance. Aspire will have a form for you to fill out, and probably so will AXA. This will take some time, and patience. Expect to be frustrated. And annoyed by AXA. But eventually it will happen. How often do you rebalance? Is this to protect your risk or reward? I was thinking annually? Rebalancing keeps your risk at the level that you have decided on. You shouldn't worry about that yet. If you end up with a target retirement fund, rebalancing is done for you. Just want to make sure from what you are saying I should I fill out application on my own without the TPA or should I have him fill it out and say self direct and is he obligated to do it? I think you should avoid talking to either the TPA or an AXA rep. Just fill out the Aspire form and send it in. If you have questions about anything on the form, just ask us and we'll help you figure it out!
  17. I read his other thread before I wrote the last 2. I don't think I'm giving him too much advice/information, but who really knows? My goal is to make him aware of his best options and there are 2 of them I think. They both require some effort on his part. Either one would be a good outcome. Hopefully he'll tell us how it goes.
  18. Besides using Aspire, your other possible at a low-cost 403b/457 plan is to get Lincoln Investment added to the district's vendor list. There is an undisclosed relationship between the NJEA (the NJ state union) and Lincoln Investment (and possibly the NJ legislature?). It's an excellent, low-cost 403b and 457 plan that uses Vanguard funds, and is only available to NJ school districts (and a few near Chicago and some in NY state). It's possible that if you called the regional office, they could persuade your district to add Lincoln Investment to their 403b and 457 lists? You won't know if you don't give it a try. I think you should forget about getting Security Benefit added to the vendor list, for the reasons I've mentioned.
  19. Aspire is good! You should pursue getting the TPA to add Aspire to the 403b vendor list. What it means is that the TPA thinks that you need an AXA advisor to oversee your Aspire account. That would add an additional fee (0.6%?). Aspire does not require that you use an advisor, and the TPA has no business in my opinion requiring an advisor. On the Aspire application that you download from their website, you can write in "self-directed" or words to that effect, instead of the "advisor" name. The TPA is contracted by the district to regulate which vendors are on the list. But the TPA or the district does not have the power to determine which options of a vendor you use. If you want to do Aspire self-directed, it should be allowed. You may get some resistance, but it's up to you to stick up for yourself and choose a low-cost option, if that's what you want. All the best low-cost 403b plans are 'self-directed, such as Fidelity, Vanguard, and the Security Benefit NEA Direct Invest. They are all internet based, not local rep based. Your district and its TPA have ignored the critical importance of the fees in a 403b.
  20. I looked over Direct Invest threads through 2018 and couldn't find the number. Bash Dash, jebjebitz and several other posters are also using Direct Invest--maybe they'll have the number. There is an 800 number on the Direct Invest website and they should be able to direct you to a number that is Direct Invest-smart. Have you checked out the website? I would only use their phone line if you have a problem (that we can't help you with here). As the website states, Direct Invest is meant to be used by those able to manage their account via the internet. Instead of using a rep who has a conflict of interest, you can get advice from posters here who are actively using Direct Invest. Security Benefit is a large insurance company which sells expensive 403b plans to teachers. They and NEA (the national teachers union) have arranged the NEA Direct Invest 403b plan. SB pays NEA several million per year to attach the NEA name to several 403b plans. EXCEPT for the NEA Direct Invest plan, all of SB's 403b plans are very expensive annuity and mutual fund plans. Direct Invest is a very small part of SB's 403b business. When you phone SB about Direct Invest, you may talk to someone that is uninformed, although that is annoying.
  21. Oh Boy, I'm loosing it! That's the number for the Lincoln Investment plan! Let me look for it, I'm sure I've seen it fairly recently. Ed may know the best number also as he is currently using NEA Direct Invest.
  22. It's in this thread:http://board.403bwise.com/topic/7040-aspire-or-nea-direct-invest/ Sorry, I got the recent threads about NEA Direct Invest mixed up!
  23. The important thing to realize with the SB NEA Direct Invest 403b is that it is internet (and phone) based, not rep based. You shouldn't need to talk to a local rep. The phone number jebjebitz posted will connect you to a SB office, not to a local rep. The Direct Invest website has the forms you need to fill out. Most posters have not had significant trouble getting set up with Direct Invest. A few have had trouble with their TPA and or district. Some have complained about getting to talk to someone knowledgable at SB. This stuff takes patience and persistence, but it pays off.
  24. Tricia C., I think you and whyme have found the current fees. The fee info I found was stating the fees that Nationwide could use in the future. Future fees could be more or less than current fees, but Nationwide has to compete with other large insurance companies for these recordkeeping/administrator jobs so it's probably more likely for the fees to go down as the plans grow in assets. I believe that fee changes would have to be approved by the fiduciary-based committee that controls the plan. These state-run plans usually have to be self-supporting, that is pubic funds are not used in their administration or to lower fund ERs.
  25. That’s great the the admin fees are very reasonable (0.14%). Sorry I couldn’t find the actual fee page. The fee info I quoted was below the page that listed all the funds. It did seem strange that Nationwide used “as much as ____” rather than the actual current fees. I think that only the 403b plan is available to “Teachers”, not the 457 or 401k or 401a plans. In any case, the Security Benefit NEA Direct Invest is the lowest cost 403b option using the 3 basic Vanguard Admiral funds that Ed used.
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