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Everything posted by krow36

  1. Yes I think it can be done with either a 403b or a 457. It’s a great idea to pay the IRA tax when your tax bracket is 0%, or even just 10%! The article does mention that ideally you have a taxable account you can live off of after retirement. Selling from a TSM fund in the 15% or lower bracket results in 0% rate on dividends and cap gain distributions. If you retire and your pension starts, those 2 lower brackets will be filled. Maybe quitting and postponing the pension for a few years would work? Most folks don’t have a large taxable account that they can use for living expenses including medical insurance, so they need to take the pension. At any rate, most retirees’ tax brackets are lower than during working years, which makes contributing to tax-deferred rather than Roth employer plans a better idea. "The Case Against Roth 401(k)” by The Financial Buff, Harry Sit I don’t think there’s a problem doing either a “trustee to trustee” transfer of either the 403b or the 457 to an IRA. Some trustees seem to want to do a “direct rollover” which means they send you a check made out to the new trustee “For the Benefit of (your name)”, which you then mail in within 60 days. In neither case is income tax withheld. When the old provider does an “indirect rollover” where the check is made out to you, there’s income tax withheld, you have 60 days to get the check to the new provider, and only one indirect rollover is allowed each year. Not every employer offers a 457 plan so it might not be possible to transfer the old plan to the new employer. I don’t think there’s a problem moving a 457 to an IRA after leaving the employer if the 457 is a “government 457” (such as a school district’s 457). Doing so would loose the 457 special distribution rules. IRAs have a 10% penalty if distributed before age 59.5. It would be a shame to loose that early distribution option.
  2. I like this Vanguard table showing the impact of fees over time. Compare a low-cost index fund's fee of 0.10% to that of an AXA annuity based 403b fee of about 2.5%, over say 20 years: -2.0% vs about -38%! The table is also useful when considering paying for an advisor.
  3. Having both a low-cost 403b and a 457 plan available to you is very fortunate. A lot of folks are envious because most in the non-K-12 world are restricted to a single employer-based plan like a 401k. What does your TPA’s 457 list for your district look like? Frequently there are fewer 457 providers to choose from than 403b providers. Sometimes the 457 plan is much better (lower cost) than the 403b plan, sometimes the reverse. It all depends on what your district has on their provider list. If PlanMember is on both your 403b and 457 provider lists, I’d contribute to both of them to the max I could swing. The 457 is unique in allowing penalty free distributions at any age if no longer employed by the plan’s sponsor. This provides a valuable option which may or may not be used. The 403b plan requires age 55 and no longer being employed by sponsor before penalty-free distribution (with a few exceptions). Teachers frequently decide to leave the profession after less than the years needed for full retirement. If you anticipate both a pension and Social Security, as well as a large 403b and/or 457, it might make sense to contribute to a Roth 403b or Roth 457. Otherwise you might find yourself in a higher tax bracket in retirement, especially after age 70.5 when Required Minimum Distributions start. Of course a spouse’s tax deferred accounts need to be considered also.
  4. Have you looked at this webpage for PlanMember Direct? https://pdfs.planmember.com/PDFs/PMPARTNERS_SALESandMARKETING/FloridaModelPlan/PartFactPMDirectFactSheet.pdf PlanMember Direct doesn’t use the local advisors or reps, so it is probably something they do not “have” or “offer”. They may think it’s not their job to inform you about how to avoid using their services. PM Direct is designed for investors who can manage their 403b over the internet without the help of reps/advisors. I think whether the local office knows about it or not is probably not relevant. Here’s the list of mutual funds PM offers. http://www.planmember.com/programinfo/index.cfm?currentpage=Elite%20Program The Vanguard fund list is not long but you could easily construct a fully diversified account. The funds are Institutional class which have lower ERs than Admiral class and Investor class. Vanguard uses only Investor class in their own 403b plans (TBM Investor has an ER of 0.16%). You could use the following to get close to a Total Stock Market Index fund: Growth Index, ER 0.07% Value Index, 0.07% Small Cap Value Index, 0.07% They do have: Total International Stock Market Index, 0.10% Total Bond Market Index, 0.05% The 403bcompare.com website has a somewhat different list of funds for PM Direct with includes Vanguard Total Stock Market Index. https://www.403bcompare.com/Employee/SubProducts/FundingOptions/FundingOptionList.aspx?pid=4595
  5. OK, I see 9 county school districts listed by TSA Consulting Group’s website for MD. Most of them have neither Lincoln Investment Group nor PlanMember Services on their 403b list and none of them have both providers. No matter, assuming your 403b list is correct, what’s important is what the TSACG, the Third Party Administrator, lists. The TPA is the gatekeeper for 403b and the 457 plans that are allowed by the district. If Lincoln Investment Group is on the 403b list, you should consider it a possibility for a low cost 403b. If it’s not on the 457 list (even though Lincoln Invest. Gp. can be a 457 provider), you won’t be able to use it for a 457. Contact me by PM is you want to look over the Lincoln DIY application form.
  6. I'm not familiar with the Solin book. Anyway you can probably cross off the donut lady's firm from your 457 possible venders list. I’m a bit confused about your TPA. If it’s TSA Consulting Group, when I look up Maryland, and go through the districts listed, I don’t see the same list of eight 403b providers that you gave. Is your list different than the one provided by the TSA website? Is your district not listed?
  7. It's conceivable to me that the PlanMember and especially the Lincoln Investment Group people you spoke with do not know about the DIY options! They are trained to sell products that are profitable and these DIY options are not very. I've been told that some PlanMember reps are aware of the Direct plan and don't fight it, while others don't seem to be aware of it, although of course they should be! As for the LIG Participant Directed Platform, they haven't published anything on it as far as I know. And the application form must be asked for from a main office?? It's like they want to keep it a secret. Of course it does bypass Retirement Premier 403b plan with it's 0.90% add on to Vanguard's ERs. Did I mention that the PDP makes traditional and Roth 403b and 457 plans available?
  8. PlanMember Services has an option called PlanMember Direct that adds 0.35% to Vanguard Investor class funds. Not a bad deal, certainly better than American Century. You need to make use of 403bcompare.com so you know what the possibilities are!! (Although that doesn't help with the DIY Lincoln program.) The local reps and offices won’t tell you about the low-cost options because there’s no money in it for them! Anyway, we’ll tell you about them! The folks here and on the Boglehead forums have spent years looking for low-cost options! And we're still looking for new ones.
  9. Lincoln Investment Group has come up with a DIY plan that looks very good but they are not making it easy to learn about it. Here’s a link to a recent thread on this forum, which links to a current Boglehead thread. http://board.403bwise.com/index.php?showtopic=6361 It’s not possible to put a link to the pdf application form, but needs to be emailed. If you send me a private msg, I’ll email you the link to the form. Or you can call up a main office of Lincoln Investment Group (not the local rep) and they can provide the pdf link.
  10. TechTeacher, sorry about the district’s problems resulting in no addition of a low cost vender to the list. I agree with you that American Century appears to be a usable 403b provider in the mean time. Their Equity Growth, BEQGX, an active large cap blend fund with an ER of 0.67% looked like a reasonable choice. Are you using 403bcompare to look at all the funds available? Or does AC use a different list in your district’s case? Would you mind posting the other 8 vendors? How did your wife fair with her district’s vendors?
  11. "But the principles of fiduciary duty are strengthening. Investor awareness grows with each passing day. The nation’s investors are already awakening to the role of low costs and broad diversification, and understand that long-term investing is a far more profitable strategy than short-term trading." HERE HERE!!
  12. Your Prudential Guaranteed Investment fund is a stable value fund. It's considered an alternative to a bond fund, but has a minimum rate of return (1% in this case) and usually declares a rate of return for the coming year (3.5% in this case). They are run by insurance companies and invest in a variety of bonds and other securities. Usually it's a mystery as to what the investment categories are but in this case there's a fair bit of information given in their fact sheet. I think this fund is well thought of and is the envy of many folks, especially when it was returning 4% or more! https://www.weabenefits.com/uploadedFiles/z_docs/Retirement/Shared_Retirement_Brochures/Shared_Investment_Fact_Sheets/Guar.pdf
  13. I agree with Tony on the Mid Cap Index fund. By using just the Large Cap Index fund and the Small Cap Index fund in a 4 to 1 ratio, you end up with very close to the equivalent of a Total Stock Market fund. https://www.bogleheads.org/wiki/Approximating_total_stock_market The Fidelity Diversified International fund has an expense ratio of 1.05% while the Vanguard Total Int’l Stock Fund has an ER of just 0.12% and they use the same index. I would switch to the VG fund. The TR Price New Era is a natural resources fund with lots of oil companies and should be considered very speculative compared to the large and small cap index funds. I don’t think it belongs in a about to-be-retired teacher’s portfolio. Then again we all like to scratch our speculation itch a little bit don’t we? It might be better to take more risk by increasing the percent of the large or small cap funds. I also agree with Tony that using one of the Target Retirement funds is a very good way to go. Very simple and all the stock and bond markets are covered. Because TR 2015 is 50/50 stock/bond, I would reduce the Stable Value account to maybe 25% of your portfolio and use the TR2020 or TR2025. You could use a TR fund here in your 403b, and also in a traditional IRA if/when you roll over the account to Vanguard. You would save on lower fees at Vanguard but would give up the ability to take a distribution on the 403b at age 55 penalty free. For tIRAs it’s age 59.5. Maybe with your pension you don’t need to consider such things? I’d like to point out that your 403b plan with WEA is a great example of an excellent K-12 403b! If only state K-12 unions were doing the same elsewhere!
  14. Thanks for the reminder Tony. I keep forgetting about that optional 0.60% for an advisor with the Aspire account. Self Directed! I gotta remember to add that to "Aspire"!
  15. Yes I think the SB rep is very unlikely to mention the Direct Invest option, which is the only SB product worth using. SB pays the NEA several million dollars a year for the privilege of sticking "NEA" on their very expensive annuity and MF products. NEA added Direct Invest with Vanguard funds to the offerings recently. Your district has 3 good options--Fidelity using their index funds, Aspire using Vanguard index funds, and SB Direct Invest using Vanguard index funds. Direct Invest is a DIY plan with no involvement by the SB rep. That's why the fees are so low. Likewise Fidelity and Aspire have no face to face rep involved, just the internet and a phone # to answer simple questions but not to give investment advice. As for what to say to teachers asking for your advice concerning the rep, I think I'd suggest they avoid meeting with the rep. Teachers that go to the meeting should know that the NEA labeled annuity based 403b is an outrageously expensive (i.e. ineffective) way to save for retirement. SB also has a mutual fund based 403b with the NEA label on it with fees that average about 2% plus a 1% back end load fee for the first year. So nothing the rep wants to sell should be bought by your fellow teachers. The rep might spend some time discussing why it’s a good idea to save for retirement but I think trying to justify an annuity will be the rep’s main focus. Of course the rep will want to sign up the teachers for a one on one session where he can zero in with the sales pitch.
  16. I found this post on a Boglehead forum thread. I'll keep looking but this does sound logical, and it would fit with your form. It sure seems like you should be able to get this information from the 457!? https://www.bogleheads.org/forum/viewtopic.php?t=59384
  17. april7th and christinasweeney@sbcglobal, I suggest you call the NYSDCP office and ask about that specific question on the form, and if they can't answer it, ask to speak with a supervisor. You probably realize that if you move your 403b assets into the 457 plan, you will not get the special distribution 457 benefits on the 403b you move to the NYSDCP plan. However the NYSDCP fees (0.045% added to Vanguard’s Institutional Plus ERs) are significantly lower than Aspire’s fees (0.15% added to Vanguard’s Admiral ERs) as I’m sure you’ve noticed. Good luck!
  18. I agree with Tony. Yes, of course the surrender fee sucks! Especially on a teacher's salary. I don't think it is a good plan to ask for a special deal that is not available to everyone. And if you don't get the special deal, you will work to get your colleagues out of their AXA 403b annuities? You are making a threat that doesn't fit with your aim to help your colleagues. $600-$700 is the cost of your education on annuity-based 403b plans. You signed the papers and I think you're stuck with the bill. Lots of posters have paid $1000s to get out, and still consider it a smart move. If your annual fee on your ~30k account is about 2%, your annual fee would be about $600 wouldn't it? If that's so it doesn't make sense to hold on and wait for the surrender fees to expire.
  19. Maybe I’d focus on the folks with an account with AXA. It would be a useful example for others as well. According to 403bcompare.com, AXA has both an an annuity-based 403b and a mutual fund-based 403b. Since most K-12 403b contributors do not know what their plan’s fees are, showing them how to look them up on 403bcompare.com would be very valuable to them. It seems that a lot of folks don’t even know the title of their plan, which they need to be able to look it up!? Maybe ask them to bring the title to your meeting? I realize that 403bcompare doesn’t have all the providers on the list, but the ones it does have are probably representative. Digging out the fee numbers on the others will probably have to involve the reps and maybe the actual plan and fund/subaccount prospectuses. The AXA EQUI-VEST Series 201 (Roth Eligible) is a variable annuity product with the following fees: Personal Income Benefit Charge, 1.00% Administrative Fee, $30 per year 5% Surrender Fee, for 6 years Individual subaccount fees, for example: EQ/Equity 500 Index, 1.82% EQ/Common Stock Index, (Russell 3000 Index) 1.92% TOTAL FEES FOR A BASIC LARGE CAP BLEND FUND: about 2.82% The AXA EQUI-PATH Mutual Fund Program Management/Wrap Fee, $7.50 per quarter = $30 per year Custodial Fee, 0.06% per quarter = 0.24% Individual mutual fund fees, for example: T Rowe Price Equity Income Adv, ER 0.93% American Funds Invest Company of American R4, (large cap blend), ER 0.65% TOTAL FEES FOR A BASIC LARGE CAP BLEND FUND: about 0.90% The Fidelity Direct 403b Custodial Fee, $24 per year Individual mutual fund fees, for example: 500 Index Fund, Premium class, ER = 0.07% Extended Market Index fund, Premium class, ER = 0.07% TOTAL FEES FOR A BASIC LARGE CAP BLEND FUND: 0.07% For a basic large cap blend fund, Axa’s variable annuity plan charges 3 times as much as their mutual fund plan, and 40 times as much as Fidelity mutual fund plan charges!! Axa’s mutual fund plan is over 12 times as expensive as Fidelity’s mutual fund plan! ​I'm assuming that before doing comparisons like those above, you've discussed why fees make a difference. It's really great that you're trying to help your colleagues! Good luck!
  20. tony, I think your slightly different point of view is just what is needed! Not everyone’s “sleep well at night” AA is going to be the same. Not all of us have nerves of steel! Our retirement income is made up of about equal parts pensions (I bailed out after 16 years), SS and RMDs. We were about 50/50 for the first 10 years of (early) retirement, after that 40/60. Assuming raido_me has a pension and SS waiting, I agree with your #5. A taxable account increases the choices you have approaching and in retirement. That excellent MA 457 really does offer a lot of future flexibility.
  21. OK, 75/25 stock/bond and 20% of stocks in international. That works out to: 60% US stocks 15% international stocks 25% bonds It’s good that you have at least started a Roth IRA 15 years ago. Folks on this forum think that the biggest problem with American Funds is their 5.75% loads. Their expense ratios are usually between about 0.5% and 0.75% which is high compared to Vanguard and Fidelity and a few other providors. So it would be a good idea to move your Roth IRA to either Vanguard or Fidelity and since you’ll have your 403b with Fido, I’d move the Roth there. You don’t have to deal with the AF broker that has the Roth now, just call up Fido and have them pull the account out for you. You might want to go to sell the AF at the brokerage. Fido can tell you whether it’s cheaper to sell at the AF brokerage, or at Fido after the transfer. The move will be a trustee to trustee transfer that has no tax consequences. The State 457 looks like an excellent plan with rock-bottom fees. You should probably consider the advantages of a 457 vs a 403b plan. The big appeal to a 457 plan is that you can take penalty-free distributions from it after terminating with your employer regardless of age. With a 403b the age is 55 and with an IRA it’s 59. The early distribution fee is 10%. The 457 fits in well with plans for an early retirement. Teachers often have burn-out problems and so having choices is a plus. Of course you can contribute to both a 403b and a 457, up to 18k to each!
  22. OOOOPS! I meant 85/15 which is what the Four-in-One Index fund is. 75/25 for a 39 yr old seems reasonable to me. What are your thoughts on the percent of stocks you want to be international? Are you contributing to an IRA? If so hopefully it’s at a low-cost provider like Vanguard or Fidelity etc? Do you have a 457 plan available in your district? If you have a working spouse, the 457 plan can be very useful for adding to the family's tax-deferred retirement savings.
  23. raido_me, as Tony mentioned, whether the Fidelity® Four-in-One Index Fund FFNOX .11% fund is appropriate for you depends on what your desired asset allocation (AA). 85/25 stock/bond seems fairly aggressive to me, appropriate for someone in the 20s. Have you decided on your AA? That's the first step. Remember if we have another downturn like we had in 2008, that 85% stocks could cause the portfolio to drop by over 40%! Were you invested in 2008-2009 and how did you react? As you get close to retirement I would want to be no riskier than about 60/40. Others may disagree. The next decision is to decide on the percentage of stocks you want to be international stocks. Anything from 0% to 40% is commonly used and recommended, but it's a personal decision. I think 20% to 30% is the most common recommendation although John Bogle prefers 0% and Vanguard itself uses 40% in their Target Retirement and Life Strategy funds. I'm about 10% myself. Once you decide on these 2 ratios, it's easy to work out the percentages using those 3 Index funds. I believe the Fidelity® Global ex U.S. Index Fund - Premium Class FSGDX .11% includes emerging markets and N. America which Fidelity® International Index Fund - Premium Class FSIVX .08% does not. I'd pick the more diversified FSGDX.
  24. The AXA salesperson could actually think he is doing you a favor selling you his product. As for knowing what the fees are, they certainly don’t make it easy, and it should be. Have you read the NYTimes series of articles on the K-12 403b problems? This one discusses AXA annuities. https://www.nytimes.com/2016/10/27/your-money/403-b-retirement-plans-teachers-brokers-fees.html?_r=1 Although 403bcompare is run by the CA State Teachers Retirement System, these 403b providers seem to offer the same products in most of the states. 403bcompare shows that AXA sells both mutual fund 403b plans and also annuity 403b plans. I guess you have the annuity 403b because that’s what the rep and AXA make the most on. The MF 403b doesn’t have any surrender fees. https://www.403bcompare.com/Employee/Vendor/VendorProductList.aspx?vid=1819 As you mentioned, the annuity 403b has a 5% surrender fee that applies to all your contributions over the last 6 years (unless you’ve had the contract for 12 years in which case they are waived). It also has “Personal Income Benefit Charge” of 1% per year and an “Administration fee of $30 per year. These fees are in addition to the subaccount expense ratio. Their EQ/Equity 500 Index (which should be their least expensive stock subaccount) has a fee of 1.82%!! If you let your AXA account just sit there and wait out the 5 years, you would be paying almost 3% every year from your balance of 35,000. Most posters and advisers have concluded that it makes more sense to rip off the bandaid and pay the 5%. It’s an easy decision to stop contributions to the AXA 403b. Then you need to decide whether to use the self directed Aspire/Vanguard 403b or the NYSDCP 457. Or you can set them both up and contribute something to both. Although the 457 is making some fund changes, I’m sure there will still be a 500 Index fund for large caps, a fund for mid and small caps, a bond index fund and an international stock index fund. They will just have different names. And Vanguard’s Wellington will remain. I don’t think there’s really any reason to delay joining if you want the 457.
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