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Everything posted by krow36

  1. You shouldn't beat up yourself about AXA. You now know enough to change providers and move on. Many poor souls spend their whole career making the AXA mistake. All of us have made many costly investing mistakes! My $6000 in a single stock went to $0 during the 2 years I completely ignored it while overseas!! Financial education seems to usually be learned the hard (expensive) way. Especially by educators with their 403b plans.
  2. Your best 403b vender is Aspire where you can use low-cost Vanguard index funds. Aspire calls themselves an Aggregator. They make use a very wide variety of fund companies, but Vanguard is the hands down choice on this forum. They add an acceptable 0.15% fee to the funds' expense ratio and charge an annual fee of $40. I believe all the other vendors on your list are companies with unacceptably high fees. His choice of either Vanguard or Fidelity for the 403b is excellent. Fidelity will be slightly cheaper, but the difference is not that important in my opinion. You can use 403bcompare.com to compare the fees (although I think Fidelity's ERs are not up to date). Vanguard uses only Investor class funds in their 403b, not Admiral class. The NYS 457 plan is excellent and has nothing in common with an AXA plan. The plan is changing the funds offered this year and you might want to wait until things have settled down. Most of the Vanguard funds are being replaced by Blackrock funds. I don't think there's much detailed information yet. There's a current thread on it on the boglehead.com forum. I expect that the new funds will have even lower ERs than the Vanguard funds, but that's just a guess. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=209272
  3. Fidelity is not only the only vendor on the provider list with low-cost index funds, Fidelity's 403b plan is a slightly lower-cost than Vanguard's. I don't think you can do any better. If you use 403bcompare.com to check out the offerings of the other 7 providers, I'm confident that you will find their offerings have very high fees. The Fidelity funds I would use would be: Total Stock Market Index Total Bond Market lndex Total International Stock Market Index Fidelity does offer a very long list of managed (non-index) funds and sector funds that have high expense ratios, so stay away from them. Congratulations, you are very fortunate to have Fidelity for your 403b!
  4. I wonder if I have this straight? A HSA allows you to put away before-tax money and later spend it on medical costs without ever paying income tax on that money? Or, you can use the HSA as a "stealth lRA" and pay the bills out of pocket (keeping all the receipts), and after age 65 you can convert the invested balance into a traditional IRA? In the first case your medical costs are lowered because you're paying them with untaxed money (your medical bills are being subsidized by the taxpayer). If you go the stealth IRA route, you are being allowed to contribute more to an IRA than the rest of us, and that's a cost to the taxpayer. Yes, it's all legal, at least for now. Who knows what will happen in the future with any of our health insurance plans?? High deductible HSAs favor those with high incomes because the average taxpayer can't afford them. If I were you l would keep quiet about your HCA and certainly not complain about the $24 per year fee. A HSA cannot be compared to a regular savings account.
  5. I don’t think there’s a medical expense rule for withdrawals from Roth IRAs. Of course you can withdraw your contributions from a Roth IRA for any purpose without penalty or being taxed. The money you put in the Roth IRA was after-tax money and it only gets taxed once. The earnings in the Roth IRA can be withdrawn without penalty or tax IF you are over 59.5, AND it has been 5 years since the first Roth IRA contribution. So you need to know the year of the first Roth IRA contribution and the 5 yrs starts Jan 1 of that year. Here’s the 403b hardship distribution rules: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions Here’s VALIC’s form for applying for a hardship distribution: https://www.ncompliance.com/downloads/AIG_VALIC_Hardship_Distribution_Form_2008_01_13.pdf The Information page has the following: They don’t make it easy to do a hardship distribution because the idea is retirement plans like 403b’s are not supposed to be used until after age 59.5. However, if the employee no longer works for the plan’s sponsor and is age 55, there’s no penalty for distributions. Of course the distributions are taxed as income. I think your best way to deal with health care costs is with health insurance, rather than trying to use your retirement accounts. Yes, I know, that’s not very settled right now. Sorry.
  6. Yeah, hit and runs are also happen on the BH forum especially if they aren't quickly engaged. Oh well, bringing it up gives me another chance to bring it to folks' attention. And you never know who's looking.
  7. Here’s an example of a recent post on this forum where there was no obvious low-cost provider of index funds. SPerk15, http://board.403bwise.com/index.php?showtopic=6215 Several of us suggested checking out Lincoln Investment and VALIC. Here is what 403bcompare shows for a large cap index fund: Lincoln’s Premier Mgmt/Wrap fee of 0.90% added to Vanguard’s Total Stock Mkt Investor’s ER of 0.16%. Total fund fee 1.06% + $60 VALIC’s Inside Edge Recordkeeping Fee of 0.40% added to their Stock Index (SunAmerica) funds ER of 0.34%. Total fund fee 0.75% + $30 VALIC’s Group MF variable (0 to 1.0%) Mgmt/Wrap fee of perhaps 0.60% to a Dreyfus S&P 500 fund with ER of 0.50%. Total fund fee 1.10% We weren’t aware of the DIY Lincoln plan at the time SPerk15 asked about his district’s vendor list. Lincoln’s Participant Directed Platform no Mgmt/Wrap fee, VG Total Stock Mkt Admiral fund with ER of 0.05%. Total fund fee 0.05% +$60 Sperk15 hasn’t returned and hasn’t responded to a PM suggesting he take a look at this thread. Maybe he was successful getting a low-cost provider signed up to his district’s list? If not, the Lincoln PDP plan looks like his best option for a 403b and probably also for a 457.
  8. You can use this link to bypass signing into Callan: https://www.bogleheads.org/w/images/d/dc/Callan_Periodic_Table_of_Investment_Returns.png Double click to enlarge. Sorry there's no legend. The Bloomberg Barclay Agg is US investable bonds. The Russel 2000 is US Small Caps. MSCI EAFE is international stocks (minus EM).
  9. Deb19, you don't have to worry about cost basis in a tax-deferred account like an IRA, 403b etc. It doesn't matter if it's stocks, bonds, mutual funds or ETFs. Cost basis applies to taxable accounts only because you need it to figure out your capital gains (or losses?) when you sell something. I agree with Tony on the EJ closing fee. You should just rip off the band-aid and move on. We've all had to pay for our financial education, often in the $1000s!
  10. Our AA has been 40/60 for over 10 yrs. We've been retired 25 yrs. International stocks only about 8% of stocks. 1 yr, 6.4% rate of return (IRR from Vanguard) 3 yrs, 5.4% 5 yrs, 7.9% 10 yrs, 6.4%
  11. You can always find negative comments about a provider. Just like you can always find advice to sell it all and get out of the market! Unless you tell us what specifically you think might be a problem with TDA, nobody can say much. As long as you don't hook up with an advisor, I don't think TDA is going to take advantage of you. I've never used them. As long as you are a DIY investor, buying mutual funds (hopefully index!) and and maybe an occasional stock, they should leave you alone. Will they offer other expensive services? Probably. So will Fidelity and other vendors. Remember, IRAs are portable! You can move them to other vendors repeatedly. It just involves filling out some forms and doing a trustee to trustee transfer. There's no tax consequences to selling the contents and buying something different! Such FREEDOM! You know that you will be doing a lot better leaving EJ if you move to TDA, Schwab, Fidelity, Vanguard, etc.!! Relax!
  12. Fidelity has 2 different series of Target Retirement funds, one (Freedom) uses actively managed funds and the other (Freedom Index) uses index funds and has a significantly lower expense ratios. FFKFX is in the former series. Does your plan offer the Fidelity Index funds like TSM, TISM and TBM? If it does, you can certainly put together the equivalent funds using only a few low-cost index funds. The Chuck Burns article you linked is from 2008 and Fidelity has lowered those index fund ERs significantly (thanks to trying to compete with Vanguard). The only downside of doing it yourself is that you will do the rebalancing yourself. Not a big deal in my opinion, and if that's not a big deal for you, then go for it. You'll get lower expenses and that adds up over the years.
  13. You're not confusing TD Ameritrade with the insurance company Ameriprise are you? I don't think there's anything to be scared about with TDA, it's a respected discount broker. I think I'd prefer to use either Vanguard or Fidelity, but that's just me. Where are your IRAs located? Hopefully at a low-cost provider, and it is convenient to have accounts in the same provider if possible.
  14. I have a question about the 403bcompare website that is run by the CA State Teachers Retirement System (CalSTRS). As I understand it, 403b vendors of K-12 plans in CA are required by CA State law to participate by submitting information on their offerings. Are there any consequences if the vendor omits one of the plans it sells? Is the vendor allowed to omit their low-cost option and continue to provide information on only their high-cost options? I believe this is the case with Security Benefit’s NEA Direct Invest 403b plan, and with Lincoln Investment Group’s Participant Directed Platform 403b/457 plans. I see that a school district “may not forward annuity or custodial account consideration to the vendor of any unregistered 403(b) product,” except for employee accounts started before 2004 which are grandfathered in. (403bcompare.com) In CA neither of the above self-direct low-cost plans would be legal. In a document sent to the school districts, employers are encouraged to notify the 403bCompare.com Administrator at Administrator@403bCompare.com if: The employer suspects materially inaccurate information has been provided by a vendor. and Vendor Removal Process California Education Code Section 25103 gives authority to the Teachers’ Retirement Board to remove a vendor for submission of materially inaccurate information, not submitting assessed fees within 60 days of invoice, or failing to submit notice of material changes to registered products. https://www.403bcompare.com/Documents/ED2004-04_403bCompare.pdf Scotty and Steve, what do you think? Can 403bcompare force the vendors to include all their products? Or does the school district have to start the process?
  15. MMK, this thread has had a bit of “high-jacking” and I wonder how you are doing? It’s good that you were able to get the VALIC rep to show you that your district’s “management/wrap fee” is 0.60%. Added to the expense ratio of 0.47% for the ACITX fund (TIPS bond), the total fee you have been paying is 1.07%. If you use the PEOPX fund (Dreyfus S&P 500 Index) with it’s ER of 0.50% the total fee would be 1.10%—not significantly different. Are you making use of your 6.5k and your spouse’s 6.5k possible IRA contribution? I’d do that before contributing to your expensive 403b. If you can put more than 13k towards retirement, then using the 403b is probably better than saving in a taxable account although they both have their advantages and disadvantages. If you want to reduce your present taxes, contributing 13k to the traditional IRAs and then to your 403b is the way to go.
  16. A HSA is a great deal for the wealthy who can afford to use the required high deductible health plan. The money goes in tax-deferred and money going out for medical bills is not taxed. Amazing! After retirement age it can be converted to an IRA. It’s been call a “stealth IRA”. Congress may not let the deal last. I don’t think school districts commonly offer HSAs. You probably know that you can withdraw funds from your 403b account without a penalty if you’ve quit your job and are 55? I did it at 57. For traditional IRAs that age is 59.5. If you make withdrawals while still employed (by the plan’s sponsor) before age 55, there’s a 10% penalty. As you know before age 55 you can make penalty free withdrawals for medical bills if your plan offers it. There are some restrictions such as the withdrawals can only be your contributions, not the gains. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions I think contributing as much as possible to your 403b is a good idea, assuming you have at least a half-year’s expenses saved up in an emergency fund in a saving account or CDs. In a 403b, you are deferring the tax on those contributions as well as on the gains. Hopefully you won’t need to make pre-age 55 withdrawals. There’s no substitute for medical insurance, certainly not a 403b. Medical bills can quickly add up to tens or hundreds of $1000s! As you know. What happens with the ACA, Medicare, Medicaid and health insurance in general is up in the air and we’ll just have to wait it out. In the mean time, contribute as much as you can to IRAs and your 403b! Doing so gives you choices down the road.
  17. krow36

    Ira Input

    Yes, IRA questions are OK on this forum. I don’t recommend Edward Jones. They are unnecessarily expensive and their advice is likely to benefit EJ and not so much you. Instead of paying someone to hold your hand, you would be better off learning more about investing so that you didn’t need face to face hand holding. Advice costs money which is better put in your retirement account. Firms like EJ are very good at making investing look very complex in order to make you think you can’t do it on your own. You can always ask for opinions on this forum and on the Boglehead forum, and you can decide what makes the most sense. Have you read any books on investing? Have you read all the good information on this website? A lot of it applies to investing in general, not just 403b and 457 accounts. Check out the “ Investment Tips and Tools”, especially Key Terms, Asset Allocation and Target Date Funds. http://403bwise.com/k12/content/21 TD Ameritrade has a good reputation as a discount broker (unlike EJ). I believe you can buy ETF versions of of Vanguard or Fidelity low-cost index funds there. I prefer to buy mutual funds directly at Vanguard or Fidelity and I don’t use ETFs. We believe in investing in the whole market, not just a part of it that did well in the past or is predicted to do better in the future. If you invest in Total Stock Mkt, Total International Stock Mkt and Total Bond Mkt, you have all you need—you’ve covered it all. And using a Target Date fund covers it all in one fund! Most of us think that buying individual stocks for your retirement accounts is not a good idea. I’ve done it in the distant past, and it didn’t turn out well. Mutual funds with their 1000s of stocks are diversified—not relying on a single company’s success. Diversification is something you can control, unlike the direction of the market. You should be investing in the US and world economies, not guessing** on a single company’s future success. (**this website won't let me use the word "gam-bling"??)
  18. Here's the IRA chart on rollovers: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf So it's OK with the IRS to do a trustee to trustee transfer of a 403b to a 457. You could just cross out "former" and write in "current" employer and supply that, which is true. What could go wrong??
  19. Page 22 discusses moving other retirement plan assets into the NYSDCP. It's kept in a separate account because the rules are different, but the fund choices are the same as those of the 457 plan. Have you talked to the NYSDCP office to get the correct form? They should be able to help fill it out also. https://www.nysdcp.com/tcm/nysdcp/static/Brochure_NYSDCP_Education_Kit.pdf?r=1
  20. Dave, I like the idea of getting rid of the insurance providers because they will push their annuity products. I can’t answer as a presently contributing teacher but here’s a retired teacher’s thoughts on getting red of the insurance companies. (I contributed to a VALIC fixed annuity while working, rolled part of it to a Fidelity 403b before retiring, years later rolled the Fidelity 403b to a Vanguard tIRA, years later yet rolled the rest of the VALIC 403b to a Vanguard tIRA.) I understand wanting to get the insurance companies. How are you handling the fact that AXA and many other insurance companies also offer mutual fund based 403b plans in addition to their annuity based 403b plans? AXA’s annuity 403b plans have fees of 2 to 3% (and deserve the boot!) but their MF based plan’s fees are about 1%, according to 403bcompare. Of course the reps only sell/push the annuity 403b plans. Fees of 1% are certainly not ideal, but it might be about average for managed funds (except at Vanguard)? What are the fees like in the mutual fund based 403b providers that will remain after getting rid of the insurance companies? Can you and the district ask for a proposal (an RFP?) from each of the vendors that will restrict them to only offering MF based plans? If the insurance companies couldn’t sell their annuity 403b’s they probably wouldn’t want to be on the list. Maybe they would self-select themselves off the list?
  21. Thanks April7th. I'll add your link and another one I found.
  22. Yes, Fidelity is trying to compete with Vanguard and has lowered their expense ratios on their index funds to lower than Vanguard's. The differences are not large--maybe 0.01% or so? Another fee factor is that Vanguard will only use Investor class funds (not Admiral class) in their 403b accounts. Fidelity uses their Premier class in their 403b accounts if the fund balance is high enough. I think you are doing great with Fidelity and it doesn't make sense to want to move Vanguard. Those folks using an Aspire 403b account are able to use Vanguard's Admiral class funds, which helps cancel out most of Aspire's additional 0.15% account fee (compared to an account directly with Vanguard). For your IRAs where you get to choose the provider, either Vanguard or Fidelity is a great choice.
  23. Have you checked out Fidelity on 403bcompare. com? The annual fee of $24/year is very reasonable. There’s a long list of available funds, most of which are more expensive managed funds, not index funds. There is however an adequate number of very low-cost (Premier class) index funds available: 500 Index FUSVX, ER 0.07% Extended Index FSEVX, ER 0.07% (The above 2, in a 4 to 1 ratio, equal the US Total Stock Market.) US Bond Index FSITX, ER 0.17% International Index FSIVX, ER 0.17% So Fidelity can certainly compete with Vanguard and Aspire/Vanguard when it comes to low-cost funds and the flat annual charge. Fidelity is trying to compete with Vanguard on index funds and recently lowered the ERs on many of their index funds. I think the above Premium ERs have been reduced and 403bcompare isn't up to date.
  24. Welcome to the forum LibraryLady! Have you listened to Mark Eichenlaub’s podcast (#32)? He was able to get Fidelity for his small district. http://teachandretirerich.com/podcasts/ I would actually put Fidelity at the top of the list although Vanguard and Aspire are also excellent. Vanguard seems to be having problems handling a greatly increased volume of traffic and their use of only Investor class in their 403b is a slight negative as you mention. From what I read on this and the Boglehead forums, the most common way a new low-cost provider gets added is by repeated personal contacts. Talking to the HR department and whoever makes decisions on the provider list, school board members, etc. seems to often get results. Having other teachers join you no doubt helps. It takes persistence and patience to overcome the organizational inertia. Have you read the NY Times articles on the problems of the K-12 403b? The articles should be useful in recruiting your colleagues to the cause. http://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?smid=tw-share&_r=1
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