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Everything posted by krow36

  1. A few thoughts, in random order: Reasons to keep the old 403b at American Funds: You think the 11 managed funds will perform better over time than 3 broad-based index Vanguard funds. You understand why the funds were selected and think those reasons are still valid. You feel attached to the funds because you’ve had them a long time. You don’t think it makes much difference. Reasons to sell and move the money to an Aspire 403b using Vanguard TSM, TISM and TBM. It will be easier to keep track of your asset allocation. Knowing your current overall asset allocation allows you to rebalance easily. The lower ERs at Aspire/Vanguard give the 3 funds an advantage over the AF funds. You don’t know why the funds were originally selected. There is a lot of duplication in the 11 AF funds. It’s hard to know if you’ve covered all the markets like you would with TSM, TISM and TBM. Simplicity is desirable, especially as we get to retirement age.
  2. Here's a link to the thread on 457 State plans which is on the 403b discussion board. It's an incomplete list. Please add States and corrections/updates.
  3. Adding West Virginia: DCP: https://dcprovider.com/PDF/WVirginiaWR/enroll.pdf
  4. I guess we can say that most mutual fund based 403b win hands down over an annuity based 403b (except for TIAA?). I think this Participant Directed Platform (PDP) should be compared to Lincoln Investment’s Retirement Solutions Premier Platform which adds on a Mgmt/Wrap fee of 0.90% (and uses a smaller (but adequate) selection of Vanguard funds). The Retirement Solutions Premier doesn’t include an advisor—that’s an additional 0.60%. So the PDP like the RS Premier plan is a very bare-bones DIY plan. The PDP is a DIY way to use rock-bottom low cost mutual funds in a 403b and/or a 457. There’s no hand-holding, no website explaining the basics of investing like we see with the CalSTRS Pension 2 or the NYSDCP 457 and some (all too few) plans. Because Lincoln Investment is widely available throughout the US, this plan could be a big help in many school districts with no low-cost providers such as Vanguard, Fidelity, TIAA or Aspire (if Lincoln Investment is on the district’s list). Being able to use Vanguard funds in a 457 plan would be a welcome improvement for many districts. Lincoln hasn’t made the PDP easily available by putting the application form on their website, making a phone call and email necessary to get started. Maybe this will change?
  5. Boglehead poster A440 has been contributing to a Lincoln Investments 403b called “Retirement Solutions Participant-Directed Platform” (PDP) for over a year. The PDP is a Platform for those who do not want or need any help from a rep or an advisor. A440 is using Vanguard Admiral class funds and there is no Management/Wrap fee (as in their Retirement Solutions Premier Platform). There’s a $35/year Account Fee. BH poster Coolstavi has also signed up for the 457 PDP recently. Lincoln Investments’ 403bcompare info does not include the PDP, nor does Lincoln’s website mention the PDP. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=175295 Lincoln has an PDF application form for the PDP that Coolstavi included in an email to me. It’s not possible to include the PDF in a posting here or on the BH forum. The form is specifically for the PDP, either a 403b or a 457, both either traditional or Roth. Dave Grant, you’ve mentioned Lincoln Investment several times. Can you tell us more about this Lincoln plan?
  6. Ok krow36, you are on record! :- ) Sometime between 2017-2020 you are expecting a "serious" downturn. Would you mind getting a little more specific? In my mind serious is at least 20%, 30% 40% 50% or more downturn. Predicting is just a game. Reminds me of Taylor's quarterly and annual Dow predictions. BTW I was number 1 on Taylor's list, once, with predicting after a quarter, forgot when. It was exciting, have to admit. But I trained my mind to be more excited about my 5.7% return YTD, in my fairly boring portfolio. Happy holidays, Steve I should have added that I'm not planning to change from 40/60 even though I think we're in for serious volatility during the next administration. I use plus and minus 5% bands for rebalancing and equities are up to 42.1% now.
  7. That's wonderful!! If only every school had a "403bwiser" like you to help their colleagues become aware of their better choices! I agree with Tony--use only Vanguard's low-cost index funds, and go "self-directed" to avoid the advisor's fee.
  8. I agree with Tony that AF has a number of above average funds (the problem is the average is fairly lousy!). Of course none of us likes the loads (and I realize that you're not paying those any more). I think paying about 2 to 3 times the ER of a Vanguard index fund for a managed fund is a negative. A lot of AF funds contain a mixture of US and international stocks that makes figuring out your asset allocation a bit more work. They also keep significant amounts of cash which is a gamble that doesn't always pay off. If you agree with John Bogle that index funds outperform managed funds over longer periods of time (and I and most of us here at 403bwise do agree with him), then AF looses to Vanguard. If this is an EJ account using AF, do you know if EJ adds on an annual fee? They probably do but it may be about the same as Aspire's annual fee of $40. If you give us the list of the AF funds with tickers, we'll be able to compare them with some Vanguard funds.
  9. If you were in a 403b with Vanguard you would be restricted to Investor class funds. Usually Vanguard allows Admiral class funds if it's an index fund with a balance of at least 10k--but not in their 403b. Aspire allows you to use Vanguard's Admiral class in their 403b and I don't think they have the 10k limit, but others on the forum may know for sure. The difference in the 2 Vanguard classes is 0.11% for TSM and 0.10% for TBM. The difference just about cancels out Aspire's added 0.15%! If your AF funds are at EJ, I would go ahead and have Aspire transfer them to your account. Now that you have a good 403b, are you maxing it out?
  10. Our YTD balance is up 6.11% as of today. Our asset allocation is 40/60 and we've been retired 24 years. Our personal rate of return (using VG's IRR) is: 1 yr 4.3% 3 yrs 5.2% 5 yrs 7.8% 10 yrs 6.3% I'm expecting a serious downturn in the next 4 years.
  11. April7th, are the AF funds in your old 403b or in a taxable account?
  12. I assumed that PlanSponsors' subscribers deal mostly with 401k and non-K-12 403b plans. The author felt Tara’s title was demeaning to those plans and the subscribers who work on them. The NYT article was only about K-12 403b plans, so I agree the title is a bit confusing. The PS author's title “Not the Same….Not Even Close, This group of plans received a label it does not deserve” is also confusing. What “group” is she referring to—all retirement plans? all 403b plans? all K-12 403b plans? More semantics—sorry! Another editor/title problem? I think I’ll plead guilty the charge of thinking about semantics. I don’t think the 403b plans of Vanguard, Fidelity, TIAA and other low-cost providers are “bad", in fact I think they are very good compared to the average offering. Maybe the reform movement should avoid painting EVERYONE who is not actively working for reform, as part of a plot to stop reform. To me, the article seems fairly sympathetic to K-12 403b reform and there didn’t seem to me to be any sympathy for annuities in K-12 403b plans. We know that a “plan sponsor” in the 401k world has duties and responsibilities that K-12 public school districts almost never assume for their 403b plans. The PS author did not address this critical problem (among many!) did she? PlanSponsor is not addressing the plan sponsor problem!!!
  13. I meant to say that some 401k plans are too expensive and could be called "bad", but not all of them. Tara's title "Think Your Retirement Plan Is Bad? Talk to a Teacher" does impugn all retirement plans, even defined benefit and all defined contribution plans. I wonder what other titles she considered? Obviously she went for one that might grab the reader's curiosity. If someone is a professional working to establish good 401k's, implying that all retirement plans are bad would understandably cause annoyance. I doubt if Tara thinks all retirement plans are bad. The paragraph about the provider rather than the plan sponsor being the one to fix the K-12 403b mess, is a joke.
  14. The article seems fairly accurate to me. The author's main beef seems to be the title of the first NYT article, implying that 401k plans have a problem. Of course many 403k 401k plans are too expensive, especially if they are small, but maybe she is a bit overly sensitive? Some 403b K-12 plans are great, even if they're not under ERISA. The NYT articles are great because they brought (are bringing) attention attention to the often uniquely crazy K-12 403b world. I just stumbled on the a M* discussion of the NYT articles. Interesting. http://socialize.web.morningstar.com/NewSocialize/forums/p/364542/3787947.aspx#PageIndex=1
  15. Steve, I can't get your link to work. I couldn't find the article on the PlanSponsor website either?? I did stumble on to this article on getting more 403b K-12 participation by greater education of the employees by the district. Interesting. http://www.plansponsor.com/Overcoming-Benefit-Reductions/?fullstory=true
  16. MoeMoney, I see that a 457b plan allows a "last 3-year catch-up" of double the annual 457b limit. In your case, if you qualify, that deferral would be 18k times 2 or 36k, as you posted. As you’ve only worked 13 years for your district, I don’t believe you are eligible for the 403b “15 year catch-up”. The “over 50 catch-up” of 6k, gives you a 403b deferral of 24k. There's no "last 3-year catch-up" for a 403b plan. It looks like there's some serious consequences for over contributing if you don't correct it fairly soon. It's amazing to be able to defer as much as $60k! After taxes, FICA and other deductions, there may not be 60k left??
  17. I'm ignorant about the 15 year catchup but would like to learn about it. Can you supply the ?????? number of years from retirement that you are within? How do they figure "retirement age"? I'm confused on the plus $18k because it seems like the max "15 year catchup" is $3000 for a total of $24k?
  18. I guess we agree that there’s momentum, not just for improving the 403b, but also for improving the 401k, and for investing in general. Vanguard’s increasing success with index funds is leading the way to lower cost investing. Thank you John Bogle!! The DoL fiduciary rule for ERISA plans is a beachhead that has the insurance industry worried and their lawyers preparing to fight the extending of fiduciary to 403b plans. I don’t see how the high cost annuities can continue to be allowed in 403b’s any more than in 401k plans (or SEP or SIMPLE IRA plans). I agree with you that “real change happens one teacher at a time”. I wonder if the superior 457b plans like LAUSD’s will actually help fix the K-12 403b, rather than “starving it out of existence”? The slow and steady increase in the number of good low-cost 457b (and 403b) plans serve as examples that make it easier to see what every 403b should look like. Steve, Dan, Scott, Tony I., Tony and lots of others are helping the K-12 403b world see the light, and the word is spreading. Progress is not a straight-line thing but happens in fits and starts. Sort of like our account balances? Who knows, the fact that NEA employees now have a great 401k with Vanguard may help convince someone in NEA leadership that they should get out of the Security Benefits rip-off and work for a decent 403b for all NEA union members? I admit I could be overly optimistic as well as naive.
  19. This is a wonderful interview with John Bogle! Thanks Tony--you are fantastic at finding great stuff for us to read.
  20. Have you read the thread on the NEA DirectInvest that is currently running? In order to use DirectInvest, your district has to have Security Benefits on their provider list. I doubt that SB would jump through the hoops to get on the provider list just so you could use their Direct Invest. Security Benefits sells mostly very expensive annuity based 403b plans to uninformed teachers. By adding SB to the provider list, you are putting your uninformed colleagues in danger. If you can get your district to add another provider, it should be Fidelity, Vanguard (probably unlikely) or Aspire. I agree that you should contribute the max of 5.5k to a Roth IRA before using a matchless 403b, or even a good matchless 403b, because you can pick your own low cost provider like Vanguard or Fidelity for the IRA. I haven't been able to find a good state-wide plan for NJ teachers, either a 403b or 457.
  21. None of the 6 on your provider list is all that great. VALIC does offer a mutual fund based 403b which is much better than any annuity based 403b plans. It’s called VALIC Mutual Fund Product and has a few index funds and comes with a Management/Wrap fee of 0% to 1.0%, depending upon the amount invested in your school district. For a small district, the fee would be higher. You can find out your district’s fee from the VALIC rep. The total fee would probably be around 1.0%, maybe a bit higher. Again much better than an annuity based plan at AXA or VALIC or MetLife. But far from ideal. The AF R3 and R4 offerings are through independent brokers and so have fairly high expense ratios (but don’t have the usual AF 5.75% loads). Using the AF American Balanced fund as an example, the R3 fund (RLBCX) has an ER of 0.94% and the R4 fund (RLBEX) has an ER of 0.63%. You would have to contact the broker to find out any additional fees he/she would add on the the funds’ ER. Franklin Templeton has expensive funds with ERs of 1% plus and at least some of the have 5% loads! Way too expensive. Does your district use a Third Party Administrator (TPA) such as OMNI? OMNI has a P3 program that districts can sign up with and that allows the use of Aspire. With Aspire you can use Vanguard’s low cost index funds for an additional 0.15%. If I were you, I’d go talk to the HR office and ask if you can get a low fee index fund providor like Fidelity added to the list. That would be ideal and could benefit your fellow teachers as well. Sometimes it requires 5 or 10 employees to join the request for the added vendor. Here’s a link to a podcast (#32) with a teacher who got Fidelity added to the list. http://teachandretirerich.com/podcasts/ I second Steve's idea of using a 457 plan instead of the 403b plan if your state offers one. Please tell us your state and also if your district uses a TPA.
  22. A taxable account (Vanguard calls them “Individual” or “Joint”) that you use for retirement can be very useful, especially in the period after retirement but before you take social security and before your tax deferred accounts become penalty free. It’s also useful for any short term savings. If you use equity funds like Total Stock Mkt, the “qualified" dividends (and capital gain distributions) it produces are taxed at 0% in the 15% bracket and at 15% in the higher brackets. If you sell from a taxable account, you pay 15% on just your capital gain. You don’t pay it on the principal you started with or on any of dividends or CGD you reinvested. If you took the money from your tIRA, you’d be taxed at your income tax rate. Here’s a link to the Boglehead Wiki on taxable investing that is worth looking over. In fact the BH Wiki is a great source of information. https://www.bogleheads.org/wiki/Tax-efficient_fund_placement A good basic book is “The Bogleheads' Guide to Investing” which you may be able to get from your library or you could buy it (paperback or ebook). Maxing out your tax deferred and tax "free" accounts first before funding a taxable account for retirement is the standard advice usually given. When you retire, you will probably want to convert your 403b account to a traditional IRA. This can be desirable if your 403b is expensive because you can choose an inexpensive provider like Vanguard for the tIRA. Something to consider though is that the rules for taking your funds out of the 403b and the tIRA are different. There’s a 10% penalty if you take your money from the tIRA before age 59.5, but for the 403b, it’s penalty free at age 55 if you are retired. If you retire after age 59.5, I don’t think there’s any reason not to go ahead and convert your 403b account to a tIRA. This isn’t anything you have to decide on now, it’s just some flexibility that you have down the road. Once you are retired, you will probably be in the 15% tax bracket. If you convert some of your tIRA to a Roth IRA, that will add to your taxable income so you would want to plan it out ahead of time. I don't think you have told us what your present income tax bracket is. If it's higher than the bracket you expect to be in in retirement, you might be better off using the traditional 403b rather than the Roth 403b. Assuming a Roth 403b is available, you might consider doing only partly Roth, maybe half? Remember that the tax brackets may be changed by the Republicans.
  23. CO has both a 457b and a 401k available through the state retirement system. https://www.copera.org/programs/peraplus-401k457-and-pera-dc-plan-information
  24. Yes, I agree! Why? Because the law firm's client base (the annuity companies) is nervous, and they should be! Even though ERISA doesn't include the K-12 403b and it's fiduciary protections yet, it's only recently that the fiduciary status is being extended to brokers dealing with 401k plans! I'm optimistic that Mr Fiduciary is edging towards K-12 403b plans! If the lobbyists try to get rid of the new fiduciary rules, the light will be shining again on the companies claiming they would go out of business if they were required to be fiduciaries!! Steve, don't underestimate the effect of the NYT articles. It will take time for its message to spread. I wonder if the Times will publish the articles all together? They've done that with other series. It would be great if there was a copy of them in every faculty room! I think there's a critical need in every school to have a "403bwiser" person (or group?) who is aware of the problem and is willing to spread the word. Those 403bwisers need a low cost non-annuity option to be available in the district, as a first step. If there's Aspire, Fido, Vanguard or other self-directed plan available, the score can be explained to new teachers and they can be helped get into a low cost plan. Wouldn't it be great if there was a 403bwise discussion group or even just one person in every school?? Such a group could be the start of an advisory committee that could make big changes like your 457b committee did! Oh well, it doesn't cost anything to daydream.
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