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Everything posted by krow36

  1. I think the 403b plan will cost a non-profit several thousand to set up and maintain per year. The company has a choice to pay the costs themselves, or use a plan the puts those costs on the participants in the form of funds with higher expense ratios. If your organization is willing to pay the cost themselves, then as far as the employees are concerned, their costs (the ERs of the funds) might be about the same as those of a SIMPLE IRA plan. This would assume that the 403b plan includes low cost index funds. There is no fee that the employer has to pay to set up or maintain a SIMPLE IRA plan. If a low cost providor like Vanguard or Fidelity is chosen by the employer, the employee will have excellent low cost index funds to choose from. If the 3% matching option is chosen, the employee that participates can contribute up to 12.5k plus 3% of their W-2 salary. So it's possible for costs to be "sloughed off on to the employees" with a 403b plan, but not with a SIMPLE IRA plan that uses Vanguard or Fidelity.
  2. That's great! I think they often send you a check, made out to Fidelity, "for the benefit of rhollowood", and you send it on the Fidelity. But if they send it direct to Fidelity, that would be ideal.
  3. OK Dave, Since Fidelity's Advantage class has a net ER is 0.05%, it's as low as Vanguard's Admiral class, at least for now. Am I wrong in thinking that a Fidelity direct 403b is like a Vanguard direct 403b, all the interaction takes place over the phone and/or the internet? Neither providor sends a rep to the school, unlike the Lincoln 403b. Can we assume the the 403bcompare website has the full picture on fees for these 2 providors?
  4. NJTeach34, you said "I would really prefer to stick with Vanguard funds for their low costs and I appreciate any help that anyone has for me?" The Vanguard funds offered by Lincoln are not low cost. They are almost 10 times as expensive as Fidelity's Spartan Index funds. It's great that you appreciate the importance of low cost in choosing a mutual fund. Choosing Vanguard when it's expensive would be a mistake. Your example 1 is correct except for the "total expense". You need to weigh the percent you have in the 3 funds. For instance if you want them in a ratio of 70/20/10, the weighted ER would be .95 times .70 = .67; .98 times .20 = .20; 1.05 times .10 = .11 (all rounded off to 2 decimal places). Add them up and you get .98% for a weighted average ER.
  5. I agree with Dave that the Security Benefit Direct Invest 403b should only be used if all the other choices are expensive insurance plans. Since SB is not on your list of providors, adding another annuity salesman to your school district is not a good idea. Lincoln does have Vanguard funds in their Retirement Solutions Premier 403b plan. Their Management/Wrap fee of 0.90%, added to each fund’s ER, brings the total expense to about 1%. There’s also an annual fee of about $35. I think I would choose Fidelity and use their Spartan Index funds, which are very competitive with Vanguards Total Market Index funds. Your expense ratios would only be about 0.05 to 0.20% plus their annual Custodial Fee of about $20. You can use 403bcompare to confirm the Lincoln and Fidelity expenses. Because often we don’t get our first choice with our employer’s deferred compensation plan, we end up with 2 different providors. When the 2 are Vanguard for IRAs and Fidelity for the 403b, you should count your blessings! You are very lucky to have Fidelity on your list of 403b providors.
  6. I was hoping that you would get some of the professionals who post on this forum to contribute their thoughts on your question. Maybe they will if you continue to post your thoughts? If you posted your question on the BenefitsLink forum, you will probably get several professional opinions. That forum is mainly for discussions between plan administrators and professional plan advisors but I see they can be very helpful with questions from non-professionals. http://benefitslink.com/boards/index.php/forum/2-sep-sarsep-and-simple-plans/ Another option for you is to ask your question on the bogglehead.com forum. There you might get information from professionals and non-professionals who have first-hand experience deciding the question of a SIMPLE IRA vs a 403b.
  7. I am certainly not an expert on the subject of the SIMPLE IRA vs a 403b. However I have helped a relative set up a SIMPLE IRA for her small business (3 employees). So here's my two cents worth. I think the SIMPLE IRA would be easier to administer because it doesn't have several of the features of 403b plans. The SIMPLE doesn't have to deal with employee loans and there's no 15 year catchup. There is a fairly large difference in the amount that can be contributed. For the 403b, it's 18k/yr with no employer contribution required. For the SIMPLE, the maximum is 12.5k/yr plus a 3% of income employer match. Instead of the 3% match, the employer can choose a 2%/yr required contribution to each employee, that doesn't require an employee contribution. The 403b plan may require the employer to hire a consultant to establish the plan, I don't know. A big advantage of the SIMPLE IRA is that the employer can pick the providor, so Vanguard, Fidelity etc. with their low-cost index funds are available. It may be difficult to get these low-cost providors for your 403b plan. A SIMPLE IRA can be set up using the IRS Form 5304 so that each employee can choose their own providor. This involves the employer having to fill out each providor's form to establish the employer's plan. I think most employers use the IRS Form 5305 which requires the employer choose a single providor. It's easier for the employer and if a good providor like Vanguard or Fidelity is chosen, it's to the employee's advantage.
  8. I’m surprised that this thread hasn’t received more attention. I brought up the CTA 403b plan in DK’s other thread, but I think it deserves further discussion. Here’s the long list of CA school districts that have added this new CTA 403b to their approved providor list: http://www.ctamemberbenefits.org/Financial%20Services/DistrictList I notice that LAUSD has not approved the plan. That seems puzzling considering the LAUSD is a district whose union is the CTA (not the CEA). Rather than address the question of whether a union, CTA in this case, should be offering a 403b program, even a good one, can we look at the program and discuss its quality? I copied and pasted this from the CTA booklet on their new 403b/457b. https://www.ctamembe...sp/RSP2216.ashx Money Market, Vanguard Federal Money Market Fund, ER 0.11% Inflation Protection, Vanguard Inflation-Protected Securities Fund, ER 0.10% PIMCO Inflation Response Multi-Asset Fund, ER 0.70% Bond Vanguard Total Bond Market Index Fund, ER 0.07% PIMCO Diversified Income Fund, ER 0.75% Small-Mid U.S. Equity Vanguard Extended Market Index Fund, ER 0.10% Large U.S. Equity Vanguard 500 Index Fund, ER 0.05% International Equity Vanguard Total International Stock Index Fund, ER 0.14% Target Date Funds 8 funds:Blackrock LifePath Index, ER 0.11% to 0.14% The booklet’s statement of the plan’s fees: "Each person will pay a flat, annual recordkeeping fee of $65 and $15 for custodial account services in 2016. These fees and asset-based fees for investment plans will be clearly identified in the annual fee disclosure statement you’ll receive. Additional fees such as Third Party Administrator (TPA) fees or loan fees can be easily viewed at CTAretirementplan.org.” $80 per year may seem a bit stiff, but as DK mentioned, I think it’s a much better than raising the expense ratios. As the account balance grows, the $80 becomes a smaller and smaller percentage of balance. 80/10,000=0.8% but 80/100,000=0.08% I don’t know what the TPA fees are, or whether they are asset based, or a flat dollar amount. DK, how much are the TPA fees in your district? The expense ratios are outstanding—Vanguard’s Admiral class funds, which aren’t available in Vanguard’s own 403b. I’m impressed to see the small number of funds that cover the basic asset classes. It’s fantastic that most of the funds are index funds. I don’t believe that the equity market needs to be broken down into separate growth, value, mid-cap or small-cap funds. Using the 500 Index and the Extended Mkt Index covers it all. With a 4/1 ratio, you get the equivalent of the Total Stock Mkt Index fund. The booklet states that the plan representatives are salaried and not working on commission, and that the plan will follow a fiduciary standard.
  9. That's great news! What's the TPA's name? Steve, what do you think of the CTA plan? Maybe it's good that CTA and CEA are rival unions?
  10. Debbie emailed me the following info: to download an up to date IPPFA booklet for their 403b and 457b plans, you need to fill out their order blank. Here’s the link to the order form page for the IPPFA booklet: http://www.ippfabenefits.org/wise-choice-for-educators/download-your-copy-of-the-wise-choice-for-educators/ Here are the funds in the 403b plan, with their total expense, from the IPPFA up to date booklet: High Quality Bond, 1% Core Bond, 0.97% Inflation-Protected Securities, 1% High Yield Bond, 1.10% Large Value, 1.0% Large Core/Large Blend, 1.15% Stock Index, 0.65% Large Growth, 1.24% Mid Cap Value, 1.25% Mid Cap Growth, 1.35% Small Value, 1.57% Small Cap Core, 1.53% Small Cap Growth, 1.55% International Equity/Foreign Large Growth, 1.40% Fixed Account, paying 1.3% Stable Value fund, paying 1.75% In addition there are 5 Asset Allocation funds (90/10, 70/30, 50/50, 30/70, 10/90), 1.34% to 1.12% The out of date booklet (about 2009?) showed that Transamerica was the Advisor on funds and they also had various Sub-Advisors. Diversified Investment Advisors (a subsidiary of Transamerica) in no longer mentioned.
  11. Transamerica is the insurance company that administers the IPPFA that we've been discussing with Debbie here, and listening to on Podcast #28.
  12. I agree with Tony that you should only bother to check out Lincoln and VALIC. They both have 403b plans that are mutual fund based, as well as their very expensive annuity based 403b plans. Unfortunately their MF 403b plans are not low cost, with annual expenses around 1.0%. Certainly your school district should add a low cost providor to their list—Fidelity would be an outstanding addition, and Aspire would be a good second choice. As for deciding whether to start with either Lincoln or VALIC, I think there are several things to consider. How much do you expect to contribute to your 403b and IRA retirement accounts? Do you have a spouse with a decent 401k or 403b that she can contribute to? An unemployed spouse can establish an IRA based on the employed spouse’s income. Sometimes beginning teachers can only afford to put 11k per year towards retirement and funding the IRAs is the best choice because you choose the providor, a low cost one of course. I see from a recent post that you have an IRA with Horace Mann. They are expensive (high expense ratio and possibly load funds) and you should move it to a low cost providor such as Vanguard, Fidelity, Schwab. The Schwab OneSource mutual funds and ETFs are very low cost and are a good way to go. However I and most of the posters here and on the Boglehead forum prefer Vanguard (or Fidelity) as a vendor for our low cost retirement accounts. Moving an IRA from one providor to another is fairly straightforward, and we can give you some tips. Another consideration about using an expensive 403b is that change is afoot in the 403b world. Your district and others will receive increasing pressure to provide lower cost 403b plans. When the better plans arrive, you will be able to transfer your account into it. Another possibility is that you could change districts, which would allow you to start contributing to a lower cost 403b and to roll over the old 403b into the new 403b (or into an IRA). If you want to learn more about what the Lincoln and VALIC plans look like, let us know. 403bcompare.com has information on them. You would need to confirm the 403compare info with the rep.
  13. I remember being very frustrated, waiting weeks and weeks for VALIC to move my money to Fidelity. And I was leaving about half of my account with VALIC (boy was that dumb!). Ameriprise may not tell you the move has been made--you may have to check your Fidelity account to find out?? There was something on that Ameriprise form about giving you 30 days to think about your decision to bail out?? I'm not sure it applies to your rollover, or only to a distribution. Anyway, I think you can expect the rollover to happen, just don't hold your breath!
  14. I misunderstood your OP here, assuming that you were referring to getting Vanguard in the CTA retirement plan, but you apparently now have Vanguard on your district's providor list! Congratulations again! I think I would go with the Vanguard 403b account. I think the CTA plan is a good choice for those in districts with no direct low cost 403b providor. Can you tell us the story of how Vanguard came to be added to the district's list of providors? We really like stories here.
  15. It looks like the CEA Retirement plan doesn’t offer face-to-face advisors except for “Enrollment Meetings”. It does offer “Online Resources” and “Phone Support”. I didn’t mention the annual fees of the CEA Retirement plan. Here’s the fee info from the booklet: $80 per year may seem a bit stiff, but I think it’s a much better than raising the expense ratios. As the account balance grows, the $80 becomes a smaller percentage of balance. 80/10,000=0.8% but 80/100,000=0.08%
  16. Are you sure about setting up an account with Vanguard? I think your account is set up at CTA Retirement, and it will show that you are contributing to the various funds offered, in your case, the Vanguard funds. A Vanguard 403b offers only Investor class funds, not the Admiral class funds in the CTA Retirement Plan. So that's an advantage you'll have.
  17. MoeMoney, did you receive the private message I sent you?
  18. DK posted a thread in Feb that about the CA Teachers Association new 403b/457b plan. http://board.403bwise.com/index.php?showtopic=6127&do=findComment&comment=33397 I copied and pasted this from the CTA booklet on their new 403b/457b. https://www.ctamembe...sp/RSP2216.ashx Money Market, Vanguard Federal Money Market Fund, ER 0.11% Inflation Protection, Vanguard Inflation-Protected Securities Fund, ER 0.10% PIMCO Inflation Response Multi-Asset Fund, ER 0.70% Bond Vanguard Total Bond Market Index Fund, ER 0.07% PIMCO Diversified Income Fund, ER 0.75% Small-Mid U.S. Equity Vanguard Extended Market Index Fund, ER 0.10% Large U.S. Equity Vanguard 500 Index Fund, ER 0.05% International Equity Vanguard Total International Stock Index Fund, ER 0.14% Target Date Funds 8 funds:Blackrock LifePath Index, ER 0.11% to 0.14% This seems like a fantastic 403b and as the word gets out, it should be able to make a lot of headway against the annuity 403b’s. I didn’t notice the cost for using the advisor option for those who want handholding. I like the idea there needs to be this kind of 403b available before you can get rid of the insurance companies. I bet the annuity sellers hate this plan, because it’s a huge threat to them. A united front of the union, the district HR offices and the creeping fiduciary rule, knowledgable teachers helping educate their collogues—the state law that requires the free-for-all will eventually be tossed out. You could view this plan as an educational tool. DK, if you look on the "How to Enroll" page in the booklet, you'll see some instructions for moving other accounts to this one. And congratulations on getting the Dream Providor!
  19. Transamerica has had a pointy topped building in San Francisco for decades--part of a skyline that identifies SF. Interesting that it's now owned by a Dutch company. I doubt that the annuity products of Transamerica and all the other usual suspects vary that much. They are great deals for their sellers and lousy deals for their buyers. I think that teachers (and counselors) should avoid the salespersons like the plague! They need mutual funds for retirement investment, NOT annuities.
  20. I think it's an excellent outcome! Congratulations Mark!
  21. Debbie, can you provide a link to an up to date booklet that doesn’t require filling out a form? I guess the link I provided is out of date? Steve, I agree with you—there are way too many choices. There are features of the IPPFA program that I admire, such as the education feature, confronting the annuity 403b products on fees, no loads or surrender fees, etc. This program is a very big improvement over the insurance companies’ annuity-based offerings, with fees reduced from 2% to 3% or more (mostly hidden) down to about 1%. What strikes me is that the program hasn’t escaped from the financial industry world of expensive managed funds. There seems to be multiple layers of management. At the top is IPPFA doing the education and oversight. Then there’s Diversified Investment Advisors overseeing the funds. And Transamerica Asset Mgt is the “Advisor” on most of the funds. The funds have a “Sub-Advisor” also. All but one fund is a “managed” fund rather than a passive “index” fund. Managed funds have managers buying and selling during the year, hoping to “beat the index” and that adds costs. So there are multiple layers of management, each of which adds to the expense ratio that the employee pays. Is this necessary? The podcast #13 described another single providor solution, where Fidelity was selected by a large Maryland district (Baltimore?). Using Fidelity’s Spartan Index funds, the expense ratio could be almost a tenth that of the IPPFA program. Fidelity ER 0.05 to 0.15%; IPPFA 0.98 to 1.02% (current average). Is the school district subsidizing this program? Granted Fidelity is probably hoping to sell some of their more expensive non-Spartan funds and that could be an important part of the relationship. With Fidelity, I guess there’s no face-to-face hand holding either? http://teachandretirerich.com/podcasts/2015_13_fidelity.m4a Maybe the IPPFA program is an evolutionary stage, one of several possible, necessary for the 403b world to escape the clutches of the insurance companies? In the future, could IPPFA bid out their program to a low cost providor, e.g. Vanguard or Fidelity or an ETF providor?
  22. http://www.ippfa.org/ippfa_services/457_veba/The%20Wise%20Choice%20for%20Educators%2042409.pdf
  23. Dan, Scott and Debbie, thanks for a thought-provoking podcast! It’s great to hear that the insurance companies’ annuity 403b's are loosing ground. Debbie, can you give us a link that shows the core platform funds and their ERs for the Wise Choice Plans? Also what are the fees for the brokerage option?
  24. Steve, that's great news that auto-enroll is coming to LAUSD! And to your 457b! An excellent 457b plan shows everyone the pathetic state of the 403b world for preK-12 employees. I finished reading your book Fighting Powerful Interests a few days ago. Thanks for giving us insight into the long battle to get an improved defined contribution plan for LAUSD. It's an amazing story of a few folks like yourself making a huge difference in the financial lives of thousands of LAUSD employees. And the word spreads! Steve's ebook is a free download at his website. http://latebloomerwealth.com/publications/fighting-powerful-interests/
  25. I don’t think there’s any question that non-qualified distributions can be made from a Roth 403b. The IRS has instructions on how to deal with the taxes on a non-qualified Roth 403b distribution, so it's obvious that they don't "forbid" it. Have you checked out this AXA website? https://us.axa.com/customer-service/ You can enter your “policy or contract number to get a list of the online services and forms available to you”. In addition, there are numbers to call including: EQUI-VEST, 800-628-6673. I think that you probably need to bypass your AXA “advisor” and talk to the main office. I’ve read that it’s not unusual to find reps who are uninformed and/or misinformed, and that a call to the head office can be helpful.
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