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Everything posted by krow36

  1. commanderjon, you're right on paying income tax (and the 10% penalty) on only the earnings part of the distribution, not on the contributions. I'll try and correct my post. How much of the 25k is from your contributions? Do you know the schedule for the surrender fees? Maybe your idea of taking a non-qualified distribution of the Roth 403b isn't as bad as I thought? It is a shame to loose the 25k of tax-advantaged savings, even if you'll convert it to maybe 20k of taxable savings. If you upped your traditional 403b contributions by 20k (over 2 years), you could move the 20k back in to tax-advantaged savings. Maybe that was your plan? Are you one of the lucky ones who has Vanguard or Fidelity on your district's providor list?
  2. Are you saying that Vanguard is on your district’s list of traditional 403b providors? If that’s the case, then paying the surrender fee on the annuity is probably a smart move. On your Roth 403b with AXA, I wonder if you have a better option than making an unqualified distribution? Using 403bcompare, I see that for the traditional 403b, AXA has a Equi-Path Mutual Fund Program. Have you checked to see if this is available to you with the AXA Roth 403b? If so, I think using it would be much preferred to making an unqualified distribution. You’ve already paid income tax on your Roth contributions and you’ll pay it again plus the 10% penalty (on the earnings). edit The fees of this AXA mutual fund based 403b are much different from those of their annuity based 403b that you have been contributing to. There’s a Custodial Fee of 0.06%, and a $7.50 per quarter fee. I only looked at a few of the many funds on offer, but did find one that looks worth using: American Funds Investment Company of America R4, RICEX with an ER of 0.65%. https://www.403bcompare.com/Employee/SubProducts/FundingOptions/Detail.aspx?sid=47290&pid=4256 Whether you make any further contributions to the Roth 403b is a separate decision. With a Vanguard traditional 403b available, I'd skip the Roth 403b.
  3. rhollowood, it sounds like you are making progress, even if it's slow. Folks have reported that it has taken as much as 2 months before their money arrived at the new providor. The insurance companies seem to drag it out for as long as possible. Try not to get discouraged and keep plugging away. It will feel fantastic when it finally arrives at your Fidelity 403b account. Have you started making payday contributions yet?
  4. If any of the 403b contributions were made prior to 1987, they don't have to be subject to RMD until age 75. That can be an advantage if you don't expect to need the RMDs for living expenses. My wife kept her 403b at TIAA and was able to defer her pre 1987 contribution's RMDs until age 75. I moved my 403b to Fidelity and VALIC IRAs and had to start RMDs on all of it at age 70.5. Neither of our decisions took in to consideration this feature. https://www.mhco.com/BreakingNews/A403bRMD_031914.html I think I would probably opt for the lower ERs of the IRA over the delayed RMDs if I were in your shoes.
  5. I think your decision on whether to use the VALIC 403b, or not, might hinge on how much total you think you can invest for retirement each year? You could save the maximum 6.5k in your traditional IRA, 6.5k in your husband's traditional IRA, and also contribute to a solo 401k (or a SEP IRA?) based on your husband’s self-employment income. That may give you enough salary reduction and as much saving for retirement as you want or are able to do? Of course these 3 accounts can all be at a low cost providor like Vanguard or Fidelity—a big plus. What do you think?
  6. I think Tony left off the link. http://www.nytimes.com/2016/05/14/your-money/in-college-essays-about-money-echoes-of-parents-attitudes.html?ref=your-money
  7. Scott Dauenhauer compares NEA’s 401k for their employees with the crappy 403b’s they sponsor for their members. http://teachersadvocate.blogspot.com/2016/04/nea-hypocrisy.html#more I wonder if the NEA is using the millions they receive from Security Benefit for their sponsorship of the NEA Valuebuster 403b’s to subsidize the cost of their employees' Vanguard 401k? That would be in addition to the Valuebuster’s subsidizing of the NEA Direct Invest 403b with it’s Vanguard Admiral funds? Bizarre for an organization that claims to be for the new DOL fiduciary rule!
  8. Interesting article. Most buy and hold investors don't need much if any cash in the retirement portfolio. The article starts out equating cash with stable value funds, which seems like a mistake to me. Stable value funds that yield 2 or 3% are often used in a portfolio's bond component. When bond funds have yields of only 2 or 3%, and cash (MM funds) are paying almost nothing, it seems wrong to equate them.
  9. I found this info in a ICI Fact Book for 2015, with data mostly up through 2014. Although the explanations are often incomplete and have an industry bias, the data is interesting. The trends towards lower expense ratios, fewer load funds, and increasing use of index funds are certainly in the right direction. Of course there's still a very long way to go! The graph (at the end of chapter 5) showing almost half of 401k equity MF assets had ERs of .50 to .99% caught my eye. Wouldn’t it be great if the total expense of all 403b equity mutual fund assets were as low as these (which are not all that low!)? Instead the annuity 403b total expenses probably run to between 2 to 3%! http://www.icifactbook.org/fb_ch5.html
  10. Sure Steve, I'd be glad to help with the editing. By the way, I bet you meant to say Flagship, not Admiral in the thread on advisors? I've also had a tough time remembering "Flagship". (We've also made use of the CFP.)
  11. Hi mmk, It’s good that you found out the admin fees that VALIC charges for funds in your district. Hopefully the admin fees plus each fund’s expense ratio, are the total fees. Steve is right—don’t rely on hope. Get it on paper from VALIC. On April 18 you wrote: "My 403b is a ROTH 403b. What I actually did, to lessen tax liability (due to husband's increased income) was to STOP contributing to my individual Vanguard Roth IRA, move all of my Vanguard IRA investing over to a "Traditional" plan (didn't change existing assets, just contributions going forward), and invested in our ROTH 403b to offset the loss of my Vanguard Roth contributions." Today May 10, you wrote: "My 403B is not a Roth. It's a TAX DEFERRED plan (which I'm pretty sure means that it's taken from my pay before taxes are figured, but I'll pay taxes when I withdraw -- right? Like a traditional ira)." With any traditional IRA, 403b, 457b, etc., you will include any distribution (withdrawal when retired) in your taxable income. Any distribution from a Roth IRA, Roth 403b, Roth 457b, etc., you do not include in your taxable income, because you’ve already paid income tax on the contribution money. I think I understand that you have contributed to both a traditional 403b and a Roth 403b. And that you’ve contributed to both a traditional IRA and a Roth IRA. Is this correct? Recently, due to husband’s self-employment income, you switched your 403b contribution from traditional to Roth and you switched your IRA contribution from Roth to traditional. Is this correct? Because you only made this change recently, your 403b is mostly traditional and your IRA is mostly Roth. Is this correct? Your original post asked whether contributing to a VALIC 403b was worthwhile considering the expense. With the Dreyfus S&P500 fund’s ER of 0.50% and account mgt fee of 0.1 to 0.15%, a total expense of 0.6 to 0.65% is worth using in my opinion. The Dreyfus Total Bond Mkt fund with an ER of 0.40% plus 0.1 to 0.15% for a total expense of 0.5 to 0.55% is also worth using. The ACTIX bond fund with an ER of 0.47%, with total expense of 0.72% is usable if you want the inflation protection. You also expressed a desire to reduce your taxable income in your OP. As mentioned before, you can contribute up to 18k to your 403b and to your 457b traditional plans which could reduce your taxable income by up to 36k. You could use the self-employment income for living expenses and contribute more of your income to your 403b and 457b accounts. In addition you could contribute 6.5k to your traditional IRA for a further salary deduction. Are the funds in your VALIC 457b the same ones that are in your 403b? If so, are you using only ACTIX in your 457b also?
  12. Interesting stuff Steve! Thanks. "intimidated?"
  13. Steve, you meant "paying a lot of attention to" didn't you?
  14. mmk, have you found out the account maintenance fee that VALIC uses with your school district? You are paying it with the ACITX fund you’re currently contributing to, and it would be good to know how much more than the ACITX expense ratio of 0.47% you are paying. ACITX is a bond fund using mostly inflation-protected Treasury bonds, so if you want the inflation protection, you should continue to use it. If you want a bit more return and the slightly greater risk that goes with it, you could use the Dreyfus Bond Mkt Index fund DBMIX with its slightly lower ER of 0.40%. DBMIX did better than ACITX during the 2007-2009 recession. I think it might a good idea to use both bond funds—maybe 2/3 DBMIX and 1/3 ACITX? You haven’t told us what your desired asset allocation is, or what you have in your IRAs, but I suspect you might want to be somewhere between 50/50 and 40/60 stocks to bonds? If it’s 40/60, the 60% bonds could be divided into 40% DBMIX and 20% ACITX. The 40% stocks could be the Dreyfus S&P 500 Index PEOPX, ER of 0.50%. If you want to have Int’l stocks in your asset allocation, you could hold them in your IRAs, or use the Dreyfus Int’l fund in your 403b. Not everyone (including John Bogle, founder of Vanguard) believes it’s necessary to invest in Int’l stock market funds because the S&P 500 Index includes many US stocks with Int’l exposure. I don’t believe that teachers in Georgia, unlike in some states, have a state-wide 457b plan that they can use instead of or in addition to their 403b plan. Have you made a decision on switching back from Roth to traditional 403b? That would lower your taxes, especially if you increased your contribution.
  15. Assuming the single vendor is one who offers low cost index funds and possibly some low cost managed funds, there are lots of advantages to the investor. If the school district is offering a 403b that is in the best interest of the investors (that is, acting as a fiduciary), then it makes perfect sense. There is no TPA, there's just Fidelity, which cuts out the middleman and reduces costs. The school district (especially a small district) needs help administering the 403b. There's loans, catch-up contributions, hardship distributions, etc. and the districts want to farm this stuff out. The TPA's and aggregators take over these duties for the district. Where there's no TPA, the insurance companies are willing to deal with it because they make so much on their expensive annuity 403b's. The school district should not tolerate a flock of sales people, invading the schools, and selling very poor retirement accounts to teachers and others. If Fidelity charges the district to be the single vendor and handle all administrative costs, the district should be willing to foot the bill. A business with a good 401k (that includes low cost index funds) has to pay a single 401k providor. They don't invite a bunch of providors to invade the workplace and sell 401k plans to their employees. To get a single providor for a school district's 403b, I suspect you need a very enlightened district administration. Getting rid of the greedy crowd must be really tough. They are politically strong because they have a lot of money, and the masses are uninformed. Maybe getting 403b's included in ERISA, so they become more like 401k's, would result in single vendors for school districts?
  16. Thanks Steve. Hopefully rhollowood will find them useful.
  17. MoeMoney and Tony, check out Dan and Scott's podcast #13. I thinks it's Baltimore, MD where Fidelity become the sole providor, for a big improvement in the scene. It involved Fidelity having to deal with all the legacy providor's accounts, which teachers either wanted to continue (??) or transfer to Fidelity. Fidelity became the administrator for a big mess that will gradually become the district's rational 403b plan. Episode #13: Scott Senseney of Fidelity's Tax Exempt Market Business (released 11/4/15)http://teachandretirerich.com/podcasts/2015_13_fidelity.m4a
  18. You should do the direct rollover, not the 60-day rollover. I don’t think this form should be a problem to fill out if you decide you want to roll over your Ameriprise 403b to Fidelity. If I had to fill out the form, I’d do it the following way. If you have any questions, please ask them. Page 1 supply the account number in upper right-hand corner Page 1, ,Part 1 Plan Type: Tax Sheltered Annuity (TSA) Amount to be moved: 100% Page 1, Part 2 Company name: Fidelity Advisor/Agent: none Owner name: your name Product name: 403b7 Product type: mutual fund Page 2, Part 2 (cont’d) Product is NOT an annuity, do not check. Plan type: other: 403b7 Delivery Instructions: Get these from Fidelity Page 2, Part 3 Supply your school district's name, EIN, address, phone # Page 2, Part 4 Does not apply to your rollover Page 3, Part 4 Does not apply to your rollover which is not taxable. You could check “Do not withhold” anyway. Most of this page is information for you to read. Page 4, Acknowledgements and Signatures Direct Rollover and Conversion: They will give you 30 days to think over your rollover decision, during which you can ask for a distribution, which they will process without delay. Signing means you want a Direct Rollover Page 4, Spousal Consent Your 403b plan is not an ERISA plan, and you are not taking a distribution, so this doesn’t apply Page 5, Part 6 Notarization: Doesn’t apply. Page 5, Part 7 Acceptance by Fidelity officer. I think Ameriprise can do this by phone or internet. Ask Fidelity. Pages 6, 7 and 8 Special Tax Notice for Plan Distributions. Because you are doing a Direct Rollover, most of these 3 pages don’t apply to you. Have a read to make sure. There’s a lot about a non-direct rollover, where you receive a check, with 60 days to get it to the new 403b. There are penalty tax issues and income tax issues possible if not all the money gets sent to the new 403b in time. I went through this process twice with a VALIC 403b annuity. It’s slow and frustrating, but eventually my money showed up at Fidelity (and Vanguard for the rest of it.) In the meantime, I hope you are contributing to your new Fidelity 403b, using their excellent Spartan Index funds! By the way, I don’t think it’s fair to blame all the complexity and red tape on Ameriprise. Congress has some of the blame for not preventing non-ERISA 403b’s and for allowing an insurance industry free-for-all to sell to uninformed teachers. The IRS is not known for reducing complexity or improving clarity for the 403b user. As has been discussed in other threads, there’s a lack of leadership and knowledge on many levels—, school districts, unions, educators, etc. Hang in there!
  19. I don’t know anything about doing a 100% drawdown through the TPA. I hope you aren’t considering cashing out the 403b (taking a distribution)? That would be a very big mistake. In addition to the surrender fee, you would loose the tax-deferred advantage of your retirement savings, which is very valuable, you would pay a 10% penalty for taking a distribution before age 59.5, and you would pay income tax on the distribution. I’m sorry to learn that Fidelity wasn’t able to help more. I think Fidelity would be more helpful if you were transferring a mutual fund 403b rather than an annuity 403b. It looks like Ameriprise uses one form for many different types of transfers, rollovers and distributions. That makes the form seem complicated and confusing, and I suspect that was a desired effect. It’s understandable that you feel ripped off and so angry that you want to get away from them as soon as possible. Don’t let them win by forcing you into a hasty and costly decision.
  20. I don't think the OP rhollowood needs a brokerage option. His TPA (TSA CG) has included Fidelity in the list of providors he can use. A Fidelity 403b will give him a wide choice of funds, including Fidelity's Spartan Index funds. I think that's all he needs. I notice that Fidelity has lowered the net ER of TSM and TBM: Spartan Total Mkt Index, FSTVS, ER 0.07% for the US stock mkt (now net ER is 0.05%) Spartan Total US Bond Index, FSITX, ER 0.17% (now net ER is 0.07%) and either Spartan Global Ex US Index, FSGDX, ER 0.12% or Spartan International Index, FSIVX, ER 0.12% If you want to include Emerging Mkts in your Int'l Stock fund, use Global Ex US Index, if not, use Int'l Index.
  21. I agree that the WCI blog and book are great resources. I gave the book to a relative and it helped convince her to move her retirement accounts from Edward Jones to Vanguard.
  22. On page 6, under General Information About Rollovers: Fidelity is the new administrator of your employer's 403b plan. Ameriprise calls their 403b a TSA (Tax Sheltered Annuity). If Fidelity can't do a trustee to trustee transfer, a direct rollover would be better than a 60 day rollover. A direct rollover has Ameriprise sending you a check, made out to "Fidelity for the benefit of (your name)". A 60 day rollover has Ameriprise sending you a check, made out to you. You have 60 days to get the money to Fidelity, after which the IRS considers it a taxable distribution. You do not want income tax deducted from your funds by Ameriprise. Try to get Fidelity to do a trustee to trustee transfer, and if that isn't possible, try for a direct rollover.
  23. There is a snail mail address on page 1. I don't think your spouse is involved because you are not getting a "distribution", you are doing a transfer or rollover. A distribution would be the case if you were cashing out your account. If I were you, I would call up Fidelity and ask them if they can do a "trustee to trustee transfer". This type of transfer is commonly done, and avoids you having to deal with the old providor. Fidelity, you and the Ameriprise head office may have a 3-way phone conversation to establish that you want to do the transfer. Fidelity will know if you have to deal with the Ameriprise paperwork. Having the new providor "pull" the account from the old providor is quicker than trying to "push" the account out of the old providor. The new providor has an incentive to make it happen, the old providor does not.
  24. Congratulations on making progress! I'd talk to the rep again and tell them their email got lost in the ether, and ask for the forms again. If you keep pestering them, you might motivate them to do their job. You could also tell Fidelity that Ameriprise won't email you the forms.
  25. I like your version. I guess we've left open the problem that the vendor may offer plans that are not included in their submission to 403bcompare. That could be because the plan is not available in CA but is in other states? An interesting case is that of Security Benefit not including the NEA Direct Invest 403b on their 403bcompare site. This is their only 403b plan that anyone should consider. Your 1) on "offering self-direct" covers this I guess.
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