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krow36

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Everything posted by krow36

  1. I think the OMNI P3 sales pitch to school districts is that all the P3 vendors will pay the TPA fees. Since all the insurance company vendors are usually willing to pay the TPA fees, the P3 is a con that effectively screens out the low-cost vendors such as Fidelity and Vanguard. It sure seems like the districts are being hoodwinked. The only vendor with reasonable fees on the P3 list is usually Aspire. Assuming that Aspire is on the district’s 457 (since it was on the 403b list that you posted), I would go ahead and use it while trying to educate the district’s decision makers about adding Fidelity. If Aspire is not on the 457 vendor list, then that should be your goal! You might consider talking to Fidelity about getting added to the vendor lists. You never know, they might be willing to pay the TPA fee. I think it’s only $20-$30/yr/account. Of course the district should be willing to pay the TPA fee for Fidelity. What state are you in? About half of the states have low-cost, state-run 457 plans that K-12 employees can use. Here’s an incomplete list:
  2. Thanks for giving us an update. Lincoln Financial may come around the school but if they are not on the current vendor lists, I don't think the district will allow them to be used for 403b or 457 contributions. Are you sure you have the current vendor list? In any case, there seems to be a difference between Lincoln Financial and Lincoln Investment Group. According to 403bcompare.com, Lincoln Financial is an insurance company that sells expensive annuity-based 403b plans. Lincoln Investment Group offers mutual fund based custodial accounts and in NJ they offer the Participant Directed 403b/457 internet-based plan as well as more expensive local rep-based plans. Unless the vendor list you posted is not complete, and Lincoln Investment Group is actually on the list, I think Aspire would be the easiest vendor to get added. That's because the employee rather than the district pays the TPA fee. That will make all the Vanguard low-cost index funds available. You only need the 3 basics funds to be completely diversified (either Vanguard's or Fidelity's): Total Stock Market Index Total Int'l Stock Market Index Total Bond Market Index Of course if the district is willing to pay the TPA fee (around $20/yr/participant), then adding either Vanguard or Fidelity would be the very best outcome. But Aspire is definitely low-cost enough to be a very good option for you. Adding a vendor to either of the lists will probably involve talking to the business department head for the district, maybe a school board member, your district's TPA, your union? Face to face is probably more effective than email or phone. Other posters on this forum can give you first-hand advice for adding a vendor.
  3. None of the low-cost 403b vendors such as Vanguard, Fidelity, Aspire or Security Benefit’s NEA Direct Invest have a local rep explaining the importance of low-cost investing. We understand that the reason they are low-cost is because they have no local rep. And we don’t know the enrollment numbers of any of these vendors except that the numbers are low. We all agree that SB’s main business plan is to take advantage of uninformed K-12 employees by selling outrageously expensive 403b annuity contracts. We all agree that NEA prostitutes itself by selling its name to these products. Sure, SB’s NEA Direct Invest doesn’t remove the sins of SB’s and NEA’s main relationship. And that main relationship is what makes NEA Direct Invest possible. Steve is very proud of the very low expense ratio of his portfolio. If his only choice of vendors was SB’s NEA Direct Invest and Aspire, would he choose Aspire and add 0.15% to his overall ER? Probably, but others (BashDash and Ed LaFave) choose Direct Invest. I think either choice is valid, but I don’t think we all have to agree to that.
  4. I don't believe Steve's opinion that "Very few people have successfully enrolled with SB DirectInvest" is accurate. Although there have been complaints about the slowness of the process, and about the poor phone help, it's rare to read of a failure to enroll on this forum or on the boglehead.org forum. Once enrolled, posters are very satisfied with the very low-cost plan.
  5. I think you need to confirm with SB that your application has been accepted. This usually seems to take several weeks? The district or the TSA likely has their own Salary Reduction agreement, so you should ask them about that, and they can give you the SB plan number.
  6. No, a custodial account is the name the IRS gives to 403(b)7 accounts, which allows for mutual fund based 403b plans. Prior to the passing of the 403(b)7 regulations, all 403b accounts were annuity plans sold by insurance companies. Often, the 403(b)7 accounts are just called "mutual fund" accounts to contrast them from annuity accounts. The 403b thread on first questions to ask was: https://board.403bwise.com/topic/7528-small-district-with-a-few-choices/ Yes, you should contribute to a mutual fund based 403b and/or 457 plan and avoid expensive variable annuity or index annuity plans because they will have fees of 1 to 3%. A third type of annuity is the Fixed annuity, which only grows at a very low rate, maybe 2% or less. It's the equivalent of a non-FDIC- insured savings account. Have you been contributing to an IRA every year? For 2019, that can be $6000. You can choose Vanguard or Fidelity. After you've maxed out the IRA, I think you would be better off contributing to a taxable account for retirement at Vanguard or Fidelity than to contribute to an annuity based 403b/457 plan. A taxable account using either the Total Stock Mkt Index fund or the S&P 500 Index fund is very tax efficient, especially if you are in the 12% income tax bracket (0% tax rate on most dividends). You should keep in mind that it is possible to get a low-cost index providing vendor added to the district's list. Your district does not have a leg to stand on when they deny their employees that option! It's up to you and your colleagues to push for low-cost vendors. Districts that have low-cost vendors have them only because employees have asked for them. Districts and the insurance industry resist change, but change is possible.
  7. Your question was asked in another thread recently about 403b vendors and here's my answer. Substitute 457 or 403b: A first question should be to determine if the vendor has a mutual fund (MF) based (403(b)7) plans. AXA has only annuity based (403(b) accounts which are expensive insurance products. VALIC has both types of plans but you should only be interested in the custodial MF accounts. If a vendor does only annuity accounts, I would not have further questions. The second question of a vendor with custodial mutual fund 403b is, what are the fees? For VALIC, assuming the Group plan is available in your district, what is your district’s fee? We’ve seen a 0.6% group fee, and also slightly lower, but districts’ vary. Ask about all their fees and get it in writing. A third question would be to ask the vendor for a list of all the mutual funds in the plan, and their expense ratios (ERs). This is a fee that every mutual fund has, and can be 0.04% for a Vanguard fund and up to 1% or more for actively-managed mutual funds. Ideally your ERs should be <0.10%, although somewhat higher is acceptable (~0.30%?) if there’s no lower choice.
  8. The SB NEA Direct Invest 403b plan has been discussed a lot on this forum over the last few years. You could start by looking at: https://www.bogleheads.org/forum/viewtopic.php?t=260609 This thread has links to previous threads. You can use the forum’s Search feature to look at the many past threads on this plan. This plan does not use a local rep. It is internet based with phone support that is minimal. There is no “advisor” to help with your investments. But you can certainly get advice here on this forum. I agree with KRC121212 that Direct Invest is your only low-cost option. It is a no-frills 403b plan but if you use the Vanguard broad-market index funds on offer, you will have a very, very low-cost 403b. I would stay away from the TR Price target retirement funds as they are not low-cost (0.79% to 0.97%). All you need is: Vanguard Total Stock Mkt Admiral, ER 0.04% Vanguard Total International Stock Mkt Admiral, ER 0.11% Vanguard Intermediate-term Bond Index Admiral, ER 0.07% Are you contributing to an IRA? Because you can choose the vendor, rather than your employer, you can go with Vanguard or Fidelity, the low-cost leaders. The limit for 2019 is $6000 for both you and also for your spouse, even if the spouse does not have income.
  9. Thanks Tony! This Investment News article seems more detailed and indicates the SEC letters were sent to some Third Party Administrators (TPAs). Maybe the TPAs will be required to include a low-cost custodial account vendor? One that offers competitive priced broad market index funds? It doesn’t look like all TPAs were sent letters?
  10. It's about time we see the SEC investigating the K-12 403b problems. https://www.wsj.com/articles/sec-launches-investigation-of-practices-in-retirement-plans-for-teachers-government-employees-11570651944 The pay-wall blocks this article for me. Maybe Tony can help?
  11. Public school district employees in WA state can contribute to the state-run 457 plan (also called a Deferred Compensation Plan (DCP). This plan can be used instead of the 403b, or in addition to the 403b. It is very low-cost and the funds and their fees are the same as those used in the defined contribution part of the state teacher’s Plan 3 hybrid retirement plan. https://www.drs.wa.gov/dcp/assets/DCP-Enrollment-Booklet.pdf Funds and fees: https://www.drs.wa.gov/dcp/investments.htm You district should but may not have this plan on its 457 vendor list. It should be easy to get it added to the list. An advantage of a 457 plan over a 403b plan could be if you retire early before age 59.5. There is no early withdrawal penalty (10%) from 457 plans after leaving the plan’s employer. Any withdrawal would of course be taxable income. The 10% penalty applies to withdrawals from 403b and 401k plans before age 59.5 although there are exceptions that may apply.
  12. Are you planning to make a contribution to a deductible traditional IRA? I ask because the salary limits on a deductible IRA are lower than the salary limits for making a direct contribution to a Roth IRA. The limits depend on your filing status (single, MFJ and are based on your Adjusted Gross Income (AGI) which is line 7 on the new Form 1040 for 2018 tax year. In prior years it was line 37. You can take a full deduction on a traditional IRA contribution if your AGI is $64,000 or less if you are Single. For MFJ, it’s $103,000. You can make a full Roth IRA contribution if your AGI is $122,000 or less if you are Single. For MFJ, it’s $193,000. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits If indeed your AGI is above the limit to make a full Roth contribution (congratulations!), are you aware that you can still make a Roth contribution by using what’s called a “backdoor Roth”? It’s perfectly legal and is widely used by those with higher incomes. It involves contributing to a traditional IRA but not deducting it. There is no salary limit on contributing to a non-deductible tIRA. Within a few days, the tIRA is converted to a Roth IRA. There is no limit of any sort on converting a tIRA to a Roth IRA. This is a non-taxable event because you bought the tIRA with after-tax money, as you would do if you contributed directly to a Roth IRA. There is one catch that can make the backdoor Roth not worth doing. You should not have any other traditional, SIMPLE or SEP IRAs because their balances will be partly or mostly taxed due to the IRS pro rata rule. This applies to any non-Roth IRA balance on Dec 31 of the year you make the conversion. The IRS requires that you complete a Form 8606 to keep track of the non-deductible tIRA contribution and its conversion to a Roth IRA.
  13. krow36

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    You can send Dan a Private Message by clicking the menu in the upper right corner of the page and selecting the letter icon. Dan will get an email alerting him to the PM. His user name is Admin. I think he does a lot of traveling.
  14. krow36

    Copyrights

    I think Tim Kenyon is referring to the feature article by Dan Otter on main 403bwise.com website: https://403bwise.org/blog/entry/blog-dodgers-are-part-of-the-k-12-403b-problem
  15. On second look, that post is appropriate for this thread also, so here it is: You have 2 low-cost options on you vendor list. The lowest cost is NEA Direct Invest from Security Benefit. The NEA, the national union, has "rented" their name to Security Benefit (SB) for several million bucks a year. SB put NEA on a number of very expensive annuity based 403b plans. Several years ago, NEA arranged for SB to offer a low-cost alternative. It offers a small number of low-cost Vanguard index funds and charges only $35 per year for balances under 50k. It’s based on the internet and does not use a local rep. Repeated phone calls have sometimes been reported as necessary. It’s bare-bones but adequate for those who want very low-cost and can do without handholding. Just this year the NEA logo is no longer on new SB accounts, while the old, expensive NEA-labelled accounts have been grandfathered (and continue to provide a kickback to NEA). Currently, the only new SB 403b account with the NEA logo on the title is the very low-cost NEA Direct Invest. The only NEA Direct Invest funds needed are: Vanguard Total Stock Mkt Admiral, expense ratio (ER) = 0.04% Vanguard Total International Stock Mkt Admiral, ER = 0.11% Vanguard Intermediate-term Bond Index Admiral, ER = 0.07% (a good substitute for Total Bond Mkt Index Admiral fund) You should not use their TR Price target retirement funds as they are way too expensive. This webpage gives the basics of NEA Direct Invest https://securitybenefit.com/individuals/product/nea-directinvest On this webpage, click on “Enroll Now” to access the steps to get started. https://www.nearetirementprogram.com/nea-directinvest The other vendor worth using is Aspire. All or most Vanguard funds are available, with a 0.14% added to the expense ratios. The admin fee is $40 per year. The Vanguard target retirement funds are low-cost and an excellent one-fund-does-it-all choice. Either NEA Direct Invest or Aspire would be an excellent choice as a 403b provider. Aspire can also be used as a 457 plan provider if it is on the school district’s 457 provider list.
  16. You have 2 low-cost options on you vendor list. The lowest cost is NEA Direct Invest from Security Benefit. The NEA, the national union, has "rented" their name to Security Benefit (SB) for several million bucks a year. SB put NEA on a number of very expensive annuity based 403b plans. Several years ago, NEA arranged for SB to offer a low-cost alternative. It offers a small number of low-cost Vanguard index funds and charges only $35 per year for balances under 50k. It’s based on the internet and does not use a local rep. Repeated phone calls have sometimes been reported as necessary. It’s bare-bones but adequate for those who want very low-cost and can do without handholding. Just this year the NEA logo is no longer on new SB accounts, while the old, expensive NEA-labelled accounts have been grandfathered (and continue to provide a kickback to NEA). Currently, the only new SB 403b account with the NEA logo on the title is the very low-cost NEA Direct Invest. The only NEA Direct Invest funds needed are: Vanguard Total Stock Mkt Admiral, expense ratio (ER) = 0.04% Vanguard Total International Stock Mkt Admiral, ER = 0.11% Vanguard Intermediate-term Bond Index Admiral, ER = 0.07% (a good substitute for Total Bond Mkt Index Admiral fund) You should not use their TR Price target retirement funds as they are way too expensive. This webpage gives the basics of NEA Direct Invest https://securitybenefit.com/individuals/product/nea-directinvest On this webpage, click on “Enroll Now” to access the steps to get started. https://www.nearetirementprogram.com/nea-directinvest The other vendor worth using is Aspire. All or most Vanguard funds are available, with a 0.14% added to the expense ratios. The admin fee is $40 per year. The Vanguard target retirement funds are low-cost and an excellent one-fund-does-it-all choice. Either NEA Direct Invest or Aspire would be an excellent choice as a 403b provider. Aspire can also be used as a 457 plan provider if it is on the school district’s 457 provider list.
  17. If you can get Aspire added to your district's vendor list, that would be a better (much lower cost) option than either VALIC or Horace Mann. Aspire is better because the fees are much lower--only 0.14% is added to Vanguard's very low-cost index funds plus a $40/yr admin fee. If you choose to be self-directed (rather than have an advisor which adds 0.6%), you will have very low fees. Aspire would not cost the district any third party admin fees because they would come out of Aspire's $40 admin fee, so you would pay them rather than the district. That should remove a problem that the district might have with Vanguard or Fidelity who may not want to pay the TPA fees. The expensive vendors have no problem picking up the TPA fees for the district. Are you contributing to an IRA? That should come first because you can choose any provider and that should be one of the super low-cost ones like Vanguard, Fidelity or Schwab (who all have super low-cost index funds). You can contribute $6000 every year, either to a tax deductible traditional IRA, or to a Roth IRA (non-deductible but the contribution is tax-free when taken out). If you are in a low income tax bracket just starting out, the Roth IRA would make more sense.
  18. Removed what should have been posted to a different thread!!? Sorry. Agree that Aspire is a very good choice for the 403b vendor.
  19. You are fortunate to have Lincoln Investment Planning on your vendor list because you work in NJ. They have a 403b plan called Participant Directed Platform that is only available in NJ and a few school districts in IL and NY as far as we know. It is not publicized and we only know about from teachers which have used it. It allows the use of low-cost Vanguard mutual funds and only charges an admin fee of $35 per year. You can not find out about it on Lincoln Investment’s website. It’s believed that the NJEA, the NJ state organization of the NEA was involved in setting up this option (and that it is a required option by law?). This plan was first discussed in 2016/2017 in this thread: https://board.403bwise.com/topic/6361-lincoln-investments-participant-directed-platform/ Poster jebjebitz describes his experience setting up this plan and it’s worth studying his posts. Last year it was discussed in this thread: https://board.403bwise.com/topic/6780-lincoln-investments-participant-direct/ Once this plan is set up and you’ve started contributing to it, you can work out what to do with your AXA account. Does the AXA Series 200 annuity have a of 5% surrender fee for the last 6 years, like the Series 201? Have you asked AXA for the amount of your surrender fee? Because of the very high annual fees you are being charged, you may decide to just pay the surrender fee and get the whole balance started with super low-cost investing!
  20. Hi Sara It sounds like you are in AXA’s Equi-vest Series 200 variable annuity 403b. You can look up the fees for their Series 201 which they sell to CA teachers. CalSTRS (CA State Teachers Retirement System) requires all vendors to detail their 403b product’s fees in their 403bcompare website. I suspect that the Series 200 and 201 fees are very similar. AXA Equi-vest Series 201 $30/yr admin fee 1.20% M & E fee The lowest cost stock fund I saw was their EQ/Equity 500 Index with an Expense Ratio (ER) of 0.58%. All funds have ERs. Most of AXA’s funds have ERs of 0.8% to 1.4%. As you know, Vanguard's ERs are as low as 0.04%, and that M&E fee of 1.20% is a ripoff. https://www.403bcompare.com/products/153 You are likely to be paying annual fees of around 2.2% on you AXA balance, plus the $30. Your annual fees could be higher if you have signed up for any riders. You can look up your funds (called sub accounts in annuities) on the 403bcompare website for AXA’s Series 201 variable annuity. The ER’s are likely to be the same as those of their Series 200. I agree that you should stop contributing to this AXA 403b. You have a very good choice on your vendor list which I’ll discuss in my next post. It’s past lunch time here!
  21. It looks like you are correct, the PA state 457 plan is for state employee retirement system (SERS) employees, not public school employees retirement system (PSERS) employees. Your district may not have a 457 vendor list, but most districts do. Unfortunately districts take no responsibility in helping employees select a 403b (or 457) vendor, other than maintaining a vendor list. You will have to go to each vendor’s local rep and ask questions. No, there is no fact sheet for easy comparison of vendors. You should keep in mind that the reps have a conflict of interest in that what is in your best interest (low fees) is not in their own personal best interest. A first question should be to determine if the vendor has a mutual fund (MF) based (403(b)7) plans. AXA has only annuity based (403(b) accounts which are expensive insurance products. VALIC has both types of plans but you should only be interested in the custodial MF accounts. Horace Mann has only custodial MF accounts. If a vendor does not have custodial 403(b)7 accounts, I would not have further questions. The second question of a vendor with custodial mutual fund 403b is, what are the fees? For VALIC, assuming the Group plan is available in your district, what is your district’s fee? We’ve seen a 0.6% group fee, and also slightly lower, but districts’ vary. For Horace Mann, 403bcompare says that they may reduce the 1.25% fee with certain groups. Ask about all their fees and get it in writing. A third question would be to ask the vendor for a list of all the mutual funds in the plan, and their expense ratios (ERs). This is a fee that every mutual fund has, and can be 0.04% for a Vanguard fund and up to 1% or more for actively-managed mutual funds. Ideally your ERs should be <0.10%, although somewhat higher is acceptable (~0.30%?) if there’s no lower choice.
  22. Welcome to the forum nashman50! I don’t see any great choices on your vendor list. VALIC Please read my comments on FITeacher’s thread, Friday (Oct 4) concerning VALIC. Depending on whether the VALIC Group Mutual Fund Product is available in your district, and what the Mgt/Wrap fee of 0%-1.0% is, this might be your best option. You will have to contact the VALIC rep to find out the Mgt/Wrap fee. Don’t sign anything! AXA Equitable Life. Should be avoided. Sells very expensive annuity products. Horace Mann. More expensive than VALIC’s GMFP. 1.25% fee + $25. It does have some excellent low-cost Vanguard funds. Kades-Margolis. Don’t know what they offer. Nationwide. Don’t know what they offer The comments above are based on what those vendors offer in CA. K-12 403b plans are usually (but not always) the same as offered in other states. You should only be interested in mutual fund based plans, not annuity based plans. https://www.403bcompare.com/Vendors/Browse In fact all the posts on FITeacher’s thread are relevant to your situation. Getting Aspire added to your district’s vendor list would be a great improvement! What state are you in? Many states have excellent low-cost state-run 457 plans that are available to teachers. It's usually not difficult to add states plans to the vendor list. They can be used instead of or in addition to 403b plans.
  23. Tony has given you some great advice. Your district benefits officer should be able to tell you if there’s a policy for adding a vendor. Sometimes all it takes is for an employee to ask, sometimes there’s a policy requiring some number of employees to commit to the new vendor. Sometimes the Third Party Administrator (TPA) resists, although it’s really a decision for the district. Does your district use a TPA? It often takes persistence and repeated calls or talks. I suggest you read up on Aspire before you talk to anyone. They have an excellent FAQ: https://www.aspireonline.com/resources/faqs/-in-category/categories/plan-types/403(b)-k-12 You have to set up the FAQ for “403b, K-12” and “employee”. Points in favor of adding Aspire: The district’s 403b vendor list does not include a vendor that has low-cost, index-based mutual funds. They are all (or mostly) vendors selling high-cost annuity-based 403b plans, rather than low-cost custodial account (403(b)7 plans. Although Aspire allows advisors if desired by employees (add 0.6%), they allow self-directed accounts. Aspire will not cost the district if added. The employees will pay any TPA fees through their Aspire $40 admin fee. Are you familiar with the New York Times series of articles on the K-12 403b problem? It might be useful in informing others of the high cost of the annuity 403b plans and the unscrupulous behavior of some insurance reps. https://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?smid=tw-share&_r=0
  24. Jebjebitz’s comment made me curious to see how many of Security Benefit’s 403b plans use the NEA label as an endorsement. I checked the SB website: https://securitybenefit.com/performance To my surprise, the only plan with “NEA” in its title is now NEA Valuebuilder® DirectInvest 403(b)7 !?? There are no current variable annuity plans (or custodial 403(b)7 plans) with the NEA Valuebuilder label, although they are all listed under “Legacy products, No longer available for issue”. This certainly looks like the arrangement between SB and NEA has changed and that the SB payment of millions annually to NEA for the use of the NEA “endorsement” will be tapering off. While there are still many teachers with NEA Valuebuilder annuities, that number should decrease as no new accounts are made. It’s great that the Direct Invest option is still there. As the payment was/is based on the number of NEA accounts, the legacy accounts probably continue to pay for the cost of NEA Direct Invest. Looking at the 403bcompare website, the NEA Valuebuilder annuity and custodial plans are “discontinued”. https://www.403bcompare.com/vendors/1022#/productlist I still think it would be a mistake to work to get SB added to a district’s vendor list. All of SB’s current 403b products, both annuities and custodial plans remain too expensive.
  25. FITeacher, if either Security Benefit or Lincoln Investment were already on your district's vendor list, they would provide you with two excellent, very low-cost choices. However, if you were successful in adding one or both to the list, those reps would then try to sign up your colleagues to expensive annuity based 403b plans. In effect, those expensive plans support the low-cost self-directed plans. In other words, you are only getting an excellent low-cost plan because it's being payed for by your colleagues. I think it's completely logical and ethical for jebjebitz and many others to use either of those vendors when they are already on the vendor list. I personally would feel guilty if I were responsible for adding them to the vendor list. I think jebjebitz is correct that the Third Party Administrator's fee (maybe $20-$30 per year per employee?) may be a factor in a district adding a vendor to their list. We have frequently seen districts willing to pay the fee and add a new vendor, maybe because it really isn't a lot of money. If the district realizes that there are no low-cost vendors on their list, they may feel vulnerable, even though many teachers have chosen high-cost annuity 403b plans. I think Fidelity is more likely to be willing to pay the fee than is Vanguard. However, with Aspire, the employee pays the TPA fee out of Aspire's $40 per year admin fee. There is no valid reason for a district to refuse to add Aspire to their 403b and 457 vendor lists. So please try to get Fidelity and/or Vanguard added to the list, and if there's a problem with paying the TPA, try for Aspire. Remember "the squeaky hinge gets the oil". Also remember, a low-cost, index mutual fund based 403b and 457 is really a choice that all public school employees deserve. If you don't have that choice, you are being ripped off!
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