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Everything posted by krow36

  1. I agree with Ed that your best choice on the OMNI list for a 403b is the Security Benefit NEA Direct Invest. I don't think the self-directed Lincoln Investment plan is available to you in MD. Aspire is a good 2nd choice for the 403b. For a 457, Aspire is the lowest cost vendor on the OMNI vendor list. MD has a state-run 457 that looks very low-cost but it is only available to MD state employees. However there is a state-run 403b plan with the same Vanguard funds with very low expense ratios. I don’t know if there is an additional admin fee.* You should see if that can be added to the OMNI 403b vendor list. It’s often not difficult to get a state-run vendor added to the list. https://www.marylanddc.com/iApp/rsc/fundPerformanceViewPreLogin. *Just found the admin fee info: This is discouraging and looks likely to rule out the state-run 403b. Most state-run 403b/457 plans have much lower admin fees. NEA Direct Invest certainly beats the MD 403b plan!
  2. TonyZ, you've told us that your district has only 2 vendors on their 403b list, AXA and Lincoln Financial. If that is the case, and Security Benefit is not on the list, then the Security Benefit NEA Direct Invest option is not available to you. We don't recommend you work to add Security Benefit to the vendor list because their reps sell very expensive 403b plans to uninformed teachers. We consider their reps to be predators. If the predators are already allowed, the NEA Direct Invest (which does not use the reps and is internet and telephone based) is a great option. I suggest you call the Lincoln Investment phone number that posted previously and see if it's possible for them to get themselves added to the vendor list. It's worth a try. If that doesn't work, then sign up with Aspire, using Vanguard funds, going self-directed, no AXA rep.
  3. When you mention “Lincoln (the bad one)”, are you referring to Lincoln Financial? That is indeed the annuity selling insurance company. However, I think it might be worth your trouble to call up a regional office of the other Lincoln, which is Lincoln Investment. Perhaps you have heard of their Participant Directed Platform (PDP) 403b/457 plan for K-12 schools in NJ? I’ve read that this low-cost plan is due to an arrangement between the NJEA (union) and Lincoln Investment. It’s been mentioned that this arrangement has been made a NJ state regulation. Lincoln Investment doesn’t publicize the arrangement so it has to be arranged individually by talking to a regional office. There may be a chance that you can get Lincoln Investment (LI) to convince your district’s TPA to add LI to the vendor list (and allow you to use the PDP. Its annual fee is only $35 and uses low-cost Vanguard funds and both 403b and 457 plans can be used. It sounds like the district’s TPA is in the camp that thinks that an “advisor” is a requirement for having a 403b or 457 plan. As Tony has mentioned, that is not true. In fact all the low-cost 403b and 457 plans do not require advisors. Aspire will work OK for you with a 0.15% and $40 added to Vanguard’s low-cost expense ratios. When you fill out Aspire’s application form put “self-directed” in the space where the advisors name goes. If the TPA objects, you cross that bridge at that time. Several posters have had that battle and won and can advise you. Aspire will be able to tell the TPA that “self-directed” is allowed. Either the LI PDP or the Aspire plan would allow you to transfer your AXA balance to them.
  4. Can you give us some details of the difficulty with the process? Was it with the TPA? The district? Security Benefit? All 3?
  5. whyme, thanks for the correction. I was thinking of VWEAX (Vanguard High-Yield Corporate Bond Fund Admiral), which I owned in the past. I sold it after being advised by a Vanguard CFP that it behaved like an equity fund in a market downturn. I don’t have any experience with the Vanguard High-Yield Tax-Exempt Fund Admiral Shares (VWALX) fund that bk10s asked about. It does look like mostly investment-grade bonds but because it’s classified as a long-term bond fund, I avoid it myself. I want to avoid its increased sensitivity to increases in interest rates, compared to Intermediate-term Tax-exempt Bond fund (VWIUX).
  6. It's considered a junk bond fund and behaves more like an equity fund than a bond fund when the stock market does a dive. I stick to the Intermediate-term Tax-exempt Bond fund in by taxable account.
  7. We rebalance to 40% stocks/60% bonds, using 5% bands. It can be painful to prune a winner, but that is the plan we’ve decided to follow. I agree with Ed that rebalancing doesn’t increase a portfolio’s rate of return, but as he and others note it does reduce risk to a desired level. It does beat selling out at or near the bottom and buying back after a rise. In retirement, with no additional contributions to the portfolio, we need to rebalance to keep our asset allocation under control. Vanguard produced a white paper on rebalancing in 2010. It points out that frequent rebalancing has a cost. “If an investor’s portfolio can potentially hold either stocks or bonds, and the sole objective is to maximize return regardless of risk, then the investor should select a 100% equity portfolio.” https://www.vanguard.com/pdf/icrpr.pdf
  8. The word that comes to my mind is “fiduciary”, which is the relationship you have with your relative. What is in the best interest of your relative with respect to the 2M cash? There’s no doubt in my mind that investing the 2M in another utility would not be in his best interest. I think an asset allocation of the 2M should be very conservative, perhaps 30% stock funds, 70% bond funds, maybe even 20/80. If this is this a taxable account, the bond funds should probably be muni bond funds. I would use Total Stock Market and Total International Stock Market Index funds for the stock funds. It would be reasonable to talk to Vanguard about this account. Using their advisory service for 0.3% per year, for a least a year, would make sense from a fiduciary point of view. I believe you can have an initial conversation with a CFP without cost.
  9. I’m not Bashdash but I think I recall that he is using the following funds. You can’t go far wrong with these 3 low-cost funds: NYSDCB Equity Index Unitized Account, ER 0.01% (an S&P 500 fund) International Equity Fund - Index Portfolio, ER 0.20% NYSDCB U.S. Debt Index Unitized Account, ER 0.02% The NY State 457 (Deferred Contribution Plan) is probably the lowest cost of all the state-run 457 plans. There’s certainly nothing wrong with how you are using your 457 account. It’s a good idea to view your retirement asset allocation on a portfolio basis, rather than trying to have each account keep to your asset allocation.
  10. If you expect to stay in the 22% bracket in retirement, it may be a tossup on traditional vs Roth on your 403b and 457. Are you maxing the Vanguard 403b, including the over 50 catchup? I would do that and also max a Roth IRA before use the 457. If your income is too high to contribute directly to a Roth IRA, it’s possible to use a “backdoor Roth” contribution process. If you can use a low-cost 457, you might split it traditional/Roth? Please tell us what you find out about Encompass. And let us know how it goes on adding other providers.
  11. My apologies to MNGopher and other readers. I guess I overdid it, trying to make a point about the evil empire of insurance companies.
  12. Your 457 plan does have one advantage over a 403b plan and that has to do with its distribution. There's a early distribution penalty of 10% is you distribute from your 403b plan before age 59.5. The penalty doesn't apply if you are over 55 when you leave your school district. I retired at age 56 and made use of this 403b feature. With the 457 plan, there is no penalty on a distribution, no matter your age, if you have left the plan sponsor's employment. This feature of the 457 makes it especially valuable to those folks hoping to retire early. Of course a distribution with either plan will result in taxable income. When I retired, teachers could not contribute the max to both a 403b and a 457 plan. I would check with your district and see if the SMART 457 plan is on their 457 vendor list. If it is not, you should be able to get it added. I would contribute to the very low-cost SMART plan first, and if you can max it out eventually, then start contributing to the NEA Direct Invest 403b in addition.
  13. MNGopher, by comparing your VALIC annuity in a K-12 403b with Rubbadubbss' 403b plan where VALIC is the record keeper and administrator, you are comparing apples and oranges. Maybe carrots and peaches? It's common for the big insurance companies to have two very different roles. In the K-12 403b market, they sell high-cost generic annuities and mutual fund plans. However as record keepers and administrators for large state and university plans and non-profit plans, they use other vendors' mutual funds. The mutual funds that are selected and the ER and admin fees charged are bargained by the employer and VALIC. The employer assumes some fiduciary responsibility towards their employees in these plans, unlike in the K-12 403b world. I think Rubbadubbss was also unaware of the different roles that VALIC can have also.
  14. Although your vendor lists Security Benefit as an annuity provider, it is also a mutual fund, custodial account provider. Security Benefit (SB) has joined the NEA (the national teachers lobby/union organization) to offer a super low-cost 403b plan called NEA Direct lnvest. This is the only low-cost option on your vendor list. It is internet and phone based, not local rep based. Many posters here are using it. It allows you to choose low-cost Vanguard Admiral funds. Because you are in MA, you should have access to the state-sponsored 457 plan. It is very low-cost and can be used in addition to your use of the 403b plan. https://mass-smart.gwrs.com Funds: https://docs.retirementpartner.com/ioag/98966-01_IOAG.pdf ADMIN FEE: 0.0075%
  15. The PDF is not a working link. This is often the case. Can you copy and paste the list of vendors available to you?
  16. Yes Tony, those of us from the K-12 403b world have good reason to be cautious and skeptical. However Rubbadubbss is dealing with a plan where the employer has assumed some fiduciary responsibility. Of course one should always know the fees one is paying. In this case, I don't think worrying about hidden fees is justified. I think Rubbadubbss will find that there is a reasonable admin fee, either a fixed dollar amount per year, or a small percent per year added the the account balance.
  17. I doubt that you need to worry about being miss-led by the benefits rep or VALIC. Your employer has bought their employees an excellent low-cost plan. You have a choice of some very low-cost index funds and I don't think anyone will try to talk you out of them. You don't know what the admin fee is yet, but that should be easy to find out. If you can't find it online, call or email the benefits rep. With such good index funds available, I wouldn't expect the admin fee to be unusually high.
  18. You are aware of some of the disadvantages of the non-governmental 457. Have you read White Coat Investor on this subject? He and his guest writers have discussed the subject a number of times. https://www.whitecoatinvestor.com/should-you-use-your-457b/ I would definitely consider carefully whether to use it vs investing in a taxable account after you've maxed out your 403b and Roth IRA. If you change employers, the distribution that the plan allows could be a problem for you. The WCI blog is a source of excellent financial information.
  19. You have some excellent funds on the list. Vanguard Institutional Index, VINIX, ER 0.04, is Vanguard’s S&P 500 fund for large institutions. Combined with the Vanguard Small Cap Index Admiral fund, VSMAX, ER 0.05 in a 4 to 1 ratio will give you the equivalent of a Total Stock Market fund. VINIX is mostly large cap stocks but also includes significant mid cap stocks so the Mid Cap Index fund VIMAX is not really needed. The Fidelity International Index Premium FSPSX, ER 0,05% is a good choice for international stocks. Vanguard Total Bond Market Index Admiral VBTLX, ER 0.05% is a great choice for your bond fund. These 4 excellent funds allow you to invest in a very low-cost, completely diversified 403b. Or you could use one of the Vanguard Target Retirement funds, ER 0.14%. A little more expensive but also completely diversified.
  20. Is your employer a K-12 school district? I suspect that it is not, and that you work for an institution of higher learning? K-12 school districts have different 403b setup than that of colleges and universities. It's very rare for a K-12 district to offer a match with a 401a. K-12 districts usually allow a number of vendors (often dozens!) to offer a 403b plan, most of which are annuity-selling insurance companies. Universities arrange with one vendor (sometimes several), and the bigger the institution, the more likely the lower the fees. I think you will have to use the VALIC plans on offer. VALIC is probably the record keeper and administer of the plans, but the funds and fees are decided by the employer. The employer can pay VALIC's fees, or the employees can pay them with higher expense ratios. Or they can share them. If you list the mutual funds and their expense ratios, we can help you decide which ones might be best.
  21. mqkudy, welcome to the forum! I have not run across Encompass as a 457 (or 403b) provider. I think you will have to do the footwork and find out the answers to your questions from Encompass. You are asking the right questions. Now that your district has its first 457 provider, it may be relatively easy for you to get a second vendor added (if Encompass turns out to be high-cost). The CalSTRS pension authority offers a moderately low-cost 457 call Pension2. Because the CA teachers pension authority runs Pension2 457, there should be little resistance by the district or the TPA is adding it to the vendor list. Also if Fidelity is on your district's 403b vendor list, they also offer the lowest cost 457 plan I've seen. I don't think we know enough about you to make an intelligent guess at Roth vs traditional 403b and 457 contributions. It would help if you answered these questions: 1. single or MFJ? 2. income tax bracket now? It's based on "taxable income" on line 43 of your 1040 tax return. 3. expected income tax bracket in retirement? 4. Are you contributing to a Roth IRA?
  22. In the PERSI 401k plan, the U.S. Large Cap Equity Index Fund uses the Russell 3000(R) Index which covers the total US stock market. So the U.S. Small/Mid Cap Equity Index Fund and U.S. Large Cap Equity Index Fund Large Cap are not needed to invest on a market capitalization basis. In the 403b plan, if you click on Enroll --> on the NEA Direct Invest page, you will get to the Prospectuses and Profile Pages at the bottom of the Enrollment page. The Vanguard funds are all Admiral class funds, not Investor class. You only need the 3 funds that Ed used. Check out the link he provided. Total US Stock Market Index Total Int’l Stock Market Index Intermediate-term Bond Index http://www.nearetirementprogram.com/enrollment 403Learning, although you can contribute up to 19k (for 2019, 18.5k for 2018) to either the 401k or the 403b, the total contribution can’t exceed 19k. You could contribute 9.5k to one and 9.5k to the other, or any other combination that totals 19k. I don’t see any advantage in using the PERSI 401k at this time, and would just use the NEA Direct Invest 403b. You need the latter to hold your annuity 403b balance and you can start out making a contribution to it as well as the rollover. I’m guessing that you will not max out your employer accounts, whichever you choose to contribute to, at least not currently. Have you read up on traditional vs Roth IRA’s? I think Ed linked his thoughts on this. You say you will never be able to max your employer plans, but you should have a goal of increasing your contribution if possible. You probably realize that contributing to a traditional IRA and the 403b (or 401k) reduces your taxable income and so lowers your income taxes. Whether you choose to contribute to a tIRA or a Roth IRA, either is great! They both have their advantages. I think the 403b should be traditional, not Roth, at least this early in you investing career.
  23. You didn’t provide a link to the CPS plans, so I googled it and found the 3 providers. I was not impressed with the VALIC or VOYA websites. Mostly expensive (over 1% ER), actively-managed funds, very few index funds and they were expensive. I wasted a time on these 2 websites. I finally checked out the EMPOWER website and found lots of low-cost index funds! Then I stumbled on to a 2017 403bwise thread and read that the VALIC and VOYA vendors are grandfathered and not available to new employees. This info isn’t readily available on the EMPOWER website, and I don’t know where I found it in 2017!? http://board.403bwise.com/topic/6715-need-help-chicago-public-school-system-403b-and-457-plans/ The CPS/EMPOWER website could be designed to be a lot easier to use: https://cpsretirementplans.empower-retirement.com/participant/#/articles/CPSWR/investmentInformation The admin fee of 0.45% is a bit high. I found this fee once, but cannot find it again?? Poor site organization by EMPOWER. Does that fee cover EMPOWER employees making on-site presentations to teachers? Is there any chance of extending the plans beyond CPS to include other districts. Would that lower the admin fee? The website could be better organized along the lines of the WA and NY state 457 plan websites: WA state deferred compensation plan. https://www.drs.wa.gov/dcp/investments.htm NY state deferred compensation plan https://www.nysdcp.com/iApp/tcm/nysdcp/about/index.jsp The active vs passive fund management discussion is very biased and inaccurate.
  24. The IRS rules prevent moving a 403b balance into a 401k plan while still employed by the plans' sponsor. This has come up before on this forum. If the OP changes school districts, it would be possible. The 403b would be put in a separate account within the 401k, and would use the mutual funds of the 401k. Taking a distribution of the 403b would be both taxable and generate a penalty if under age 59.5. I agree that a "taxable event" isn't relevant to what OP wants to do.
  25. Yes, you need a low-cost 403b plan that you can move your annuity 403b balance into. The Aspire Self Direct 403b would work, but the Security Benefit NEA Direct Invest would be a lower cost 403b. If you use the 3 funds that Ed, Bash Dash and others use, you will have the lowest cost 403b plan anybody here knows about! Even lower than your excellent PERSI 401K! If both you and your wife have an annuity 403b, you will both need to set up a 403b account with either Aspire or SB NEA Direct Invest. However it sounds like only you have the 403b annuity? Not being able to move the annuity balance into the PERSI 401k is not a problem because you have 2 very good 403b plans available.
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