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Everything posted by krow36

  1. Opps! I missed number 9. Sorry! Thanks for organizing the list.
  2. How about: Do your offerings on the 403bcompare.com website apply to my district, and are they complete for my district? Which ones apply?
  3. Thanks for all the podcasts that Scott Dauenhauer and Dan Otter have produced. Listening to the latest one, #26, I find it very interesting that Scott and Dan may be responsible for the NEA Direct Invest 403b because of their talk with the NEA MBC employee! I’ve been trying to find out about Direct Invest for several months. I’m a retired teacher and former 403b investor, hoping to be able to help teachers who come to the boglehead and 403bwise forums. In the podcast you say that NEA Direct Invest is: “not terrible”, “not too bad”, “not promoted” and “not easy to get money into it”. It seems to me that it is better than that. It includes 8 Admiral class Vanguard index funds, for instance: Vanguard Total Stock Market Index ER 0.05% Vanguard Total International Stock Index ER 0.14% Vanguard Intermediate Term Bond Index ER 0.10% The fees listed in the "Security Benefit Custodial Agreement" (Section ):An annual fee of $35 for accounts of less than $50,000. A annual fee of $30 if the employee revokes their agreement to receive all communications by mail instead of electronically. A $25 withdrawal fee for any withdrawal not requested through the employee’s online account. http://www.nearetirementprogram.com/#!enrollment/cc0q On the face of it, this looks like a very good option for a DIY investor, doesn’t it? This option is not hidden on the Security Benefit or NEA websites, but as you say on the podcast, it’s certainly not promoted. It is supposed to be for DIY investors who don’t need a sales rep. It is missing from Secure Benefit’s’ offerings on the 403bcompare website, which is disappointing! Scott and Dan, if a K-12 employee comes to you with a district's list containing only insurance companies, including Security Benefit, would you recommend Direct Invest? Steve and I have discussed Direct Invest in another thread and he is waiting for an investor to report a full year’s contributions to see if there are hidden fees not disclosed by Security Benefit: http://board.403bwise.com/index.php?showtopic=6120
  4. I guess you've studied this IRS FAQ on hardship distributions? https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Hardship-Distributions Have you looked at the AXA plan to see what it actually says about hardship distributions? Could you convince the IRS that the distribution is the only way you could meet the need? The IRS might find your continuing to contribute 18k to your 457b to be very interesting. I don't understand your comment on taxes on the distribution. I think it will be taxed at your bracket, 15%, 25% or ? There's no 10% or 20% bracket. I think your plan is a big mistake. You should be patient and keep your 403b contributions in a tax-deferred account. Hopefully you'll soon be able to move your AXA account to a better providor.
  5. While you're making changes, how about changing the formatting of the subject line of a post so that acronyms with all caps don't come out like Ira or Irs or Sec? I guess preventing posters from using all caps is the reason for the present format? Maybe a request to not use all caps would do the trick? Thanks for hosting the forum!
  6. "Whenever laws are proposed to try to equal the playing field between 403(b) plans and the 401(k), insurance company lobbyists spring into action to protect their illegitimate cash cow. While they have won the battle, reform-minded advisors, districts, politicians, and unions will win the war. These insurance companies are clearly on the wrong side of history. The more stories like these are publicized, the louder the cry will become calling for progressive reform of the 403(b).” http://tonyisola.com/2016/03/rich-plan-poor-plan/ Worth a read!
  7. One of the reasons I come here is I DON'T have a lot of time or what I feel is the necessary brainpower to read/understand what I need to know (including your posts!) to invest well. So this response is NOT thorough, but what I have time for, sadly. krow36: I am ONLY in ACITX for about $300/month. I went conservatively and cautiously into my relationship with Valic. I know Dreyfus is usually good, so I'll reconsider that. I do NOT know what our "management wrap fee" is -- I'll research that further. Good. It shouldn't be hard to find out. sschullo: I distrust financial sales reps, and I don't think of my Valic reps as "advisors," but sales reps. Good! Here's what FINRA.org says about our reps: http://brokercheck.finra.org/Individual/3249698 http://brokercheck.finra.org/Individual/Summary/5448180 I've tried conducting ALL of my business with them via email (so I have any promises in writing), but they act like they're not really interested if they can't talk you into what they want to talk you into. Good idea to use email if possible. Yes, they want a face to face so that they can work their sales magic. You are correct that my district offers (little to) no help. We are not a union district (I live in the deep south, where unions are considered evil). I'm on my own. I rely on organizations like 403bWise and the Bogelheads forums to help. I worked with a fee-only advisor at the Garrett Planning Network some years ago (not related to Valic) and came away thinking that I was already doing things better than she could tell me to, even though I have NO confidence that I'm doing anything better than (as I said previously) pure ######. Can you tell us what state you are in? School district employees in many states have 457b plans available that can be better than the their 403b plans. I just try to diversity, monitor, and NOT pay fees/commissions, unless performance warrants it. I think you are way ahead of all those 403b users who are investing in annuity 403b's! Here's what happens when you're overwhelmed and try to use novice knowledge to manage your own retirement -- I gave you guys slightly wrong info about my retirement savings. 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. This is one reason I think that the movement toward 401Ks and away from traditional pensions is bad -- I have the interest and some knowledge, and I feel like I'm ######. Having just watched my own mother piss through a near-fortune just to manage her healthcare costs as she reached 93 years old and then died from cancer, I know I'll need every penny I can get my hands on. I cannot imagine what a gullible person will suffer at retirement time, if all they have available is a self-invested fund. I'm lucky that I AM a participant in a teacher pension plan, as well (even though -- did I mention? -- I'm a technology employee, not a teacher). Thanks everyone. OK, you are now contributing to a VALIC Roth 403b ($3,600/yr) and to a Vanguard traditional IRA ($6,500/yr?). In the past you contributed to a VALIC traditional 403b and a Roth IRA. If you want to “lessen tax liability”, I think you have several options. You could change your 403b back to traditional from Roth. I don’t see that your DH’s (Dear Husband’s) self-employment income should cause you to change your 403b from traditional to Roth. You can increase your contribution up to 18k/year, so there’s lots of tax-deferment possible there. If your DH has significant self-employment, you can help him set up and have him contribute to either a SEP IRA (up to 20% of income--a max of 18k) or a solo 401k (up to 18k). If he has employees, you should consider a SIMPLE IRA (up to 12.5k + 3% of income). None of these plans are difficult to set up or costly. You can set them up at either Vanguard or Fidelity and use their very low cost index funds. The Bogleheads are very experienced in helping folks with this type of problem.
  8. mmk, I take it you provided a list of all the funds available in your district's VALIC Group Mutual Fund 403b plan? If so, which funds are you using? If I were you, I would use only the 4 funds I selected below. The Vanguard funds that are shown in 403bcompare are missing from your list, unfortunately. The question remains as to the Management/Wrap fee. Googling your plan name, I found one VALIC site that said the management fee was $56.12/yr and the wrap fee was 0.05%. But that was not your district's plan. http://www.valic.com/Images/bonsecours_feedisc_3_tcm2426-442483.pdf You should ask VALIC about the fees (in addition to the ERs) with your VALIC 403b plan. I believe that the "Fixed Annuity" is an option with your mutual fund 403b that you can choose instead of or in addition to the mutual funds. It guarantees a minimum (presently 1.0%) and as of Jan 1, 2016 returns 2.15%. Did you use this option? Using only these 4 funds, you can build a completely diversified portfolio of fairly low cost funds. The S&P 500 Index and the Small Cap Stock Index can be combined (in about a 4 to 1 ratio) to equal the total US stock market.
  9. OK on the $1,104 surrender fees. It looks like I didn’t use the correct fee schedule. When I google your annuity, I see they use a different surrender fee schedule: https://www.riversource.com/content/files/22109.PDF(64 pages!) Year plan started 7% year 1 7% year 2 7% year 3 6% year 4 5% year 5 4% year 6 2% year 7 0% This gives an average of 4.8% (7+6+5+4+2)/5 .048 times 22,500 = $1,080, which is fairly close to your figure of $1,104. I think it’s very likely that you are paying at least $400 to $500 more per year at Ameriprise than you would at Fidelity. It’s hard to know without knowing what investments you are in, and what if any extra riders you have. I bet you are paying over 2%/year instead of 0.1 to 0.2%/year. If it were me, I think I’d bail out and move it all to Fidelity. Hopefully others will give you their thoughts.
  10. Steve, The management wrap fee in VALIC Group Mutual Fund Program is between 0.0% and 1.00%. mmk will have to find out what it would be in her case. If her current balance with VALIC if transferred, might help to lower the wrap fee. If she used the VALIC Inside Edge Retirement Program, the total expense would be 0.80%. Yes, 0.40% is not ideal for an S&P 500 index fund, but I think it’s usable. In the 25% or 28% tax brackets, being able to deduct up to 18k from her income is a big advantage. Steve, you say "I have never heard of any large insurance carrier with a total of .80% fees or less (which means no M&E fees, on going commissions, etc. etc.).” I’m relying on 403bcompare to accurately disclose the fees in both annuity 403b plans and in mutual fund 403b plans. There’s a difference that you seem reluctant to acknowledge. The VALIC mutual fund 403b plans do not have M&E fees. If they did, they would have to be disclosed on the 403compare website, wouldn’t they? I don’t think mmk is “very green”. She has previously worked with her district to get lower cost funds. She is very aware of the high cost of annuity 403b plans. As I mentioned in my previous post, if she knows what she wants, I don’t think she should hesitate to talk to a VALIC rep. It’s possible it can be done by email. Because VALIC is the ONLY providor for her district, I think she has a strong argument for there having to be a mutual fund 403b plan available, not just annuity 403b plans. mmk, I’m assuming that your current VALIC plan is an annuity. Is that correct? The paperwork you originally signed must give the name of the plan you are in. You need to find out if the mutual fund 403b plans are available to you. Of course the VALIC rep will try to sell the annuity plans rather than the MF plans because he and VALIC make a lot more on them.
  11. Don’t you mean “providor choices”, not “fund choices”? The providor determines the funds that are offered. If a TPA is involved, then a wide selection of both providors and funds are on offer. Maybe not wide enough sometimes? MoeMoney, have you read Steve’s free ebook Fighting Powerful Interests? Although Steve’s fight for a better plan was in a unique school district and in California, I think we can all learn a lot from Steve’s experience. Fighting for better 403b’s for pre-K-12 employees is complex, and is happening on many different fronts. We need to know how we arrived at today’s 403b if we want to push for change. Steve’s ebook should be required reading for everyone from new teachers to those of us working to change the 403b world. Thank you Steve! I agree with Tony that progress is being made on many fronts. Not only on the 403b front, but also on mutual fund investing in general.
  12. I should add that I am relying on the 403bcompare website for info on VALIC’s mutual fund based 403b plans. I was not able to get any information on them from VALIC’s website. It’s not possible to know if 403bcompare’s VALIC info is up to date. 403bcompare is set up by the CA State Teachers Retirement System (CalSTRS) and the information is submitted by the vendors. I guess it’s possible that VALIC would offer a particular 403b plan in CA but not in your state? On the other hand, because your district has only one providor, I think VALIC will have to provide mutual fund as well as annuity type 403b’s. My advice would be for you to explore VALIC’s 403bcompare information, and be sure you know what you want (and don’t want) before you talk to the VALIC rep. You should be able to get complete information in print on the 2 VALIC mutual fund 403b plans. If you are meeting in person, just gather information and make no decisions until you’ve discussed the plan on 403bwise.
  13. I think you are making a mistake in not using a VALIC 403b. VALIC sells expensive annuity 403b plans, and that’s probably what you have. Have you looked at VALIC's offerings at the 403bcompare website? As I mentioned above, VALIC does have 3 mutual fund based 403b plans: If you used the "VALIC Group Mutual Fund Product”, you could invest in 3 Vanguard funds, including: Extended Mkt Index, VEXMX, ER 0.23% Growth and Income, VQNPX, ER 0.37% There’s a “Management WRAP" fee of 0.0 to 1.0% that probably depends on the size of your account. You should find out the size of this fee in your case. The Investment Advice is “optional” so you can avoid that fee. If you used the ”VALIC Inside Edge Retirement Program”, you could invest in: Stock Index (Sun America), VSTIX, ER 0.40% There is a “Record keeping fee” of 0.40%, but no Management WRAP fee. If you can use a mutual fund based VALIC 403b with a total expense of 0.80% or less, I think you should do so. You will get the tax-deferral benefit, and you should be able to pick at least one good fund. It’s always possible that your district will add a better provider and you would be able to transfer to it. (I see Steve is suggesting that it's possible for you to help make that happen. I agree with Steve on working for change but not with him about not using VALIC.) You mention that you “don’t trust” VALIC with your money? Is this a based on a fear of hidden fees, or on something else? I contributed to a VALIC 403b during my teaching career. I wasn’t aware of other providers, but transferred to Fidelity and Vanguard when I did become aware. I think you should do some research on the IRA for both of you. There is a salary limit above which you can’t deduct a traditional IRA but you can still contribute to a ROTH IRA. There’s another salary limit above which you can’t contribute (directly) to a ROTH. However, there is no salary limit for doing the “backdoor" ROTH. I believe having an employer-based retirement plan (your 403b) influences those salary limits. An advantage of IRAs over employer based plans is that you get to pick the provider! I guess the question is whether to save for retirement in a taxable account, or in a Roth IRA, or both? A phone call to Vanguard should clear up your and your husband’s IRA options. The RMD that starts at age 70.5 is only about 3%, and 10 years later is only about 5%. Most years, my tIRA balance increases despite the RMDs, even though my AA is 40/60 stocks/bonds.
  14. Welcome to the forum mms. In order for the folks here to offer meaningful advice, you need to supply more information. I was a VALIC customer for many years and I should have moved to another provider sooner than I did. Can you find the list of 403b providers on your school district’s website that Steve asked for? If you can't find it, ask them to email you the list. If you copy and paste it here, we can see if there are providers that might be better than VALIC. Do you realize that it is often not that difficult to change 403b providers? Later you can move your old account into the new provider’s 403b. If your VALIC 403b is an annuity account, you would have to consider the surrender charges before deciding when to move your account. However you can stop contributing to the old one and start contributing to the new one at any time. Using www.403bcompare.com, VALIC offers a number 403b plans: variable annuities, fixed annuities and mutual fund options. https://www.403bcompare.com/Employee/Vendor/VendorProductList.aspx?vid=1886 Which of these options are you using? Is your husband contributing to a spousal IRA based on your income? He could choose either a traditional (tax deductible) or a Roth IRA. I don’t understand the “excess” IRA contributions you refer to. You and your spouse are each allowed to contribute 5.5k to IRAs each year. Your income may be too high to deduct a traditional IRA, in which case you can contribute to a Roth. If your income is too high to contribute directly to a Roth, you can contribute to a nondeductible traditional IRA and convert to a Roth IRA, a process called the backdoor Roth. But the limit is still 5.5k per year per person (6.5k if over 50). Again, please post the list of providers that your district allows you to use.
  15. I don’t blame you about being uneasy about the surrender charges. I think keeping the fees in perspective might help you decide on whether to bite the bullet, or not. Using your original post numbers: 116.3k cash value 93.8k available without a surrender fee 22.5k has surrender fees between 1 & 5% The 22.5k at Ameriprise probably has an annual expense ratio of least 2%. .02 times 22.5k = $450/yr The 22.5k at Fidelity could have an expense ratio of about 0.15%. .0015 times 22.5k = $13.50/yr You would save at least $437 due to the ERs over the next year if that 22.5k was at Fidelity You would pay surrender charges on the 22.5k if you moved it all to Fidelity now. If the surrender fee averages 3%, that’s 22.k times .03 = $675 the first year. (5+4+3+2+1)/5 = 3% At the end of the year, you’d take a loss of about $238 (+437-675) by moving it all to Fidelity now. At the end of the 2nd year, you would be ahead because the 22.5k would be reduced (by about 1/5) to about 18k and the average surrender percent will be about 2.5%. (4+3+2+1)/4 You should ask Ameriprise to calculate your surrender fees. I have no first-hand experience with annuity surrender fees, so I could be off. When you finally close the account, Ameriprise will charge you the account closing fee which is usually about $100. Keep in mind that you can contribute 18k per year to the 403b. Now that you can use a good provider like Fidelity, contributing more than you did in the past makes a lot of sense. Also you see retirement more clearly now, so you are more motivated. A $700 surrender charge as a percent of the value of your 403b ($116,331) is only 0.6%. Also consider that Fidelity’s index funds are more likely to capture the market’s gain than are Ameriprise’s managed funds. I hope this helps you decide. krow36
  16. Here’s a respected website discussing Fidelity Spartan Index funds: http://thefinancebuff.com/best-index-funds-and-etfs-at-fidelity.html also https://www.bogleheads.org/forum/viewtopic.php?t=142022 Fidelity funds have 2 classes—Investor class for balances under 10k and Advantage class with a lower expense ratio for balances over 10k . According to www.403bcompare, the Fidelity allows 403b contributors to use Advantage class from the first contribution. In any case, once your 93k arrives, you would be in Advantage class funds. I suggest you consider a simple, well diversified, very low cost 3 fund portfolio: Spartan Total Mkt Index, FSTVS, ER 0.07% for the US stock mkt Spartan Total US Bond Index, FSITX, ER 0.17% and either Spartan Global Ex US Index, FSGDX, ER 0.12% or Spartan International Index, FSIVX, ER 0.12% Have you decided on your asset allocation, the ratio of stocks to bonds? What about the percent of stocks you want in international stocks? Do you have other accounts for retirement—IRAs or taxable? You should consider all your retirement accounts together—you don’t have to duplicate funds in each account. krow36
  17. Yes, no reason to go with ASPire or PlanMember. I agree with Steve that TIAA is a totally different type of annuity seller and if you used them you would not get ripped off. On the other hand their mutual funds usually have significantly higher expense ratios than those of Vanguard or of Fidelity's Spartan Index funds. If I had to choose between TIAA and Fidelity, I would certainly choose Fidelity. In fact I had my 403b with Fidelity before consolidating to Vanguard. You said in your OP: "The current amount available without a surrender charge is $93,770.98." If you know this to be the case, then I would call up Fidelity (their # is on your provider list) and start the process. You will be enrolling in a mutual fund 403b, not an annuity 403b. There will be no hidden fees or surrender fees with Fidelity's Spartan funds. I suggest you use only Fidelity's Spartan Index funds, which have very low ERs. Fidelity also sells many very specialized managed (non-index) funds that are very expensive. It may take a few weeks or even longer for Fidelity to move the 93k to your new account from Ameriprise. If I were you, after setting up the account I would have your contributions going there. I'd check with your district office on how to get that started. I think you are very, very fortunate to have Fidelity for your 403b provider!
  18. One thing to consider is whether your pension has a COL adjustment. If it doesn't, or if the COL adjustment can be dropped, it might weigh on the lump sum side of the decision. I took a small lump sum on retirement because my plan had no guaranteed COL adjustment. For a few years we had a COL, now we don't. I invested it at Vanguard in a traditional IRA (pre-Roth era) at an asset allocation of 50:50. For the last 10 yrs the AA has been 40/60. Its 10 yr rate of return has been between 6 and 8% over the years. No complaints.
  19. I agree that it depends on the individual. If you have a strong desire to do something else with the rest of your life, then go for it. If not, and you still get satisfaction from your job, then maybe there's not much reason to leave your career two years early. I retired from teaching early at 56. There was nothing extra added to my retirement, just a lowering of the age (from 60) and number of years required (from 25). The retirement system wanted to save money by hiring younger, less expensive teachers to replace older, expensive teachers. Very few of my fellow teachers took advantage of short-lived program (for a variety of good reasons). We were willing to forgo the added income for the rest of our lives, in exchange for the freedom to pursue another life (sailing in the South Pacific for 15 years). Was it worth it? Yes, we have absolutely no regrets. I think we all have to find a balance between money (security) and time (to follow other pursuits).
  20. Welcome to the forum, rhollowood! You are lucky to have several good choices on your provider list. Fidelity and TIAA are mutual fund companies that you can use directly. ASPire and PlanMember are aggregators/third party administrators that your district allows to choose different mutual fund and annuity companies. They add a fee to the basic expense ratio of the MF companies, usually about 0.15% to 0.20%. If you didn’t have Fidelity and TIAA to choose from, ASPire and PlanMember would be a reasonable choice and a good way to avoid the annuity mess. Fidelity is a huge mutual fund company which has a line of very low fee funds. They are called Spartan Index funds and are very competitive with Vanguard’s index funds. https://www.fidelity.com/mutual-funds/fidelity-funds/why-index-funds A great source of information on individual 403b plans is www.403bcompare.com. If you check out the “Vender” list, then Fidelity and TIAA/CREF, you’ll see the funds offered and their expense ratios and annual admin. fees.
  21. In addition to corrysold using NEA Direct Invest, griffeyfan04 is now using it. I've included a few lines of his posts in my post above that details what I've been able to discover about users of NEA Direct Invest. I'll also include it here: Feb 15, 2016 griffeyfan04 has turned in the papers to the SB rep. Chose VG TSM and TISM. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=184752 Mar 16, 2016 griffeyfan04 “We are going this route as well for my wife through NEA/Direct Invest via security benefit because of the offer of Vanguard funds. It has been a lengthy process so be forewarned. They are not exactly in a big hurry to help you. A little complicated filling the forms out and sending it to them but maybe after the ease of dealing with Fidelity I am a little biased. Not saying if they are good or bad just has taken longer than I thought lol" https://www.bogleheads.org/forum/viewtopic.php?f=1&t=186962 Again, if anyone has had experience using the NEA Direct Invest 403b, please give us a report.
  22. Davegrant82, thanks for your professional input. I try to learn all I can from the professionals that contribute to this and the Boglehead forums. I have a question about your suggestion to use Lincoln “if you want someone to help you manage the account". When I used www.403bcompare.com to check out Lincoln, I found 2 Lincoln vendors: Lincoln Investment Planning, Inc. which listed 2 mutual fund products Retirement Solutions: managed funds with loads and expense ratios over 0.50% Retirement Solutions Premier: “Management Wrap Fee” of 0.90%, with just about any Vanguard Investor class fund needed, for instance VTSMX Total Stock Mkt, ER 0.18%, total expense 1.08% per year. Lincoln Nat'l Life Ins Co (Lincoln Fin Grp) which listed only 2 variable annuity products Is the 403bcompare website incomplete or incorrect as far as Lincoln 403b products that you are able to use in IL? If it’s not incomplete, and Lincoln (with an ER of 1.08% for Vanguard TSM) is compared with Fidelity (direct) (with an ER of 0.05% for TSM), I think we’re missing something about your thinking. For optional management help with Premier, there’s a 0.90% 0.60% fee added, for a total of 1.98% 1.68% expense for Vanguard TSM. Using Fidelity (direct) blosky2001 is able to get FSTVX, Total Stock Mkt, with an ER of 0.05%. edited to correct the optional mgt fee
  23. Does the annuity have “rolling surrender fees”? Have you contributed long enough to get past the fee on your first contributions? Is the $700 needed to break the contract about 10% of the total value? You have our sympathy and I guess you realize that your experience is all too common. Don’t keep kicking yourself—it’s an expensive learning experience that most all of us have gone through in one form or another. I think if you break the contract, you will be able to invest what’s left in a mutual fund 403b—that is in a Fidelity 403b (not another annuity 403b!). The difference in fees per year between AXA and Fidelity is probably between 2% and 3%!? Once you are moved to Fidelity, that difference in fees will be compounding for you instead of for AXA. Consider yourself lucky that you’ve seen the light at a relatively young age.
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