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Everything posted by krow36

  1. 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.
  2. 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?
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. As whyme mentioned, your experience is all too common in the K-12 403b world. Actually you are doing great to have realized the problem after only several years rather than 10 or more years! Most of us on this forum have had regrettable financial experiences that set us back $1000's. Try to view it as an important learning experience. Have you read the NY Times series of articles on the problems of the K-12 403b world? It might help give you some perspective. https://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?smid=tw-share&_r=0 You can stop contributing to the variable annuity 403b and put that money in a savings account until you get a new plan receiving contributions. Find out all the 401k, 403b and 457 vendors you district allows you to use. Maybe you've already done this? If you post the vendor lists on the forum, we can make suggestions. What state are you in? Just let the variable annuity sit there while you figure out the plan you want to start using. It might take a month or so before you can start making contributions to the new plan. Do you know the annual fees you are paying? Do you know what the surrender fee would be if you rolled the balance to another vendor? You can get the cash value and the surrender fee from the rep. Usually the annual fees over time equal or exceed the surrender fee, and it makes sense to get out and invest in low-cost index funds. It can take several months to get the balance of the annuity transferred to a new plan. There's paperwork from both vendors to be signed and exchanged.
  8. Please correct me if I’ve misremembered how Aspire works. I think that the ~$40/year plus 0.15% fee is the cost of using a self-directed Aspire 403b (or 457). Part of the ~$40/year fee goes to pay any Third Party Administrator fees that the the school district might otherwise have to pay. So there is no financial reason for a district NOT to add Aspire to their vendor list. Aspire does not supply investing advice but is available for explanation of how to use their plan, by email or by phone. If you want a financial advisor, Aspire will sign one up from their list, but there is a 0.6% fee added. I think most of the folks here at 403bwise urge posters to NOT use an Aspire advisor due to the added expense. In the self-directed mode, Aspire is an internet based plan, low-cost because there is no expensive face to face hand-holding. Just like SB Direct Invest, Fidelity and Vanguard. I’m long retired but MoeMoney is still in the trenches and trying to help colleagues who think they require a face to face advisor. Perhaps the Aspire-associated advisor with the 0.6% added fee is the lowest cost option for some of these folks? I have no first-hand experience with Aspire, or with their advisors. Just saying. . . .
  9. Teachers are not allowed to use the VT State 457 plan, but there is a very low-cost VT State 403b plan for teachers! Information on the State of VT run 403b plan for teachers: http://vermont.retirepru.com/About-the-Plans.aspx The fund’s offered in the state teachers’ 403b plan: http://vermont.retirepru.com/Investment-Options.aspx
  10. I would recommend that you not ask your district about the NEA Direct Invest plan. They should not be involved in which of Security Benefit's plan you choose. That is between you and Security Benefit. Since the local SB rep is not involved, your first step should be to go to the Security Benefit NEA Direct Invest website, fill out the application form and send it in. Usually the district and the district's Third Party Administrator will not interfere with your using NEA Direct Invest. The resistance that Ed encountered with his FL district is unusual. If they do try to interfere, deal with it at that time. You will no doubt have to eventually meet with your current "plan manager" and tell them what you want to do, and stop contributions to your current SB plan. She will no doubt try to discourage you, but if you are firm, he/she will admit you are allowed to change to NEA Direct Invest, and they shouldn't interfere. Part of those high fees is very likely returned to her/him. I have seen a situation where a district had a unique 403b plan through Security Benefit where the school district contributed to employee's account. After much discussion the district allowed the teacher to use NEA Direct Invest for their contributions and the district continued to contribute to the established plan. You should tell us if your district is contributing to your SB 403b account. This is VERY rare, but is possible.
  11. If Ed means that if the “Unacceptable” fund expense (expense ratio or ER) is more than 0.2% to 0.3%, that you should work to get a lower-cost vendor, then I agree. If Ed means that plans with no ERs lower than 0.3% should never be used, then I do not agree. In the for-profit 401k world, the average ER is somewhere between 0.7% and 1.0%. These plans are certainly not ideal, but there are good reasons for contributing to them. Yes, a significant percentage of the investment return is lost to fees. However there is a benefit in lowering current taxable income by deferring taxation until distribution in retirement in a lower income tax bracket. When the employee changes employers, the 401k can be rolled into a very low-cost IRA (or into a lower-cost 401k at a new employer). These advantages apply to expensive 403b plans as well as to 401k plans. https://www.usatoday.com/story/money/markets/2018/02/08/ask-a-fool-how-much-does-my-401k-cost/110041408/ In the K-12 403b world, there are 2 basic categories of plans, those that are annuity-based and those that are “custodial accounts” and are mutual fund based. The annuity-based plans usually have fees in the 2 to 3% range and should certainly be avoided. I believe that a K-12 403b mutual fund based plan with fees as high as 1% should be considered usable. Certainly working to add a low-cost internet-based vendor should be done at the same time. And if there's a super-low cost option available such as NEA Direct Invest, Fidelity or Vanguard, it's a no-brainer to use it. You do not need a face to face with a 403b salesperson selling a high-cost plan.
  12. The above link is to your previous thread. There is still no obvious low-cost 403b vendor on your district’s list. I would not sign up with any of those vendors although I would like to look at their plans and fees in more detail. Can you post internet links to their specific options, especially the VALIC “preferred” plan? Although your district may not offer their employees the option to contribute to a 457 plan, it is an option that K-12 school districts are allowed to offer. You should have that option, and it’s possible to contribute to either or to both a 403b and a 457 plan. Many states have state-run low-cost 457 plans that K-12 districts can offer. I don’t think PA is one of those ~20 states unfortunately. Getting Fidelity added as a 403b and/or a 457 vendor would be the ideal. Your district can add vendors if they want to, it's up to them, not to the TPA (TSA-CG). There is probably a district procedure for adding vendors. I see that PA has a new hybrid pension plan for new teachers. https://www.asppa.org/news-resources/browse-topics/pennsylvania-governor-signs-pension-reform-law Are you in the older straight pension plan (called a Defined Benefit plan)? In my state (WA), the newer hybrid plan was made available to those with the previous pension plan, and many switched to it. The WA hybrid plan allows the employee to increase the defined contribution part, so it can be considered a substitute for contributing to a 403b or 457 plan (if there are no low-cost 403b or 457 vendors).
  13. If I were you, I’d cancel the meeting with the Security Benefit “plan advisor”, and spend some time learning about Security Benefit plans, their Direct Invest option, and possibly other vendors you might be able to use instead of SB. As Steve and Tony have mentioned, SB salespersons sell very expensive 403b plans to K-12 employees. The fees on these plans are usually over 1% in addition to each fund having an expense ratio (ER) of 1% or more. In addition if there’s an “advisor” fee, that can add even more cost. The CA teachers pension system (CalSTRS) runs a website called 403bcompare.com and any 403b product sold to CA teachers must register the product and disclose the fees on this site. Here are the SB products offered in CA, and these generic plans are also offered in other states: https://www.403bcompare.com/vendors/1022#/productlist As you can see, there are several annuity based products and several mutual fund based options. Are you signed up with one of these options? You can check out the fees as well as the mutual funds (if any) offered and each fund's ER. As has been mentioned, SB and NEA (the national teachers union) have a very low-cost option called NEA Direct Invest. This option is internet (and phone and email) based, and does not involve any local rep. The local rep will not mention NEA Direct Invest because he/she and SB do not make any money on it. Ask about it on this forum, don't ask a local rep. NEA Direct Invest is the ONLY SB plan we recommend. You should realize that you can stop your contributions to your expensive SB plan and sign up for the SB DI plan. This might take a few weeks to get set up and get contributions started again. Then you can transfer your current high cost SB balance to the low cost DI plan. You should find out what other 403b vendors your school district allows. It’s also possible that the district offers 457 plans that are low cost. There should be a 457 vendor list also. Many states offer low cost 457 plans to their k-12 teachers. What state are you in? I repeat, you will learn a lot more about your 403b options here than by meeting with the rep. Ask questions here and you’ll get answers from K-12 teachers (active and retired) that have gone through what you are experiencing. Bash Dash and Ed are currently contributing to SB DI. Welcome to the forum!
  14. “The recent volatility in the stock market can make older investors feel vulnerable. Here are some strategies to make sure your money lasts as long as you do.” Another excellent NYT article by Tara Siegel Bernard. https://www.nytimes.com/2019/01/07/your-money/stock-market-retirement.html
  15. Steve has an annuity with TIAA that they call "Traditional Annuity". It is really more like what we usually call a "Stable Value" fund, and is similar to a low-cost Fixed Annuity with an unusually high annual interest rate (but with no surrender fee or M&E fee). TIAA guarantees the rate for the year ahead (and past?) and has a history of keeping the rate higher than most stable value funds. There are several forms of TIAA's Traditional Annuity, some of which require distributions to be spread out over 10 years. Steve's version can be withdrawn without restriction. My wife has had a TIAA Traditional Annuity in her 403b account now for about 40 years. I would prefer she roll it over to Vanguard and use Total Bond Index fund instead, but it's her call.
  16. Hi Tony, Not really AWOL, I've been here, reading posts and links, just not checking in, or commenting. Been spending time on Bogleheads. Will try to mend my ways.
  17. The Callan Table is always interesting! 2018 is the only year for 19 years that "Cash Equivalent" was at the top!
  18. Ed's link that Steve supplied works for me. Here's another thread that discusses getting started with Security Benefit's Direct Invest:https://www.bogleheads.org/forum/viewtopic.php?f=1&t=260609 Most posters do not encounter the problems described in those threads. Signing up is usually just a matter of signing up online, confirming to SB that they (SB) are on the district's 403b provider list, and filling out the district's (OMNI'S?) salary reduction form. Some posters have had to make phone calls to SB to move things along.
  19. You can contribute 19k to both your 403b and 457 plans in 2019. In addition you can contribute 6k to your Roth IRA. The IRA limit is separate from the employer plan limits. If you are over 50, there's a 6k catchup allowed on both the 403b and the 457 plans, and a 1k catchup on the Roth IRA. Hopefully you have low-cost vendors for your 3 accounts.
  20. It sounds like your wife's Lincoln plan is certainly worth using. If it was an annuity based plan, the true total fees would likely be much higher than 0.35% + low ERs. Maybe you can join the school committee that decides on the vendor for your school? In addition to a low-cost 403b vendor, both schools deserve a low-cost 457 vendor. If there's a Third Party Administrator that's involved in the selection process, that also needs to be checked out. A TPA can be paid by the school district, or by the employees, or by the vendor. There's lots of opportunity for a conflict of interest. I would also be interested in the union's input into the vendor selection process. If you knew that you were moving school districts within a few years, you might justify maxing out the Nationwide 403b plan, using the one Vanguard index fund. On leaving the district, you could roll it into either an IRA or a good new 403b or 457 plan. I wouldn't bother if the contribution could only be about 5k/year. Just use Total Stock Market Index in a taxable account dedicated to retirement or possibly the kids' college expenses. It's fairly tax-efficient.
  21. I think you mean your schools are NOT on the 457 list? It's hard to believe that a school or union would pick the Nationwide 403b! I wonder if they knew anything about the importance of fees? What is the name of the Lincoln plan? There's a Lincoln Investment that offers 403b custodial accounts with mutual funds, and a Lincoln Financial Group that offers annuity-based 403b options. Which do you have?
  22. Are they charter schools, run independently from the school district? There is a 457 Deferred Compensation Plan for Indiana state, county, city, etc. employees. I don’t see any school districts listed. https://www.in.gov/auditor/hoosierstart/1885.htm Are your salaries and pensions paid through the state?
  23. Here’s a very thorough article on financing college by Tara Siegel Bernard. She starts with the topic: Retirement vs College. https://www.nytimes.com/guides/business/how-to-save-for-college
  24. Welcome to the forum! I would say that Nationwide is NOT on your side! I would definitely choose your 403b instead of her Nationwide 403b, if the fees are significantly lower. Are you sure you don't have a vendor that is better than Nationwide? How about posting the complete list of 403b vendors? What state are you in? Several dozen states have low cost 457 plans that teachers can contribute to in addition to (or instead of) their 403b plans.
  25. Thanks very much Steve! Simon is a professional ERISA lawyer who writes columns for Morningstar. There are several on 403b problems that include a long interview with Steve.
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