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Posts posted by krow36

  1. Sorry Tony but I don't know if or how Reg can get his balance out of Lincoln Life. Hopefully Fidelity will be able to figure it out? If I were Reg, I would present this problem to the Boglehead forum. Alan S. is a highly respected expert on IRS regulations and on this sort of problem. Also Spirit Rider has amazing depth of understanding IRS regulations. They both participate in other forums used by professionals. https://www.bogleheads.org/forum/viewforum.php?f=1


  2. Calteacher, welcome to the forum! $50,000 seems like a lot of money, but in terms of retirement savings, which needs to last over decades of retirement, it's not likely to be a big tax burden. You don't have to withdraw it all once. A rough rule for a safe withdrawal rate is around 4% plus a correction for inflation. That assumes a stock/bond ratio of around 60/40. A taxable income of a $2000/yr distribution, added to your pension, is not something to worry about. 

  3. Yes, Vanguard Fiduciary Trust Company is THE Vanguard that we all love! And Fidelity Management Trust is the excellent, low-cost Fidelity. Neither of these vendors will send reps to your school because they are internet based, with phone support. Their employees are salaried, and don't work on commission. Their 403b plans are not annuities, but are mutual fund based and are called custodial accounts. Either Vanguard or Fidelity would be an excellent choice for your 403b vendor. 






  4. IRS regulations of 403b plans do not allow investing in individual stocks. You’ll have to lobby Congress if you want to change that.



    Assets in a 403(b) plan can be placed in any of the following investment types:

    an annuity contract provided through an insurance company;

    a custodial account invested in mutual funds; or

    a retirement income account set up for church employees.




  5. Fidelity has a low-cost target retirement fund that is index-based called Fidelity Freedom Index Fund that is available for her Roth IRA. Amelia's current Freedom fund uses actively-managed funds to make up the Freedom fund. 

    Amelia, Security Benefit's NEA Direct Invest is certainly the lowest cost 403b option she has. I didn't mention it because its service has been reported as sometimes unhelpful. However, if you are willing to be persistent and keep at it, with our help if you need it, you can get a very low-cost 403b using just 3 Vanguard Admiral class funds. If you Google the plan name, you will find a number of threads from several forums including this one.

  6. Amelia, welcome to the forum. Aspire is can be self-directed, without using an advisor. Just write "I wish to self-direct" in the space for the advisor's name on the application form. Have you checked out Aspire's FAQ? There's good information there. Have you found the application form? You'll also need to fill out a Salary Reduction form from your district's Third Party Administrator (TPA). You can use either Fidelity or Vanguard funds with an Aspire 403b. 



  7. Transaction fees are caused by buying and selling in a brokerage account. Unless you are using a Self-directed brokerage account within your Valic 457 account, there should not be any transaction fees. 

    As Ed mentioned, a Total Stock Market Index fund is more diversified than 500 Index fund which holds about 80% of TSM fund.

  8. I think Scott's statement that I bolded covers it. It means that you can change providers within a 403b, or within a 401k. But if the plans are different types with the current employer, you cannot move a plan balance into a different plan type. So, no 403b -> 401k or visa versa, and that goes for other plan types. If the plan is with a previous employer, it can be allowed by the plans.

  9. Tony I emailed Scott D and he replied:



    There is no legal way to transfer a 403(b) to a 457(b) or vice versa while employed (assuming the accounts are with that employer). Technically one could use the CARES Act to do so, but that’s only for 2020 and a bit complicated.

    It’s just not allowed (I wish it were).

    You can always move money among the plan type, but not between plan types.

    If one is over age 59 1/2, it would be possible assuming In-Service Withdrawals are allowed and either plan allowed for transfers in.


    I bolded what holds if the plan types are both with the current employer. So it's clear that  tormand should pursue the transfer of his Valic 403b balance to a TIAA 403b during the next open period.

    For those readers who aren't familiar with ScottyD, his user name on this forum, Scott Dauenhauer is a Certified Financial Planner and long-time advocate for better 403b plans. He is Dan Otter's partner in their 403bwise podcasts: https://teachandretirerich.libsyn.com/page/1/size/25 

    Dan and Scott are the administrators of the FaceBook 403b Group:

  10. On 7/13/2020 at 9:10 AM, tony said:

    Gosh this topic has got my attention because there seems to be so much contradictory information on this topic. The more I read t the more confusing it gets. I really think it all comes down what the employer allows.

    This chart might help.


    Yes, it IS confusing, and I have searched repeatedly over the years for IRS information on this question. Without luck! That IRS rollover chart would seem to say 403b to 457b is allowed if the 457b plan will put the 493b in a “separate account” within the 457b. However posters have confirmed that the 403b must be with a prior employer. So the IRS chart is incomplete on that detail, probably because in the for-profit world, an employer would not offer 2 different plan types?? Maybe you are right and it’s not an IRS rule but the employer’s 457b plan rule?

    This IRS publication discusses 403b to 403b contract exchanges within an employer’s plan, but there is no mention of exchanges between a 403b plan and a non-403b plan, both with the current employer. https://www.irs.gov/publications/p571#en_US_202001_publink1000239748

    I’m going to ask Scott D about this because it comes up frequently doesn’t it?

  11. 19 hours ago, tormund said:

    My wife was with Valic for the State Optional Retirement Program (ORP; 401a) and also she opened a 403b with them. I found out they have her in managed/prferred services with extra fees and in annuities and stuff after we got married.

    Later she opened a 457 and 401k for the state deferred compensation plan (DCP) with Empower Retirement and we got into funds with low fees that we self manage.

    Finally she switched from Valic to TIAA during open season for the 401a.  There are also lower fee funds here than with Valic, and it's self managed.

    So she's contributing right now to TIAA 401a, Empower 457, and Empower 401k. This is great, but I want us to move existing money to minimize the admin burden of monitoring fees, mistakes, etc.

    She's getting the run around on moving funds out of Valic. Empower is saying they think you can't rollover anything unless you meet certain criteria. They said SC Public Employee Benefit Authority (PEBA) has certain rules. I know the IRS allows you to move funds between administrators. Also she said one of her school admins says you can change contributions amount but once a year.

    We should be able to move the 401a funds from Valic 401a to TIAA 401a right?

    Can we move the Valic 403b to Empower 457? If not, what about moving to the Empower 401k? If not, what about the TIAA 403b?

    Can employers limit you to only changing contributions once a year to retirement plans?

    It's great that you got the 401a shifted from Valic to TIAA during the open period. The Valic 403b can't be shifted to anything other another 403b plan as long as she is with the same employer. Those are IRS rules. I think you should talk to TIAA and ask if you can transfer her Valic 403b balance to their 403b. You might have to wait until the open period if the Valic 403b is part of ORP. 


    Each year, there is an open enrollment period (January 1 to March 1) during which you may change service providers:


  12. 18 hours ago, californiateacher1 said:

     I am in the exact same situation with National Life Group and  Vanguard. Were you able to move your money from NLG to Vanguard? Did you have to pay fees? I am so glad that we have this forum with very helpful info!  Thank you! 

    This thread started by GSCalifornia is 3 years old, but you are certainly welcome to add to it with your own questions (or start a new thread?). If you send a personal message to GSCalifornia, it will generate an email to them, and they may respond to your query. I have no doubt that the transfer was completed, and that there was the surrender fee, and probably an account closing fee.  

  13. 6 hours ago, GA teacher said:

    Thank you for the calculator article.  If I'm calculating correctly, I pay 17% in taxes combined state and federal.  I basically did monthly tax amt divided by monthly salary amt.    And I couldn't figure out the next steps in the calculator...  I'm single and I make about 70k/yr.  I just looked up 2020 tax bracket and attached it here.   Does this mean if I put away (hypothetically) $30,000 in post-tax account, I will be in 12% tax bracket?  And does that 10% in tax savings really make that much difference in the long run?

    tax bracket.jpg

    Roughly, if your employer says your basic income (before taxes) is 70k/yr, and you contribute 30k to tax-deferred accounts (traditional IRA, 403b or 457), then your Adjusted Gross Income (AGI) would be 40k. Your Taxable Income is your AGI minus your Standard Deduction (12.5k). So your taxable income would be 27.5k, which is towards the bottom of the 12% income tax bracket. Check your Form 1040 to see your Taxable Income.

    Tax deferred accounts are pre-tax because you won't pay the income tax on the money you put in them until you take a distribution in retirement. They reduce your taxable income for the year of contribution. Roth accounts and taxable brokerage accounts are post-tax because the money you put in them is taxed (or will be at tax time). They do not reduce you taxable income.

    It's very desirable to be in the 12% income tax bracket if you have a significant taxable (brokerage) account. Dividends and capital gain distributions are taxed at 0% in the 12% bracket and at 15% in the 22% bracket. 

    It's not a big deal if your income edges into the next higher bracket, but you should be aware that 22% is almost double 12%. Only the income above the top of the 12% bracket is taxed at 22%.


  14. I assume you know that the age for starting RMDs has changed from 70.5 to 72? This is from a Fidelity site:

    Do I have to take my RMD if I'm still working?

    Yes, even if you continue working past age 72,* you have to take an RMD from your IRA.

    However, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small-business account, if:

    • You're still working
    • You do NOT own more than 5% of the business you work for
    • You have an employer-sponsored retirement account with the business you work for

    If you meet all the criteria above, you may delay taking an RMD from the account until April 1 of the year after you retire. Keep in mind that this does not apply to IRAs or other accounts you may hold with companies you no longer work for.



  15. I think 50% in the Fixed Income Option is way too much for someone age 36. Is your 457 plan also with VALIC, with no other vendor choice? I know GA has a state 457 plan but can't remember if it is open to teachers. I'm afraid it is not. I would go ahead and get rid of the advisor and that fee, and change to 100% VINIX for the time being. There shouldn't be any surrender fee to change your funds within the account. If the district improves their plan in the future by adding a low-cost bond index fund, you can make changes. You might push for it?

  16. There’s an annual administration fee of 0.21%. http://publish.gwinnett.k12.ga.us/gcps/wcm/connect/4ce75fac-bf7c-4af5-8655-ea985b2bede9/Announcing+Changes+to+RSP+effective+04+05+2018.pdf?MOD=AJPERES

    I agree with Tony that you should stick with the S&P 500 Index fund (Vanguard Institutional Index Inst VINIX). It covers about 80% of the total US stock market, and its rate of return has been almost the same as that of the Total Stock Market Index fund. If you are young (in your 20’s?) then you can justify having only 10 or 20% in bonds. Maybe use the Fixed Interest Option for you bonds allocation if you want? Or go 100% VINIX as Tony suggested. I don’t think VALIC is giving your district a very good deal. There should be at least a low-cost bond fund in addition to VINIX!


  17. The American Funds American Balanced fund class C (BALCX) is an expensive fund, as you've noticed. It’s expense ratio is 1.33% and it has a load of 1%. The load and high ER are providing the “advisor” with compensation. If you moved your rollover IRA to Vanguard, you will pay no load on any fund, and ERs will be 0.04% to 0.10%. The big advantage of an IRA is that YOU get to pick the vendor, unlike with employment accounts like a 403b or 457b where your employer restricts your choice of a vendor. There’s no reason you should be paying class C loads and ERs! I don't think that it's a good idea to have cash in your IRA. 

  18. The Performance Results for the funds in VALIC’s plan for County of Henrico PS 403b:


    Notice that near the bottom they give the administration fee:


    Note: Performance data does not include plan administrative charges of 0.15.

    This is a very reasonable admin fee, and I think your district has done an excellent job of organizing their 403b and 457b plans!

  19. I don't understand what happened to your 403b and 457 accounts. Are you trying to make contributions for the year(s?) during which you were unemployed? I agree with Ed that employee contributions cannot be made for years when you were not employed. If you want a definitive answer, you should explain your problem on the Boglehead forum. Posters Spirit Rider and Allan S. are experts on IRS regulations concerning 403b and 457b plans.

    I believe you'll find that neither 403b nor 457b public school district plans are governed by ERISA. 

  20. Your comment about starting next week made me wonder if you realized that setting up an Aspire account is an online exercise and does not involve a conversation with Aspire? Their FAQ will answer most questions you might have. You can find the Application form and Contract at https://www.aspireonline.com/docs/default-source/form-library/403(b)(7)-application-and-agreement.pdf?sfvrsn=44

    Be sure to choose the “self-direct” option and avoid the 0.6% fee of an advisor. You can choose any of the mutual funds on Vanguard’s list, but all you need is a Target Retirement fund, or the 3 basic total market funds (Total Stock Mkt Index, Total Int’l Stock Mkt Index and Total Bond Mkt Index).  https://www.aspireonline.com/plan-types/403(b)-plan/fund-search If you go with the 3 Fund Portfolio, ask here on the forum if you want to discuss the relative percentages.

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