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Everything posted by krow36

  1. EdLaFave's post has a link to his discussion of Fidelity, Security Benefit's NEA Direct Invest and Aspire. I agree with Ed’s ranking. Fidelity Investments would be an excellent choice for your 403b plan. I would stick with the 3 very low-cost index fund he suggested. However one of Fidelity’s Freedom Index Target Date funds that he mentions would also be a good choice, although slightly more expensive.
  2. I wonder if the SEC's Retirement Investment Summit on Education (RISE) will be held in other states?
  3. krow36

    457 question

    If you only have a need for 1 defined contribution plan, and you can choose between a 403b and a 457 plan that are equal, then I’d choose the 457 plan because of the no penalty on early distribution feature. For instance if the Lincoln Investment PDP (with both 403b and 457) was the only low-cost vendor available. I think Fidelity also offers both a 403b and a 457, with the same funds available and same fees. Usually the fees and/or funds in the 2 available plans are unequal, which can make it easier to choose one or the other. Often the state 457 plan is much lower cost than any of the 403b plans on the district’s vendor list. Another difference between a 403b and a 457 plan is with catchup contributions. They both have the catch-up contribution for those 50 or over, which is currently 6k. The 457 has another catchup that can double the contribution during the 3 yrs prior to “normal retirement age”. https://www.drs.wa.gov/dcp/investments.htm 403b plans has another catchup for employees with 15 years of service. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits Both the 457 and the 403b extra catchups use previous years’ contributions to calculate the amount of additional contribution. This means that good records are necessary. Plans don’t have to allow the catchups, although I think the age 50 catchup is usually allowed.
  4. krow36

    457 question

    I don't think NEA Direct Invest can be used for a 457, but you could ask Security Benefit and NEA Members Benefit. I remember you had Lincoln Investment's Participant Directed Platform before you changed to NEA Direct Invest. The former does both 403b and 457 plans.
  5. Yes, like the 403b plans, the 457 vendor list is up to each district. Normally there is a list, but I've noticed that some WA districts have only the WA State 457 plan, run by the state pension and pay system. You should be able to find the 457 vendor(s) at your district's Third Party Administrator (TPA) website.
  6. There’s little doubt that the NEA Direct Invest with Security Benefit is one the lowest cost 403b plan available to K-12 employees (especially if your balance is over 50k). You can contribute and defer income tax on up to 18.5k/yr of income. In addition, if you haven’t been contributing to an IRA at a low-cost provider such as Vanguard or Fidelity, you can do that up to 5.5k/yr. If you have further ability to save for retirement, you can use the WA State 457 plan. It’s called a Deferred Compensation Plan and is run by the organization that runs WA teachers’ pension funds. I’m a WA long-retired teacher. So in addition to a 403b and an IRA, you can contribute up to 18.5k to an excellent 457 plan. Plan booklet: https://www.drs.wa.gov/dcp/assets/DCP-Enrollment-Booklet.pdf Fund description, performance and fees: https://www.drs.wa.gov/dcp/investments.htm The annual administration fee is 0.1283%, let's call it 0.13%. That is added to each fund's expense ratio to give the total cost of the selected fund.
  7. Supersonic3434, welcome to the forum. Please repost your list of vendors as a new thread. Use the "Start New Topic". You have at least 1 low-cost option, maybe 2 on your list. Please include your state.
  8. It’s interesting that the CNBC article brings up the establishment of the Missouri based multi-district consortium that we discussed last winter. It would be interesting to know the extent of the resistance from the multiple vendors and from their national lobby organizations.
  9. Tara Siegel Bernard describes the outlook for Social Security and some proposed fixes from the two parties. The November election may well determine how Social Security is modified. https://www.nytimes.com/2018/09/28/your-money/8-questions-about-social-security-answered-as-election-day-nears.html?rref=collection%2Fbyline%2Ftara-siegel bernard&action=click&contentCollection=undefined&region=&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection
  10. I find this reply from your TPA curious. If Fidelity isn’t currently on the 457 vendor list, how is the TPA getting “feedback”? From other districts? Anyway a Fidelity 457 is worth persuing, whether Internet enabled or not.
  11. Is it your third party administrator ( or the district HR office?) that is telling you that Fidelity 457 isn’t internet-ready? Like Ed I’m a bit skeptical. Once you’ve established that Fidelity is on the 457 vendor list, call up Fidelity and ask about them about internet access to your account.
  12. Ed, I (and maybe you?) have forgotten that Shannon has an inherited Roth 457 that she is moving to her Vanguard 403b. Vanguard has told her they can accept the account and understand that she will have RMDs when her dad reaches 70.5 in 3 years. I think that's all good. I don't think Shannon has told us how much she can or wants to contribute to her tax deferred accounts. Perhaps she's able to contribute to both a Vanguard 403b up to the 18.5k max, as well as to a Fidelity 457 account, as well as to an IRA, either traditional or Roth? In order, I would contribute to: (1) an IRA (5.5k) (2) the Vanguard 403b (up to 12.5k) (3) the Fidelity 457 (up to 12.5k) Shannon if you have a spouse, your 403b and 457 plans may be lower-cost and a better option than your spouse's plan. It might make sense to contribute to the lowest costs plans first.
  13. Yes, I would go with the Fidelity 457. I think that using the Fidelity 457 sans internet and thus avoiding the 0.25% management fee of the CalSTRS Pension2 457 is worth the inconvenience. If you contribute the max to the 457 over say 20 years, that 0.25% fee will add up to $1000’s less in your account. Fidelity’s $24/yr becomes less significant as your balance grows. The 0.25% Pension2 fee becomes more significant as your balance grows. It’s very possible that Fidelity will bring their 457 into the internet era before long. By using one of Fidelity’s target retirement funds, you will almost eliminate any need to manage the account. Any change can be done by phone.
  14. Yes, the date on target retirement funds is meant to roughly match one’s retirement date. The funds gradually shift the asset allocation in a conservative direction as the years go by. For instance, the 2035 fund might be 70/30 stock/bonds in 2018, but by 2025 it might be 60/40 and by 2035 it might be 40/60. I’ve made up the numbers but you can check out the actual numbers on the internet: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/SHDOCS/FXIFX/hosts/sh_comm_pmqa.002216.RETAIL_pdf.pdf If you have decided on your current stock to bond ratio (your preferred Asset Allocation), then you can use the Freedom Index fund that matches that AA rather than using the retirement date of the fund. Based on your age, you might consider an AA of about 60/40 or 70/30. The 2025 fund is 70/30 and the 2020 fund is about 66/34. I don’t think I would go more aggressive than the 2025 fund. Fidelity thinks that if your retirement date is about 2040 (in ~20yrs), you should be 90/10! You would expect to get more return over the long term, but in a stock market downturn like 2008 your balance could drop by half! I would sleep better using 60/40 or 70/30, but it's a very personal decision that's up to you.
  15. That's great that your district is willing to add Fidelity and CalSTRS Pension2 to their 457 vendor list! I would choose Fidelity over Pension2 due to the latter's 0.25% admin fee. I’m not sure what Fidelity means when they say the 457 would be managed manually rather than over the internet. I’m guessing that it means your management chores will be done by telephone and snail mail (possibly email?). Like in the days before the internet (when I made my 403b contributions!). However you should ask them what the“manual processes” are, and if you will be able to see your 457 account online, which would be handy. If you used one of the Fidelity target retirement funds (Fidelity calls them “Freedom Index 20(35?) Investor” funds, you would have a minimum of management changes to make. Rebalancing is done automatically. The expense ratio is 0.14%. Avoid the “Freedom 2035 Investor” funds which are made up of more expensive actively managed funds rather than index funds. When you roll your previous 457 into your Vanguard 403b, I believe it goes into a separate account in the 403b and maintains its 457 character. You should ask Vanguard about this because as Ed says, the 457 does have a desirable distribution advantage over other 403b’s and IRA’s. You never know when it might be very useful. If you do loose the 457 advantages, you may be able to stop the rollover process, and roll it to Fidelity instead.
  16. Ed, TSA stands for" tax sheltered annuity" which the insurance likes to call all 403b plans, even if some of them are custodial accounts, not annuities. It's a gripe of the 403b reform folks. Unfortunately the IRS sometimes uses the term the same way. Grrr. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-403b-tax-sheltered-annuity-plans Jen21, a 403b employer match in K-12 schools is very rare! Fantastic! What percent of your contribution is it?
  17. Your choice of vendor should be based on their fees. The return of your investment is reduced by those fees. Over time this makes a huge difference. The losses due to fees are compounded. The clear choice on the list is Fidelity. They are one of the very lowest-cost providers and your district is fortunate to have them on the 403b provider list. If you want to find the likely fees of the other providers, you can look them up on the 403bcompare website: https://www.403bcompare.com/Vendors/Browse This site is run by the CA state teachers pension system but it is useful in other states because companies offer generic 403b plans in most other states.
  18. Darn, I see I've made a mistake in my post above when I referred to "defined compensation plans". I meant "defined contribution plans". I'll correct it. It's all the fault of the IRS for cooking up these terms! Defined contribution plans include 401k, 403b and 457 plans, where the employee chooses to contribute. And pensions are called Defined Benefit plans. Only a 457 plan gets the label of "deferred compensation plan". Using DCP for an abbreviation for the 457 plan is not a good idea I guess---I should stick to 457.
  19. How about: https://www.irs.gov/retirement-plans/irc-457b-deferred-compensation-plans If you look at a few of the state 457 plans in thread I linked above, you'll see they are often referred to as "Deferred Compensation Plans". Sometimes the websites use only 457, sometimes the Deferred Compensation Plan label, and sometimes both. I agree it's not a great label and overlaps the term "Defined Contribution Plans", which includes 401k, 403b and 457 plans. If you look at the Log In page of Steve's favorite 457 plan, that of LAUSD, you'll see both labels at the top. https://my.voya.com/voyasso/index.html?domain=lausd457b.voya.com#/login-pweb I agree that the article was poorly written and edited. The writer shouldn't have mentioned the Tier 3 hybrid pension plan because it isn't relevant to the new 457. I'm confidant that a 4% contribution limit can't be part of a 457 plan. Maybe the writer needed to fill up some space? Maybe he got it from the state representative, or from the head of the IL TRS? Who knows?
  20. Steve, I think you may have misread the article. The article is about establishing a “deferred compensation program” which is a 457 plan, which I know you are very familiar with. This plan is NOT a hybrid pension plan. According to the article, the IL TRS has already set up a hybrid pension plan, their Tier 3 plan, not fully implemented yet. The coming IL state 457 plan could use the same mutual funds that are used by the defined contribution part of the hybrid pension plan. That’s what WA has done. WA uses a very small number of extremely low-cost funds. What’s your problem with that? It seems only logical to me to make use of economies of scale.
  21. Steve, I think you and Ed are mistaken to think of the coming IL state deferred compensation plan as some sort of hybrid pension plan. This DCP is a 457 plan, that’s all. It is being set up and will be run by the IL State Teachers Retirement System (IL TRS). It will have to use the IRS rules for 457 plans. CA, WA and other states have 457 plans run by their state TRS. WA has a TRS whose current Tier 3 plan is a “hybrid”—part pension and part defined contribution plan, similar to the Tier 3 of the IL TRS mentioned in the article. I’m a member of Tier 1, a straight pension plan (with no guaranteed COLA). In WA, the very low-cost funds* offered in the defined contribution part of Tier 3 are also the funds offered in the state 457 plan. I think the article probably was referring to that sort of setup. The pension part the WA Tier 3, and pension Tiers 1 and 2, are invested differently and I don’t think the investments are disclosed in any detail. *Examples: US Large Cap Equity Index (S&P 500), ER 0.003% WA State Bond fund (high quality corporate bonds), ER 0.009% The additional management fees total about 0.13%
  22. A "deferred compensation program" or DCP is another term used for a 457. Some plans don't even mention "457". It is unusual for a politician to be out front pushing successfully for a better retirement plan for teachers, isn't it? I agree with Dan that it's likely that the NYT articles probably helped get this started and approved! Kudos to Tara and Ron and all those that participated in the series!
  23. At least 21 states have 457 plans for K-14 districts that are run by the state governments as per the thread I’ve been keeping. http://board.403bwise.com/topic/6130-457b-state-plans-for-k-12-employees/. States are added to the list as we become aware of them. Some states have such a plan for their state employees but K-14 employees are excluded. It’s great that IL is starting a 457 for K-14 employees! These plans are low-cost and usually preferable to any of the other vendor’s 457 plans on the district list with the exception of Fidelity. I think Ed is correct that the states’ 457 plans compete with those of other vendors, most of whom have sales reps on-site. However several large districts in WA have only the state 457 plan on their vendor list. WA state law preventing districts moving to a single 403b vendor apparently doesn't apply to 457 plans.That’s encouraging and so maybe IL districts will drop their other vendors in the future. I doubt that Rep Martwick is correct that the contributions will be limited to 4% of salary. The IRS rules for a 457 determine the maximum salary contribution, not state law. Perhaps the IL TRS will be consulting with CalSTRS about establishing their 457 plan. Their Pension2 457 is probably the lowest cost 457 plan most CA districts have (unless they have Fidelity on their list).
  24. IRAs can't be borrowed from, but your can take a distribution from them for education expenses that avoids the early-distribution penalty of 10%. Loans from 401k's and 403b's are possible, as well as penalty-free distributions for education expenses, as I mentioned. The distributions add to your taxable income of course. I agree with Ed about stopping contributions to retirement accounts to help fund your degree. I agree with Tony that loans from your retirement accounts is a bad idea. You should leave them alone to grow. Taking out student loans may make sense if your sure you'll be able to pay them back. Please research them out first. I know next to nothing about them except what I read in the NY Times, and that's a bit scary.
  25. Patrick, the IRS does not permit loans from IRAs: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans#1 I haven't checked the NEA Direct Invest 403b plan yet to see if they allow loans. They do welcome adding retirement accounts from previous employer's plans so consolidation could be done. It is possible to take a distribution from 401k and 403b plans for educational purposes, if the plan allows it. Have you investigated that? The distribution is taxable buy not penalized the 10% for early withdrawal before age 59.5. EDIT It looks like loans are available in the NEA Direct Invest plan. See the Custodial Agreement: http://www.nearetirementprogram.com/enrollment
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