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Everything posted by krow36

  1. JAM, that's great that you have the Lincoln Investment Participant Directed Platform (PDP) set up for your 403b! To get the 457 PDP added to the 457 vendor list, you may need to go over the head of the business admin person. Was the "person" the chief financial officer? If not, you could write or talk to the CFO. If it was the CFO, then find out who's over her/his head. One of the BH posters quoted a Lincoln Investment staffer saying that the PDP is required by "law" in NJ (?) and another has said that the NJEA was involved in setting it up (?)! You could ask the NJEA on the state level for advice on how to get your district to add the 457 PDP. There must be some secret arrangement between Lincoln Investment and somebody that allows the PDP almost exclusively in NJ. Please update us on your progress in getting the 457 PDP added.
  2. This BH thread on “Teachers: what are your best personal finance tips?” is worth a read. Steve, Ed, BashDash and I contributed, but others may have missed it. https://www.bogleheads.org/forum/viewtopic.php?f=2&t=220126
  3. It’s probably worth noting that teachers’ salary can increase with both time and further education, at least they do in my old district. I believe that is usually the case but don’t know for sure. My district has 15 yearly steps, and 9 education level steps. I started at $6000/yr in 1974 and ended up at $45,000 in 1992. I was a PhD program dropout so started (and stayed at) BS + 155 credits + MS. Here’s the current salary schedule. Teachers are “Certificated Non-Supervisory Employees 2015-2018”. Currently I would start at about $60k and currently with 15 years of experience I would top out at $109k. https://www.seattleschools.org/departments/HR/current_employees/labor_and_employee_relations/cbas__salary_schedules__work_year_calendars I believe it’s not uncommon for teachers in many states to currently earn over 100k after 10 or 15 years. A number of states have state-wide salary schedules which can be relatively high while the cost of living may vary within the state and be relatively low.
  4. Steve, have you tried to access the Simon articles recently? Morningstar seems to have dropped them. Too bad, I always found them interesting, especially those on the K-12 403b problem.
  5. A FIRE article worth reading! Thank you Tony!
  6. This article left me a bit confused as to what Fidelity target date fund we should be recommending to folks. There are now actually 3 different series of Fidelity target retirement funds, two based on index funds and another using as many as 13 funds which are mix of active, index etc. funds. It turns out that Fidelity’s new Target Allocation Model Portfolios are only “available to advisors at broker-dealers, registered investment advisors, banks, and insurance companies.” This BusinessWire article has more information on this than the FinancialAdvisor article. https://www.businesswire.com/news/home/20181112005376/en/Fidelity®-Continues-Deliver-Industry-Leading-Launch-Lowest-Cost Fidelity Target Allocation Index-Focused Model Portfolios: uses very low-cost institutional index funds but not the zero cost funds. The funds’ ERs are a very low 0.04%. Of course the advisor fee will add perhaps 1% to that, depending on the size of the account? Fidelity Target Allocation Model Portfolios: uses "risk-targeted portfolios mixing active, factor, quantitative and passive mutual funds" with the goal of increasing the returns over that of the index-based target retirement funds. Up to 13 funds are used in each Portfolio, with ERs of 0.38% to 0.40%. https://institutional.fidelity.com/app/literature/flyer/9890548/fidelity-target-allocation-model-portfolios.html However for those of us on this forum, nothing has changed because Fidelity’s Freedom Index funds are still the low-cost index-based best Fidelity choice. The current ER is 0.14% for all these funds. https://www.fidelity.com/fund-screener/evaluator.shtml#!&ntf=Y&ft=BAL_TD%2CBAL_TI%2CBAL_TK%2CBAL_TG%2CBAL_TN%2CBAL_TH%2CBAL_TE%2CBAL_TA%2CBAL_TJ%2CBAL_TL&mgdBy=F&expand=%24FundType
  7. That link doesn’t work for me. I would avoid the OASBO 457 because the expense ratios are much higher than those of the Ohio Deferred Compensation. The OASBA 457 target retirement fund I looked at has an expense ratio of 1.11%. I couldn't easily find the admin fee and it's possible it's included in the fund's ER. Voya Solution 2055 Portfolio - Service Class The LifePath funds of the Ohio state 457 are funds of funds (also called target retirement funds) and very low cost with an expense ratio of 0.06%. As I mentioned above the 0.14% admin fee is very reasonable. I agree with Tony that one of these LifePath funds in the Ohio 457 is a great way for you to start investing. https://www.ohio457.org/iApp/tcm/ohio457/investments/fees/index.jsp
  8. If you use the google search on the bogleheads website, and enter "Ohio, 457, teachers" you'll get links to a number of interesting BH threads on the subject. The Ohio state 457 plan is definitely available to K-12 teachers. It should be on your district's 457 vendor list, but if it isn't, you should be able to get it added with minimum resistance. It's admirable that there is no admin fee for balances under $5000 and also that the 0.14% admin fee is capped at $220/yr. That means that for balances over $157,143, the admin fee will decrease, e.g. for a 200k balance the fee works out to 0.11% (220/200,000).
  9. The EZ Enrollment Form has a spot to specify the enrollee’s pension plan and one of the options is STRS (State Teachers Retirement System)! So maybe Ohio K-12 teachers are eligible to use Ohio Deferred Compensation? https://www.ohio457.org/tcm/ohio457/static/EZ-Enrollment.pdf It’s worth checking it out because the fees are a bit lower than those of the Aspire 403b or 457 plans. There is no admin fee for balances less than $5000! For balances over 5k there’s a 0.14% admin fee (capped at $220/yr) that is added to some very low expense ratios. The LifePath series of target retirement funds have a very low ER of 0.06%, and the Vanguard Index funds used for a very low-cost 3 or 4 fund portfolio are offered. https://www.ohio457.org/tcm/ohio457/static/OhioIPR.pdf
  10. Ohio does have an excellent state 457 plan that is called “Ohio Deferred Compensation”. It is open to state, county, some city, and state university and college employees but unfortunately I see no mention of school district employees. Just because the state plan isn’t on your district’s 457 vendor list doesn’t mean that it’s not possible to get it added. You can give them a call or an email. Aspire can be used for a 457 plan as well as for the 403b, if it’s on the district’s 457 vendor list. It does sound promising that your district is open to adding another vendor such as Fidelity or Vanguard. This can take months or even years and be well worth the effort, but in the meantime I think using Aspire would be a good idea.
  11. jwils118 has posted the same on the Boglehead forum where I posted an answer, so I'll post my same answer here. I think Lincoln Financial is different from Lincoln Investment which offers the very low-cost Participant Directed Platform, mostly to teachers in NJ. I think maybe the OP is converting the $40/yr admin fee into a percent of a low balance of say $5000, which would add 0.8% to a very low-cost ER 0.07%? Not ~1%, but not ideal. That should be incentive to contribute more and get that balance higher! After say 3 years, with a balance of $15,000, the admin fee is only 0.27%. Hopefully in the future, maxing the Aspire 403b will result in the admin fee being even more reasonable. Remember that Vanguard’s 403b plan for K-12 districts has an admin fee of $60/yr (but no added 0.15% to the funds' ER). Aspire is well-know to be a reasonably low-cost 403b vendor. I’m not familiar with D & E Financial, First Educators/ FEIC or GALIC/ Great American. The other vendors are well-known to be high-cost sellers of mostly annuity-based 403b plans. What state are you in? Many states have 457 plans that are low-cost and available to teachers. Your district should have a 457 vendor list.
  12. My wife assures me that we did max out my 403b but not hers, back in the late '70s, '80s and early '90s. We retired in '92. Other factors: kids or not? (not) working spouse with lower income? (yes) home owners or renters? (renters, still) lots of extra credits that increased my salary from the start (yes) enough years teaching that salary increased until it was maxed at 15 yrs (yes) frugal life style (yes)
  13. The WA TRS 3 hybrid plan has a required employee contribution of 6% to the defined benefit part, and a minimum contribution of 5% to the defined contribution part. However, the employee can choose among about 6 different contribution schedules with the top rate being 15%. The schedule can be changed only once unless the employee changes districts. The defined benefit (pension) part results in a 1% of final salary benefit.
  14. In addition to the states above, the following states have hybrid plans for non-teacher state employees as of about 2015: Georgia, Indiana, Michigan, Ohio, Oregon, Rhode Island, Tennessee, Utah and VA. So both lists are out of date. And we had that recent poorly written article on the soon to be Illinois state 457 plan that mentioned a hybrid IL TRS pension plan that is in the works. https://www.pewtrusts.org/~/media/assets/2015/04/hybrid-public-pension-plans_brief.pdf
  15. Thanks Tony for posting the link to the Frontline program on pensions! It got me interested in doing some rereading on the subject: WA State’s TRS 3 plan which is a hybrid pension plan, part defined benefit (DB) and part defined contribution (DC). The following states have adopted hybrid teachers retirement plans for new hires: Indiana, Oregon, Florida, Ohio, Michigan, Rhode Island, South Carolina, Alaska, Washington and West Virginia. https://caldercenter.org/sites/default/files/wp-81.pdf It seems likely that states have been added to the list in the last 8 years. And rereading John Bogle’s 2011 book and the chapter on our retirement system: “I would argue that the shift from DB plans to DC plans is not only an inevitable move, but a move in the right direction in providing worker retirement security.” Bogle, John C.. The Clash of the Cultures: Investment vs. Speculation (Kindle Locations 4469-4470). Wiley. Kindle Edition. Bogle lists many advantages of DC plans over DB plans. Very interesting!
  16. If you click on any of the target retirement funds on the Vanguard link Tony provided, you'll get to the details. The 2025 fund is the "5 years to retirement".
  17. After retirement, most folks roll over their employer based retirement plans to IRAs. Both Tony and I did, for reduced fees, for better fund selection and for convenience. Doing it a few years before retirement also makes sense. Can you tell us what you've read that said that leaving in the employer retirement is the way to go? It just occurred to me that you may have read about horror stories where conflicted salespersons try to get folks to roll over their 401k etc. accounts into expensive, inappropriate accounts such as annuities. This does happen all too often, alas. Doing a rollover to an IRA at a low cost vendor such as Vanguard, Fidelity or Schwab is a different story. Rolling it over to a bank or to a for-profit brokerage firm such as Edward Jones would be a costly mistake in my opinion.
  18. The traditional IRA with US Bancorp is very likely subject to unnecessary high fees. I would move it to Vanguard where the fees are very likely a tenth as high. Empower's relationship with your old 401k is similar to Voya and the OR State 457. Empower is a subsidiary of a large insurance company. The organization hires Empower to be the record keeper and administrator, but the organization can determine the selection and fees of the offerings. If the fees (both expense ratios and admin fees) of the 401k are significantly higher than those of a Vanguard IRA (which is likely), then keeping the 401k is not a good idea. There may be a maintenance fee for the inactive 401k. Also the 401k may not offer low-cost index funds. If you moved the 401k to an IRA it would be labelled a "rollover IRA" which just means that the IRA was previously an employer based retirement account. I have read that 401k accounts have more protection from creditors than do IRAs. As Tony mentions, it is a good idea to simplify your various accounts with a single provider, if possible. The decision to move your tIRA and 401k can be put off and dealt with after you've established your 403b and are making contributions to it. Are you planning to make contributions for 2018? I think your understanding of traditional vs Roth is correct. I would go ahead and start with traditional. You can always change it some of each, or all Roth.
  19. Vanguard just announced that all their Target Retirement funds’ expense ratio as of 2019 will drop to 0.09% due using Institutional rather than Investor class! Hooray! This was on ScottyD’s website. http://teachersadvocate.blogspot.com I agree with Tony that a target retirement fund is all you need to get maximum diversification of all US and International stocks and bonds. And it rebalances for you when there is changes within the fund. It really makes it easy once you’ve picked your stock/bond ratio, which you can use to pick the fund (rather than using your retirement date to pick the fund). Because the 403b (and 457 and IRA) are tax advantaged, there is no tax consequence to making changes in the future. If you later decide that you are more conservative, you can change funds to reflect that change. Or if you decide to lower fees a bit and go with the 3 funds that Tony mentioned, you can do that, no problem. Kgreen4me, do you have an IRA, either traditional or Roth, and if so, what company is it with? Do you any 403b accounts? If so are they with your current district or a previous one? If you give us this information, it will help us make suggestions. Do you have an idea of about how much you can contribute to a 403b and/or a 457? Because you are over 50, you can contribute an additional “catchup” of $6000 to the basic $18,500 (for 2018—I’m not sure if it’s the same for 2019, or going up to $19,000).
  20. kgreen4me, I just read consumer affairs reports on Voya. Thanks for the link. They do seem to have a problem with their customer service. And there was 3 complaints dealing with state plans--CO, OR and MI. Very disappointing! I'm not surprised that there was complaints about service with insurance products. I think the state 457 plans are much larger than Voya's generic 403b and 457 plans that they sell to individual school districts and municipalities and it's hard to know what percentage of customers have complaints. The state plans do change their record keeper and administrator so there's no guarantee that OR will stay with Voya. Tony can relate a customer service problem he had when helping a friend with Vanguard. So even very highly respected companies like Vanguard sometimes have these types of problems, unfortunately. If you value the 457 over the 403b, I think it's unlikely you will have a problem with the OR 457.
  21. When Vanguard moved from running their "smaller" 403b plans to hiring Newport Group for the job, the Roth 403b was introduced as was Admiral class funds, and a $60/yr admin fee rather than a per fund fee.
  22. I agree with Tony that having Voya as the record keeper and administer is not a problem. Insurance companies usually have this job in state run 457 as well as 401k and 403b plans. The plan is controlled by a state entity that is a fiduciary for the investors. The plans are usually run at cost, not for profit. The admin job is put up for bid and Voya won the bid. Because there's a cost to being a fiduciary, these state plans can be slightly more expensive than the usual K-12 403b plan from Fidelity or Vanguard which are non-ERISA plans lacking the fiduciary relationship. Tony, 457 plans have a different distribution rule from 403b and 401k plans. The 457 has no penalty for distributions after leaving the employment of the plan's sponsor. This is different from the 403b and 401k plans where distributions prior to 59.5 will result in a 10% early withdrawal fee. There are some exceptions to the early withdrawal fee that a plan may allow. Because of this no penalty feature, 457 plans are valuable in adding flexibility to funding an early retirement, whether planned or not. Of course, any distribution is taxable income unless it's coming from a Roth 457 plan.
  23. OR State 457 plan is certainly worth using. Can you give us a hint of the "bad reviews" of this plan, maybe links? The admin fees are relatively low cost at 0.17%. The Lifepath Portfolios (all-in-one target date funds) are low-cost at 0.12%. https://www.oregon.gov/pers/OSGP/Documents/Fee-Structure.pdf Either the Vanguard or Fidelity 403b options would be excellent and slightly lower cost than the OR 457 plan, depending on your balance.
  24. I have a bunch of fee calculators that I’ve bookmarked in my browser. One kind calculates the fees on a given principal, over time, using an assumed rate of return and expense ratio. Some include sales loads etc., but that would be applied once at the beginning. Vanguard’s Compare Fund Cost is this type and it is effective in showing graphically how costs compound. It is set up to compare a Vanguard fund with another fund. However because all the inputs can be changed after a calculation and a recalculation done, it’s very flexible. It’s not necessary to select a particular fund, any 2 funds can be chosen and their fees changed as needed. I like that the calculator separates out the cost due to the fees (ER, loads, etc.) from the opportunity costs (compounded loses due to diverting assets to pay fund costs). I also like that it calculates the average annual return that the costlier fund would need to overcome its higher fees. https://personal.vanguard.com/us/FundsCostCompare Another kind of calculator uses continuing contributions to the account, which is more realistic. However there’s usually some variable that isn’t included. I like the 360degrees calculator but it doesn’t include a sales load input. To compare the costs of 2 funds would take 2 calculations, and then a subtraction. https://www.360financialliteracy.org/Calculators/403-b-Savings-Calculator3?fpath=197
  25. Welcome to the forum aef5080! Keep up the good work with your Vanguard 403b. Yes, for 2018 you can contribute up to $18,500 to your 403b account and it can be part traditional and part Roth, or all either one. There are income limits on the deductibility of the tIRA, and income limits on the direct contribution to the Roth IRA (which the "backdoor" Roth gets around). I've read that for 2019 the limit will be $19,000 although I don't think it's official yet. The $5,500 limit to your IRA is separate from the 403b limit.
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