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krow36

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Everything posted by krow36

  1. To me 403bannuitysaleman’s situation is not as black and white as many of you write. He describes the many outrageous practices of his colleagues but he hasn’t said much about his own practices. Perhaps he tries to avoid selling his company’s more expensive products? He says he discloses the fees of company’s products but that most teachers ignore his advice. Perhaps most of his sales are of fixed annuities, where there is no 3% plus drain on the contributions due to fees? Yes, fixed annuities are more of a savings account than an investment account, but it’s a savings account with a tax-deferral benefit. That’s actually what I had during my 403b contributing years (1976-1992). My 403b rep didn’t try to get me into a higher fee option. Many of you seem to be tar and feathering 403bannuitysaleman with the worst practices that he describes, which I think is most likely unwarranted. I think of him as a sort of whistleblower, all be it one without any whistleblower protections, benefits or higher authority to complain to. I’m glad Dan Otter has seen fit to allow him a platform here to express his perspective. He’s not pushing annuities here, he’s calling for self-directed low-cost index custodial accounts to be an available option in every school district! Sounds familiar. I would like to see his perspective given more coverage. Maybe a NYT article by Tara and Ron? A podcast interview?
  2. krow36

    403(b) help!

    Shannon, let’s not worry about your inherited 457 account right now and go to some basics that we all agree on. First off, about how much can you currently contribute to your retirement accounts? If it’s only about $5500, then all you really need right now is the Roth IRA you opened at Vanguard. If you can contribute more than 5.5k/yr, then also opening a 403b with Vanguard or Fidelity is the way to go. In both the IRA and the 403b, you can choose an all-in-one Target Retirement, low-cost index-based mutual fund. If you want input on which one (2020 or 2055?), just ask. If you can contribute more than the 5.5k to the IRA and the 18.5k to the 403b per year, then working on your school district to add a low-cost 457 plan is worth doing. Either the CalSTRS Pension2 or Fidelity would be excellent. Yes the district and the TPA will resist, but if you persist, it’s very likely they will give in and do the right thing. Other posters here can advise you because success stories are frequent.
  3. Bashdash, thanks for the kind words. Give yourself most of the credit for your eye-opening. You kept coming back with questions until it was clear what was going on. That makes the process so much easier. The great thing about the forums is that the poster not only learns, but also other readers. I’ve learned so much from reading the forum threads of others. By the way, I think you mentioned that your learning process started with reading one of Tara’s NY Times articles.
  4. krow36

    403(b) help!

    Has anyone sent him a PM?
  5. krow36

    403(b) help!

    WOW, this is a bit complicated! I haven’t found anything on inherited 457 that came from a divorce settlement (the employee being under 70.5!). I think this is a job for a professional, which none of us here are. Maybe one will join us? Hopefully the folks running the City of LA 457 plan (VOYA) have it figured out. But maybe we can help you understand some questions to ask VOYA and we can learn something ourselves? There are 2 other forums that both have experts on retirement plans where you (or we) could ask questions if you have them. To summarize: Your mother received a part of your father’s 457 in a divorce settlement. She died 11 years ago and you inherited the 457. You haven’t said it is a Roth 457 but if VOYA says the taxes have been payed, then it has to be a Roth 457. You should confirm this. Do you get statements or have an online account? You should at least get the former. You’ve been told by VOYA that you must start taking a distribution by the year that your living father is 70.5. I’m not sure if the Required Minimum Distribution will be based on his age, or on your age? It just so happens that it’s 5 years until your dad is 70.5. I was confused because there is a 5 year rule that applies to distributions inherited IRAs (and maybe 457 plans?). So the 5 year rule doesn’t apply in this case. It’s not clear to me yet that you should move the inherited 457 anywhere, including to an IRA at Vanguard. It would be best to postpone that decision I think. You are paying 0.36% in fees on the fund now which isn’t rock-bottom but it’s not too bad, and certainly much better than any of your district’s current 457 vendors. The Aggressive Portfolio Profile for the City of LA 457 plan is 80% US and Int’l stock funds and 20% bond and stable value funds. The 0.36% fee includes the management fee as well as the expense ratio. https://cityofla457.gwrs.com/preLoginContentLink.do?accu=CityOfLaWR&contentUrl=preLogin.InvestmentInformation.A&specificBundle=preLogin
  6. Am I correct in thinking this is an inherited 457 account? If so I don't think it can be rolled into a 403b account. It can be rolled into an IRA where it will be an inherited IRA. When you inherited the 457 2 years ago, you had a choice of (1) taking RMD’s based on your age, or (2) taking a full distribution by the end of the fifth year following the year in which your father died. You opted for the full distribution in 5 years and there’s 3 years left. Is this correct? You have mentioned that the taxes have already been paid, so this must be a inherited Roth 457? This is a very critical bit of information! Shannon, how much of the above is the case?
  7. krow36

    403(b) help!

    OK, Shannon, that's different. If your 457 is an inherited 457, you don't have that "no-penalty withdrawal at any age" benefit. I think you must take "Required Minimum Distributions" but I need to do some reading on inherited 457 accounts. When did you inherit the 457? Have you made any withdrawals yet? I don't understand your comment about your dad being 70? Can you provide a link to a website that covers the "70 age and time to roll it over" ideas?
  8. krow36

    403(b) help!

    Ed asked why Security Benefit and NEA don't include a 457 plan, only their 403b plan. I was making some guesses as to why. So NEA Direct Invest is a 403b option for Shannon (but we prefer VG or Fido), but it's not a 457 plan option. SB's 457 offerings are only their expensive stuff.
  9. Tony, Shannan's $30k 457 account is with a previous employer, the City of Los Angeles. His current employer is Temple City School District. So he could roll it to a traditional IRA with no tax consequences. Or to a Roth IRA and have $30k added to his taxable income. I think Shannon should work to get a low-cost 457 vendor, as I discussed in Shannons' other thread. Rolling it to another 457 will keep that no penalty at distribution after quitting advantage. You never know when it might be handy. The Security Benefit NEA Direct Invest plan is only a 403b, not a 457. We need to take a look at what Shannon has in the 457 and their fees. As you say leaving it there may well be the best idea.
  10. krow36

    403(b) help!

    As I mentioned, your list of 457 providers does not include a low-cost index fund provider. They are all expensive insurance companies. However, your 403b list does include CalSTRS Pension 2, which also offers a 457 plan. It should be relatively easy to get your district to add them to your 457 vendor list. They SHOULD be on the list already! The CalSTRS Pension 2 plans are good plans with excellent Vanguard index funds, so you shouldn’t hesitate to use it for your 457. It is run by the same organization as runs your state teachers pension. You could use the following funds in the 457: Vanguard Total Stock Mkt Idx Instl Pls (VSMPX), ER 0.02% Vanguard Total Bond Market Index Adm (VBTLX), ER 0.05% I suggest you use an international stock fund in your other accounts as they are more expensive actively managed (not index) funds in the Pension 2 plans. Also consider the Easy Choice (target retirement) funds with a date close to your retirement date. They are a bit more expensive but have the advantage that they do the rebalancing for you. CalSTRS adds 0.25% management fee to each fund’s ER, but there is no flat dollar admin fee as there is with Fidelity and Vanguard.https://www.calstrs.com/sites/main/files/file-attachments/p2_fee.pdf Adding Fidelity to the 457 vendor list might be slightly more difficult but certainly worth a try, considering they are already on the 403b list. They are significantly lower-cost than CalSTRS. I would call them and get their input before talking to the district. I would not roll your old 457 account into an IRA. 457 plans have an unique advantage over IRAs and 403b accounts in that you can make withdrawals at any age after you quit. The other plans have a 10% penalty for withdrawals before age 59.5 (there are some special exceptions). It's possible this could be useful in the future, who knows? So be patient and leave your old 457 plan where it is until you have a low-cost vendor available. If you post the funds you are using and also other funds available in the old 457 account, we can see if that can be improved? Please include the fees (expense ratios, etc.)
  11. AndyH, I was out of the country with very limited access to the internet this last summer and was unable to post on your thread. I’m a retired WA teacher and so your thread is especially interesting to me. For other readers, here’s a link to the website for WA State 457 fee table that you posted: https://www.drs.wa.gov/dcp/investments.htm An Administration fee of 0.1283% is added to the fund’s “Investment fee” (expense ratio or ER). The total fee for one of the Target Retirement funds (they call them “Retirement Strategy funds”) would be the fund’s ER of 0.15 to 0.17%, plus the Admin fee of 0.1283%, or about 0.29% total. The fees on $10,000 of the 2035 Retirement Strategy fund would be $29.44/yr. The annual fees on the WA State Bond fund and the US Large-cap Equity fund would be much less, only $13.69 and $13.13 respectively. Their ERs are 0.0%! You can compare the WA 457 fees on $10,000 with those of the Security Benefit NEA Direct Invest 403b, which are very low. Its Vanguard Total Stock Market fund has an ER of 0.05% and the admin fee is $35/yr for balances less than $50,000. So (0.0005)(10,000) = $5. Add in the $35 admin fee that will apply for at least several years, and that’s $40/yr. A 403b account with Vanguard (through Newport Group with whom they outsource their 403b) would cost a $10,000 balance the $5 ER plus an admin fee of $60, for a total of $65. (Which is still a bargain!) I’m trying to convince you that the WA State 457 is a very low-cost plan. I suggest you consider your and your wife’s accounts together. The WA State Bond fund is a very low-cost bond fund that is 100% high grade corporate bonds, while SB NEA Direct Invest’s Vanguard Intermediate-term Bond Index fund is about 47% Treasury bonds and 53% corporate bonds. I prefer the VG fund, but using some combination of the 2 funds might be worth considering. Or you can just use one of the Retirement Strategy funds in the 457 and call it good. Your plan to contribute to both a tax-deferred 403b and 457 as well as a Roth IRA is a good one in my opinion. Staying below $77,200 in taxable income tax bracket is also a great idea. Especially if you have a taxable account where long-term cap gains and qualified dividends on stock funds are taxed at 0%. The folks here at 403bwise are knowable about 457 plans as well as 403b plans. In fact there's a forum platform for each but we all participate in both platforms.
  12. "Please contact provider for investment type" just means that either OMNI or the companies neglected to supply the investment type and phone number. Perhaps OMNI charges the vendors for including this information? It's very disappointing in any case. I agree with Ed, Tony and MoeMoney that either Vanguard or Fidelity are excellent choices. Either google them for their phone numbers, or better yet, use 403bcompare.com to look them up where you'll find complete info on fees and mutual funds offered.
  13. I should not have included Security Benefit as a good vendor for a 457 plan. SB's Direct Invest plan is for a 403b only. All of SB's plans other than Direct Invest are very expensive and are definitely not recommended.
  14. krow36

    403(b) help!

    Ed, I don't know why Vanguard doesn't offer a 457 plan but we can speculate. It's probably related to the same reasons they contracted with Newport Group to run their smaller (K-14?) 403b plans. That is, their costs per participant. The K-14 457 plan market must be much smaller than the 403b market, so less economy of scale? As for SB's Direct Invest, I guess neither SB nor NEA think it's worth bothering with. We can only guess at the real motivation behind the 403b Direct Invest. I think of it as a plan subsidized by the expensive SB (so-called value builder?) plans that the NEA name is attached to. Without that 2M+/yr subsidy that NEA gets from SB, there would be no SB Direct Invest.
  15. krow36

    403(b) help!

    Shannon, your district does give you access to a 457 plan in addition to the 403b plan. https://www.tcusd.net/site/handlers/filedownload.ashx?moduleinstanceid=152&dataid=5902&FileName=TDS_457-Salary_Reduction_Agreement_20170922.pdf Unfortunately there are no low-cost providers on the list. If in the future you are able to max out contributions to a Roth IRA and the 403b plan, you could ask your district to add Fidelity and/or CalSTRS Pension2 to the 457 vendor list.
  16. Unless he’s referring to the AXA Retirement 360 plan which is listed on the 403bcompare website but which is not explained on AXA’s website, at least I couldn’t find anything when I looked a year or so ago. 403bcompare says it has an admin fee of $0 to $100 per quarter, so that’s a mystery. It does include a dozen or so Vanguard funds, including 3 LifeStrategy all in one funds, and Fidelity's 500 Index fund, all with very low ERs, so it is certainly an unusual AXA plan. We need to know about the details of the admin fee.
  17. I don't think so, I certainly haven't. Did the AXA rep give you any details?
  18. Becker1685, welcome to the forum. You have several low-cost vendors worth using for a 457 plan (and a 403b). My first choice would be Fidelity. Their Fidelity Direct 403b charges only $24/yr for a custodial fee and has all the low-cost index funds you need: Total Stock Market Index Premium (FSTVX), ER 0.02% US Bond Index Premium (FSITX), 0.03% International Index Premium, (FSIVX), ER 0.05% If you want a all-in-one mutual fund that includes the above you can use one of their Freedom Index funds that have ERs of 0.14%. You would pick one with your retirement year, or better yet, on with the stock/bond ratio that you want. I got the above info from 403bcompare.com which is run by CalSTRS (the CA state pension organization. Fidelity’s Direct 403b plan is a generic plan offered in all the states. I believe that the same funds and fees are apply to their 457 plan. You should confirm that with Fidelity. If you didn’t have Fidelity, I would use Security Benefit’s NEA Direct Invest which offers 3 low-cost Vanguard Index funds and charges $35/yr for account balances under 50k. Also usable is Aspire Self-directed, which offers Vanguard and Fidelity funds but adds 0.15% to each fund’s ER and charges $40/yr. Last choice would be PlanMember Direct adds 0.35% to Vanguard ERs. So I believe Fidelity is clearly the best choice for either/both of the plans. https://www.403bcompare.com/products/68#/fees
  19. jebjebitz, are you sure NJ is considering an annuity to replace the traditional pension? The trend seems to be to move to some form of defined contribution plan (the DCP), often part pension and part defined contribution. Of course the DCP would be like an ERISA governed 401k, and requires the employee to assume responsibility for level of investment risk and amount of contribution. My state of WA now has this type of plan. I think it's possible that teachers might benefit from this type of plan. It's flexible and you would hope that it might stimulate teachers to take an interest in investing for their retirement?? John Bogle doesn't believe in pensions and prefers more portable DCP. Hmmm.
  20. MNGopher, 50% savings rate is awesome! I understand you don’t really need another tax deferred plan. However some of your colleagues might find it useful. A couple with 2 salaries can frequently make good use of the teacher’s 457 plans. I think the MNDCP is one of the “good states” that allows school districts to use their 457 plan. In WA the state Department of Revenue issues K-12 and university employment checks and runs our pensions. In states where the local districts issue run the finances, they often don’t get in on the low-cost state 457. The same dept. runs the state 457 plan. I found the Admin fee, currently 0.10%, with a maximum of $125, so no admin fee for balances over 125k. I’ll add the fee link to the K-12 state 457 plan thread. https://www.msrs.state.mn.us/web/employers/plan-fees "Eligibility for Participation in the MNDCP All current full-time, part-time, and temporary employees and elected officials of the State of Minnesota and its political subdivisions (cities, counties, townships, school districts, etc.) may voluntarily participate in the MNDCP." https://www.msrs.state.mn.us/web/employers/participation-eligibility Notice that the employer has 45 days to set up the 457 if it's requested by an employee! I like it!
  21. The easiest way to deal with your $1500 in the Voya 403b is to roll it to a Fidelity IRA. I agree with Tony it would be best to move the 403b money to a traditional IRA. If later you want to convert it to a Roth IRA, that’s easy and will only increase your taxable income slightly. You can set up IRA accounts and fund them later. So talk to Fido and tell them you want to transfer the 403b to a tIRA with them. I’d have them initiate the transfer paperwork which you’ll fill out. No doubt Voya will require their paperwork as well. Voya will want proof that you are no longer employed by the old district. The process can take weeks, even months before your money is in your Fido account. The ideal way to have accounts transferred between vendors is a trustee to trustee transfer that doesn’t go through you. Some companies especially insurance will only do the check method. The check should be made out to the new vendor For The Benefit of (your name) so that you cannot cash it. I think the 60 day limit applies to a check made out to you rather than the vendor but I’m not sure. Hopefully if Voya uses the check method, they’ll make it out to Fido FTB of you.
  22. MNGopher, K-12 school districts sometimes have access to a state sponsored 457 plan. Maybe about half of the states have such plans that are available to K-12 school districts. http://board.403bwise.com/topic/6130-457b-state-plans-for-k-12-employees/ They are often but not always very low-cost. They are entirely separate from the state pension plan and are entirely optional. Notice that MN has such a plan. Is it available to you?
  23. We prefer Vanguard and Fidelity 403b plans because they are low-cost. It’s been show that low-fees are the best predictor of superior performance over time. Both firms offer index funds with very low expense ratios, the fee that every mutual fund charges. The very low-cost MA State 457 plan is excellent as is the Fidelity 403b plan. Either or both are worth using. The MA State 457 is actually has lower cost expense ratios than any 403b plan I've seen. The 457 plan has the advantage that penalty-free distributions at any age can be made after separation from your employer. A 403b plan has a 10% penalty for distributions before age 59.5, although there are some exceptions allowed in some plans. Of course any distribution is considered taxable income. If you can only contribute 5.5k or less, then using a Fidelity or Vanguard IRA instead makes sense. There is an advantage to the employer-based plans using salary reduction which makes it easy and an effective way to save, and is easily increased as your salary increases.
  24. As 403bannuitysalesman states, he is “torn between making a living and providing teachers with the best possible options.” Yes, there’s an obvious conflict there and hopefully he is planning his escape. His posts imply that he is able to avoid the outrageous conflicts he describes, at least to some degree. Is he able to avoid signing teachers up to expensive annuity plans charging 2-3% in fees? We don't know. Perhaps he’s working on the CFP qualification that will help him move into a less conflicted part of the financial investment field? Dan and Scott’s recent podcast was with Daniel Alexander, a former 403b salesman. http://teachandretirerich.libsyn.com/fighting-conflict-of-interest-61 He has started Principal Review, a firm that specializes in “Providing expertise to empower plan participants to make informed and educated decisions with their retirement savings while protecting employer sponsored retirement plans from service providers with hidden conflicts of interest.” Principal Review is now a sponsor of this forum. https://www.principalreview.com/specialized-expertise/ I admire 403bannuitysalesman for contributing to the forum and giving us a view from the inside. Yes many of us are aware of many of those rip-off practices. But as the NYTimes articles demonstrated, getting information from those working inside the industry is a powerful tool for reform. I would like to see greater use of 403bannuitysalesman’s observations and hope he will continue to post. Maybe another NYT article by Tara and Ron?
  25. ivan41, have you been filing the IRS Form 8606 for each of the years that you have made post-tax contributions to your tIRA? That is what prevents you from being taxed on them a 2nd time when you take a distribution on them in retirement. Each year has a separate form (2015, 2016, etc.), and each year’s form uses the numbers from the previous year’s form, starting with the first year you made a post-tax contribution. If you have not been sending in the 8606 forms each year, you can still do it. You can send all the pre-2018 forms to the IRS any time. The 2018 form should be included with your 2018 tax return. Vanguard doesn’t know whether you took a deduction on your tIRA or not, and the IRS will assume you took a deduction unless you document the post-tax contribution with the 8606 forms. So it’s up to you. The form: https://www.irs.gov/pub/irs-pdf/f8606.pdf The instructions for the form: https://www.irs.gov/pub/irs-pdf/i8606.pdf It’s easy to make a mistake on the form if you don’t read the directions carefully. Even CPAs have been known to fill them out incorrectly. What you should have been doing each year is immediately convert the post-tax tIRA to a Roth IRA. There is currently no income limit to this process, which is called a back-door Roth. An explanation of the backdoor Roth IRA: https://thefinancebuff.com/the-backdoor-roth-ira-a-complete-how-to.html Please forgive me if you know all this and are on top of the process. Not knowing is fairly common.
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