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ks-man

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  1. They're going to contact their rep and see what the deal is. I just have a bad feeling about all this. SOL = $hit out of luck
  2. This might not be good. My dad just sent me out all the stuff on my mom's 403b. It looks like one of her accounts had a deferred annuity product. The statement (through 3/31) shows there being no withdrawal charge but my dad wrote on the sheet that the interest rate expired in 4/12 and the new rate goes to 4/22. I did some web searching and the product seems to have fixed interest guaranteed rate options of 2,3,5,7 or 10 years. The surrender charges are 7% for the first year declining 1%/year. It appears that when the old one expired they were put in a new 10 year product which I'm assuming means a brand new cycle of surrender charges. I spoke with my dad. He said that he thinks this happened automatically (being rolled from the old product into the new one). I know there is an account representative who handles the investment of the 403b funds. Are they likely SOL? Will they have any recourse in not having this explained to them? If I'm correct I can't see it being worthwhile for them to take a 7% hit of a surrender charge to move the money out.
  3. My mom just retired from teaching and I want her to roll her 403b out of the district sponsored plan (high management fees) into an IRA with lower costs and more choices. I can easily help her (and my dad) invest the money into funds to suit their goals. I'm thinking either Fidelity or Vanguard for the rollover. The most important thing in my mind is having the process be as easy as possible. The more effort on their part the more likely they will just leave it in the district plan as they don't want to deal with the hassle. Does anybody know if one firm is better than the other from this point of view? Or if there is a different firm than I mentioned which they should consider that also offers a lot of choices with low fees? Thanks.
  4. I manage my personal accounts (retirement and non-retirement) with my main brokerage account being well over $1MM. My personal belief is that low fees are the way to go but there is no golden rule that you must go 100% index funds. All of my accounts invest in a mixture of index funds, actively managed funds and ETFs. Each accomplish something that the other doesn't. Index funds are great but I like to further diversify myself by investing in specific active funds that achieve my objectives. In these active funds I ensure that the expense ratio is no more than 1.5% (except for some emerging market funds where the cost of entry to specific markets leads to higher fees). Keep in mind that there is another rule to long term growth accumulation that is just as important as low costs and that is a properly diversified portfolio. The difference between a well diversified portfolio and a second portfolio invested in Vanguard Total Stock and Vanguard Total Bond will probably be quite large over 10, 20 or 30 years. A portfolio should have a mix of Large, Mid and Small Cap (growth and value), Bonds (depending on time horizon), International, Real Estate, Natural Resources and more. Also to say that annuities are bad is just plain wrong. They aren't the right choice for most people investing for retirement with a long time horizon (I am very upset that my wife needs to invest in a VA in her 403b), but some people need that income guarantee for the rest of their life and are willing to pay for it. I've accumulated my wealth through making the most of opportunities, and am growing it by diligent saving and intelligent investing. I won't rule out any investment, but I make sure to ask the right questions before getting involved. Keep watching the fees and keep your expenses down, but also make sure to diversify your portfolio, even if it means a slightly larger expense ratio. The past few years small caps, international, real estate and commodities have far outperformed the S&P even despite some higher expenses associated with these types of funds.
  5. Thanks for the response Tony. Unfortunatley our combined income makes us inelligible for a Roth IRA and I am already maxing out my 401k so we can't use a Traditional one either. While I agree with you that adding a company like Vanguard does benefit the entire school, we don't think like a 25 year old first year female teacher who wants to stay below the radar. I will try and convince her to step up and see about requesting Vanguard be added, but if she isn't willing to then I guess it pays to stick with the Variable Annuity. While fees may be 3% vs .3% at Vanguard, we'll still win by not paying the 35% that Uncle Sam wants to take from the money. Thanks again for your help.
  6. Kevin, As a Registered Financial Consultant, and a person approved to offer 403b plans to 2 universities and 2 K-12 school districts, I do not believe in offering variable annuities in a 403b plan. By law, you have deferred protection under the VA, as you do under the 403b plan. Therefore, you are getting double protection for extra costs. Since a VA is an offiering by a life insurance company not only do you have insurnace company charges but you also have charges from the companies who are providing the sub-account investments. Most districts have a minimum number of participants you must have to start a new investment plan. What is the number at her district? What state do you live? Will they allow other companies or is it a closed district? Ron Ron, Thanks for your reply. I do understand and agree that we don't want to be investing in a VA in her 403b. I don't know the minimum number to start a new plan but I will have her ask. We live in Illinois and I don't know if they allow other companies.
  7. My wife works at a small school district where the only 403b plan they offer is through AXA-Equitable and they are offering her a variable annuity. I have read all the information and see that we'd much rather invest in a mutual fund companies 403b, but her district doesn't offer it. She is a first year teacher and I know won't be willing to go to administration to try and set up a plan with a new company (Vanguard, Fidelity etc). She isn't as concerned with investing in a 403b as I am and doesn't want to draw attention to herself right away. Are my only options to invest in the variable annuity or not invest in a 403b? Are you allowed to set up a 403b individually through a company, or does it need to be sponsored by a school? Any help would be greatly appreciated. Thanks. Kevin
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