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BCinMI

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Everything posted by BCinMI

  1. I side with the original post on this one. Being from Detroit I see it daily. Ford has their entire 401k portfolio at Fidelity and with good reason, there's a great deal of soft money there..... for those of you who don't know, "soft money" is what Fidelity gives to Ford to continue to monopolize the plan. Anyhow, I have never seen a smooth transaction with them. We're in process right now of taking a 90-24 away from them and they're dragging as usual. First its their forms, so we fill out their forms, then its the wrong forms, then its this, then its that. I've seen grown men cry out of confusion trying to work with the "advisors" at Fidelity. It may be possible, but I have never seen a client happy with Fidelity after telling them they want to roll money out. Customer service there means "we'll tell you whatever you want to hear as long as you keep the $$$ with us." My response to confused clients of Fidelity.... 1. Has Fidelity ever called you before this point to assist you with your management? and 2. How much do you trust an "advisor" who makes $7/hr answering customer service at the end of an 800 number? This article is titled for 401(k)'s, but it relates in parts to 403(b)'s well well: http://www.smartmoney.com/10things/index.c...ry=december2006
  2. Another angle, fees aside, are you confident that your Roth investments will return 100% on your contributions? Because regardless of the fees, the district is offering you a 100% return on your investment up to 4%. Even if you put it in cash and pull a 3% return, I don't see that as a bad idea. Max out the 4% and put any additional money into your Roth if you so desire. Move back to the other district and roll it over in 5 years; Valic does have products that are surrender free in 5 years or at separation from service. I would be more concerned with the districts vesting period, did I miss that detail somewhere in the post? If their vesting is >5 years and you're CERTAIN that you won't be there that long, this post was for naught because you'll never own their money. Hope you're enjoying the summer!
  3. BCinMI

    Clueless

    Regarding the IRA, I assumed you were speaking of a Traditional IRA which is taxed similar to your 403b pre tax in, taxable out. A Roth IRA is along the lines of what you are speaking, after tax in, tax free out..... unfortunately it too has income limitations. There is such a thing as a non-deductible IRA which achieves tax deferral, but again, income limitations. You are spot on with "its all about how you grow up." Some people change after learning the ways of their parents but some do not know how the way they handle money is good, bad, or ugly. In my own experiences, you need to be on the same page with your fiance. Neither of you is right or wrong, it comes down to the lifestyle you want to live. You strike me as a person who thinks long term, and that is not on your fiance's mind. Good or bad aside, I side with you and the question I would pose to him is "when do we start saving then?" His thinking is very typical these days but people never remember to start saving for the day they no longer want to work. As doctors you know the stress and long hours will likely prevent you from working forever. Try to achieve a compromised joint philosophy and life will be easier. THat's interesting since I thought my comments actually help answer questions and stay on point. Making big money doesn't make life easy. Guess you fell into your own pool of feeling "threatened" since you just couldn't resist taking a jab at me.
  4. Thank you for pointing out the specifics on the issue I did not know that!
  5. BCinMI

    Clueless

    Newbee, I envy your determination and drive. The work you do and long hours you sacrifice are worth far more than the salary pays. I have friends at The University of Michigan hospital and they earn every penny as I'm sure you foresee doing. I agree with you TR, this post has focussed on the wrong things. A few skipped notes, no you cannot contribute to an IRA anymore, you will be above the income cap (you POSSIBLY could this year if you haven't started at the hospital yet, you need to find out your AGI first, but defnitely not next year). And speaking of caps, unless my math is wrong or you are over 50, you cannot contribute 10% of your salary as it too will exceed the $15,500 limit on a 403(b). The 457 brings an entirely different angle aside from this. Pros and cons to making this type of money, and the big con is the IRS takes away many tax-beneficial opportunities. Welcome to the life of creative investing, topics far beyond the scope of this message board. When you get to where you're moving, you need to find an advisor you trust and could work with for decades; do not be sold by someone's sales tactics. Unfortunately, if you want to use the 403b, you're going to have to meet with one of the providers the hospital uses as they are the only ones who can establish new accounts. If you find a good advisor down in FL they should help you structure your 403b choices before setting up the new account. PLEASE find someone you trust in FL before you do anything, someone that can give you more detailed information face to face; at least more than some of the people on here who trip over their tongue drooling over your salary.
  6. To confirm, you defaulted on the loan and the government "dinged" you for income tax plus 10%? If that is true, then the loan should net-out of the 403b and no longer exist. Unless there is something hidden in the Plan Document about loans, you need to have the company record the loan as a withdrawal so it no longer accrues interest. Sorry, just something about "don't worry about it" that makes me worry more about it. Without having "client does not have to pay back accrued interest" in writing, I'd keep pushing them.
  7. Not sure if you still wanted an answer to fixed annuities or not, but the answer is they are horrible right now. Most of them offer a great first year rate (4-7%) but then drop to around 3.5%. Taxation/deferral are different, but CD's and money markets are doing much better than that, and are liquid. Pros and Cons to everything!
  8. Allowable contributions are about $10-15,000 more (depending on age) 403b can be accessed before 59 1/2. Loan possibilities are different. I'll stop there.
  9. What school district are you in? Morgan Stanley does not work with many of the Metro-Detroit districts I am aware of, and the ones that they do most certainly limit the fund exposure.
  10. Don't bother, AP is never wrong.
  11. AP you c r a c k me up.... "I ask you once again!!!" Sorry, I don't check up the website on an hourly basis so don't think I was ignoring you. Issuing a "warning" and saying they are "in fact bad" are two different things. There is a current NASD investigation on sales and use of Indexed based products as well..... but how many of you own and preach about those? I'm not trying to fight with you on this, I'm trying to get you to stop thinking about annuities as they were 20, 10, even 5 years ago. Just a note, that NASD article... not publication.... was written in 2003, before they even offered things like principal return with account value step ups. I'll give you a few instances where an annuity could be worth the cost (and open it to the rest of you to go ahead and bash my skull in). After all this website is supposed to be about learning right? For a person getting towards retirement who fears losing principal but wants to remain somewhat aggressive, annuities offer annual step-ups; aleviating the risk of a tanking market. For a significantly older person who still has qualified money annuities can give enormous estate and succession planning benefits for the heirs. Want me to keep going? I'm not even in sales and I can go all day. Why? Because I do the research beyond what the internet tells me. I carry some money in VA's and some in MF's, each for its own purpose. I gladly paid the cost last year to get a 14% return and lock in that account value. That's a good enough return for me to justify the cost and guard against loss. People keep bringing up "when the market tanks...", I don't care when it does, it won't affect those accounts. I will agree to this point: qualified money should not be in a bare-bones annuity chasis. Annuities are almost pointless UNLESS you utilize the riders. 5 years ago most of those riders didn't exist or were in the early phases. Mutual funds, while cheaper, offer no benefits for succession planning or principal guarantee. Here's the hard part, actually call some companies, request materials, and do the research yourself instead of listening to Suzie Orman all day and night. Or do, its so much easier to sit back and take what you hear to heart. Hang on, let me get my helmet on before you bring out the aluminum bats and billy clubs.....
  12. Please show me where the SEC or NASD or any government body has come out and said that. I want the publication.
  13. BCinMI

    Great West

    It is not a state plan, the districts I know of have their own 457's established. The only account through the state is the pension; 401a, 457, 403b's are all district specific.
  14. BCinMI

    Great West

    Unfortunately, in most districts I'm aware of, 457 plans are extremely limited in their investment choices. Here in Michigan, a school district could have 100 403b providers and maybe 2 457 providers. If you want the 457, you get what they give you.
  15. I personally have not heard of this before. The only instances I've seen of "doubling up" is if you were a W2 employee with a 401(k) AND a 1099 "business owner" who could set up a SEP.... huge opportunities to shelter money there, but again you have to be employed and self employed in the same year.
  16. There is no way to put a blanket statement out there and say "annuities are bad;" not all of them are bad. However, they typically do have a higher cost than investing in mutual funds. Annuities do not equate to low returns, your investment choices motivate your returns. What you and your wife might want to look at first is what the surrender charge on her current annuities are before moving them. (A statement should have two lines, "contract value" and "surrender value") If the charge is too high, just leave them and start contributing to a different program. By different program I mean that the second thing you should do is see if she has any Tax Shelterred Custodial Accounts (TSCA's) available through her district. These will be mutual funds outside of an annuity. Begin contributions there and get help with the investment mix. I am not well versed in the Thrift plan, perhaps others can assist with that specifically. On a personal note, thank you for all you are doing overseas, we appreciate you!
  17. I do agree with you about fees, but that's life and that is a large part of active management.... managing fees. I don't know about a pat on the back with the quoted statement though.... any investor takes on risk, the managers you choose help you to manage it. That's what this site is about, managing risk. I like to think I have a close watch on my portfolio and an ear to the ground with where my decisions lead to in the future, but no investor is without risk. Of course things go up and down, but if you're waiting on them to tank should we just stop investing all together? I absolutely believe that a 60 year old investor should own a fair amount of equities. Here's how I see it: we tell a 30 year old to own a majority share in equities because they have 30 years of active management before retirement. Does a 60 year old not have (good Lord willing) 30 years of active investment management ahead as well? The days of owning and managing a 100% bond portfolio in retirement are long gone. I will give you a little lovin of the heart though, after all it is Mother's Day weekend and we should all be in a good mood for their sake :)
  18. Ok AP, my appologies. You are the .1% of people who might even think to look into the allocation of target date funds. Consider this your pat on the back
  19. I really like #4: "our target date funds may miss the target" That goes against about 20 threads posted in here
  20. While we're splitting hairs and tenths of percents, $100,000 investment does not eat the 5.75% A-share charge at AF's..... I looked in their prospectus online.... it would be 3.5% for the breakpoint. Makes me wonder about how accurate the rest of their information is?
  21. Sorry to offend you Kev, I included the "in my opinion" so as not to be arguementative. Obviously your opinion is different, that's fine. Let me rephrase, I crushed the S&P and re-balanced to where I think it should be this year. Given 3 decades is not the point. I happen to like spending more than the average Joe's 2 minutes a year looking into my accounts. Sit back and take what they give you is crazy. You have NO control in a target date fund of how much your "mix" contains. Throw that basketball up and, for your sake, I hope it comes near the hoop in 30 years.... you won't know until then. You're right, for some people target date funds could be the way. Get beyond expenses and look at who manages your money. I guess you would rather spend $3 on a college graduate money manager at H&R Block than $5 for a seasoned wall street investment manager; all in the name of "saving money". Do you know the turnover ratio in most target funds? HUGE. Any idea what that does to a fund who's strategy is supposed to span decades? There are things more important than expenses..... such as.... returns. Why in the world has everyone become such cheapo's? Stop buying the cheaper made product and expecting it to work as well as the better made one down the road. I think people have simply stopped worrying about "down the road" and only care about tomorrow. Allow me to say again, IN MY OPINION, AIG VALIC HAS SOME VERY TASTY INVESTMENT OPTIONS. If you don't like them, don't use them.
  22. I love AIG Valic and the money I have with them. Individual experiences I'm sure vary, but I crushed the S&P last year. Proper diversification beats taking the easy way out with indexes and target funds. Target funds say to me: we (the fund company) have 30 years to get this right.... don't pay attention to the fact that money managers switch jobs every 9 months and individual strategies will vary between them, given 3 decades I'm sure we can do something. Way too much of a cop-out in my eyes. Just my opinion and my experiences.
  23. BCinMI

    Tiaa-cref

    That would have had to be one huge step up to have 6 1/2 years vested and voluntarily leave!??! 6 more months would have made a huge impact (unfortunately I don't know what your situation was and am absolutely not judging you). When companies merge they take on assets as well as liabilities..... thus the pensions of the purchased company. Nothing should have changed (but who knows anymore). I was the one who referred to Ford Motor and I know the system intimately well. Living in Michigan, the big 3 would be committing suicide to default on their pensions. THOUSANDS of residents here rely on that money after putting in their years with them. For those who were offered buyouts, one of the incentives was an addition on your years of service when determining your pension (most common was 3 years added to whatever you had acrued). I would be willing to bet that the big 3 are far more likely to close more plants down than they are to quit paying their pensions, deficits or not. Keeping the retirees happy means selling more product to them..... a shop worker who put in 30 years at Ford would rather die than buy a Japanese car more often than not. Sierra: as an OPINION, I have about as much faith in Social Security as I do in your ability to catch me if I jumped off the Sears Tower. Yes, it is universal but there is no guarantee to it. I like the idea that is it required participation if you earn an income, but as a whole, the design is terrible. As far as employees having a choice in saving DB or DC for retirement, I think having the option is a good thing but the should be required to participate in at least one. As a society I believe people are caught up in spending now and saving later, but later never comes. It cannot be yours and my job to support these people when they are 70 and can no longer work; government programs can only do so much. What those programs do supply comes from our tax dollars anyhow... its a vicious circle. Choice - yes, required - yes
  24. BCinMI

    Tiaa-cref

    All of us have Social Security, the universal DB plan full adjusted for inflation. This is yet another reason for the employee to have a choice, DB or DC, when it comes to his/her employment based retirement plan. That's an awefully bold statement. This is not the thread for the discussion of social security strengths (or lack there of) though I would never assume that I'll ever get in the future year..... its that unstable. Alcoc628: Please be weary to assume the "guarantee" of a pension benefit. Hear of all the companies lately defaulting on their pensions? They can very easily do so and the benefit is picked up by the Pension Benefit Guarantee Corporation (PBGC). The PBGC will generally pay you 100% of your expected pension UP TO $40,000/year...... anything more than that is lost. Every company who offers a pension pays a premium to the PBGC each year for this "insurance". I wouldn't throw all my eggs in that basket alone and assume a whopper of a pension too far into the future.
  25. BCinMI

    Tiaa-cref

    Many employers will allow you to run illustrations of you pension in the future. Some employers allow you to contribute to this defined benefit, sometimes even require it. I'll give you an example I see everyday, Ford. Ford offers a defined benefit program which allows you to contribute up to an additional 1 1/2% of your salary for an increase in pension. If you do the math and run the illustrations, the DC plan would have to average in the ball park of 10-12% to match the guaranteed increase in DB payout. I haven't met one person yet who wants to assume the risk in their DC plan to attempt 10-12% every year until they retire. If the employer offers benefit illustration software, its easy to determine the best option. FYI, only 1 1/2% goes to the DB, so there are also monies put into the DC plan which is NOT annuitized at retirement.
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