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mmcwenie

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  1. I've used the short term bond index fund from Vanguard for my emergency fund for about 15 years. The advantage of this is that you will tend to earn more interest than in a money market with little additional risk. Since it is an emergency fund the likelihood of having to tap into this may be small so I view it as a way to earn some additional money from the higher interest rate, hopefully enough to keep up with inflation over the years and maintain the purchasing power of the emergency money over the long term. I can't write checks from the fund but I can easily transfer funds from this account into my Vanguard Prime Money Market account.
  2. WSJ article from today: http://online.wsj.com/article/SB1000142405...0639830296.html Be sure to read the comments. The first one covers how the big insurance companies used the ISA issue to get Vanguard and Fidelity dropped.
  3. Prior to the new regs we had 40+ choices almost all of them insurance companies selling expensive annuity products. We did have a few really good options like TIAA-CREF, Vanguard, American Century, T. Rowe Price, Janus, and Fidelity primarily because a few teachers asked and these were added over the years. Most teachers I knew were invested with one of the insurance company annuities being in the dark about the costs and mostly led by the breakroom salespeople. I invested, first with American Century for about 5 years. I had read one article about how no-load companies were the way to go and that American Century was one of the better ones. Thank goodness I went in that direction. As I read and became more educated about personal finance and talking with my parents convinced me to transfer my money to Vanguard (They had been with Vanguard for maybe 2-3 years already and raved about it). I've had my money in a Vanguard 403b for the the last 15 years and it has done really well. When I tell some of my teacher friends how much my account is worth today, even after the last 2 years, most are in disbelief. I just tell them that it's all about regular saving, the power of compound interest, AND low costs. Since the new regs we have been limited to 3 companies: Security Benefit, ING, and Metlife, all of which IMHO are better than most of the options that people were in before but pathetic in comparison to Vanguard and the other low cost, no-load companies. ING has a self directed option but it's still about 5 times as expensive as what my Vanguard 403b charges. Since the new regs came out I stopped putting money into a 403b and have since shifted over to a Roth IRA with Vanguard. My view is that the IRS really shafted a LOT of people with the new regs. We still have ING and other sales reps camped out in our breakroom several times a month and most teachers are still going with the annuities. Living in Arizona, I am hopeful that the newly announced 403b/457 plan that the AZ State Retirement System has announced with TIAA-CREF will be a good option but it is still probably a year off from now. The new regs have been a bonanza for the large insurance companies who have scooped up most of the districts and can afford to absorb the admin costs with their high fee structure. I just had to shake my head in disgust when I saw that Bob Architect, the IRS official who wrote the the regs went to work for VALIC. Talk about a conflict of interest! The revolving door at it's worst.
  4. This is phenomenal news. I've been waiting to find this out since last March when our legislature (for once!) did something good for teachers and allowed the ASRS to set up their own 403b and 457 plans. I've completely stopped putting money into my 403b in the last 18 months since the companies my district went with (Security Benefit, Metlife, and ING) all had poor investment choices and high fees (almost all over 1.00% with many at 1.5% and above). I had been in Vanguard and done quite well over the last 15 years of investing. I felt like the rug had been pulled out from under me when the new regs passed and now I have some hope back. I hope they can get this implemented ASAP. Now I just need to spread the word in my district to avoid the breakroom salespeople and go with the ASRS plan!
  5. Vanguard has a Roth IRA (NOT a Roth 403b) option. I have had one for about 10 years with them. Here is the link: https://personal.vanguard.com/us/accounttypes/retirement
  6. You have two good choices for low cost, index investing: T. Rowe Price (4) TIAA-CREF (4) Maybe look at: Ohio Public Employees Deferred Compensation Program (5) I am not familiar with Ohio but some state plans are good and others are bad. Many states use insurance companies as their providers so the fees are high. Avoid the others. They are the usual suspects.
  7. The Securities and Exchange Commission has a mutual fund cost calculator here. It does exactly what you want.
  8. On managing risk in today's markets. Great points about risk regarding human capital vs. financial capital. Here
  9. Thanks for this idea. I will check to see if it is an option.
  10. My school district, in Phoenix, offers Security Benefit as one of our 3 approved providers, Metlife and ING are the others. It's good to see that Security Benefit has been such a good fiduciary of its customers' money! Our principal was told a a district principals' meeting at the start of the school year that the 3 companies were the best vendors/plans available! They HAVE lowerd their costs compared to the previous annuity vendors but we've lost access Vanguard, Fidelity, TIAA-CREF, T.Rowe Price, and USAA. We can invest in a very limited number of funds from Vanguard, Fidelity, and T.Rowe Price but due to the few choices it is impossible to build a mix of index funds from these companies that includes total bond, total international, and total U.S. funds. In addition, we pay an expense ratio that is 5-10 times greater than what we had before (1-1.5% now vs. .15 to .30% before) with the low cost vendors. Under the contract signed with the companies we also do not have the capability to change this for another 5 years. I served on the district committee that selected the 3 companies and my pleas to add Vanguard or someone else fell on deaf ears. The break room vultures from the 3 approved companies have been hanging out at my school for the last few weeks picking off the low hanging fruit. I'm stuck with investing in a Roth 401k and given some of the articles I've read I'm not sure if my income in retirement will be high enough (even with a state pension, existing Vanguard 403b, and Social Security) to justify the lack of deductibility that the Roth has. I feel like the Bob Architect and the IRS have stolen my path to a secure and potentially early retirement that I got from the 403b through Vanguard.
  11. You should be able to do a 403b rollover from the Metlife account into Vanguard. Call a rep at Vanguard and explain to them what you want to do and they will send you the appropriate paperwork. You want to make sure the money is sent by Metlife directly to Vanguard to avoid any tax issues. Vanguard may have more info about this on their website. You may need to get paperwork from Metlife to sign off on too. Don't be surprised if Metlife tries to slow the process. You may just want to call Metlife's 800 number and talk to a Metlife rep over the phone rather than the salesperson who sold you the annuity. My wife and I did this exact thing with my wife's Metlife annuity about 12 years ago and we rolled it into Vanguard. She had to pay a surrender fee too, about $1200, but the investing with Vanguard has paid of quite well in the meantime. The fees that Metlife was charging were killing her returns. I'm not sure about the answers to the other questions. I think that as long as you have an ISA with Vanguard you may be OK. You may want to talk to the person at your school in charge of this and stress the need to keep Vanguard in their plan after 1/1/2009. They may not be real knowlegeable about the new regs so you may be able to sway them to your point of view relatively easily.
  12. This helps to clarify this a lot. Thanks so much for your help on this.
  13. I plan on opening a traditional IRA and/or a Roth IRA next year since my district's new 403b and 457 options are either too expensive or the choices are not diversified enough. I have a question about opening the traditional IRA. I have read two different things about income eligibility requirements. Several sources say that as long as I do not "participate" in my employer sponsored plan I will not be subject to any phase-out of IRA deductibility due to my income. Other sources I have read say that if I am "covered" by an employer sponsored plan then I WOULD be subject to the deductibility phase-out, since my wife and I are both at the top of our district's salary schedule and we are above the IRS limit. I'm not sure what "covered"means. Does "cover" mean the district "offers" the option or does it mean I actually have to contribute money to the plan to be considered "covered" by the plan? So do I have to actually participate in the 403b or 457 plan to be subject to the phase-out, or am I subject to the phase-out simply because my district offers a 430b and 457 plan?
  14. You can try 403bcompare.com, the State of California's website for plans that are offered in schools in California.
  15. Hi Steve, I got the list of 403(b) providers authorized by the school district. Although I don't know much about every one of them, a few of them kinda depress me, and I'm bracing for the possibility that they all suck. That is, they all look like they're hawking annuities, whereas I really think that a 403(b)(7) is the best option. Here's the list: American Century American Fidelity Ameriprise Financial AXA Equitable Commonwealth Annuity & Life Insurance EMC National Life Horace Mann Life Investors Insurance (AEGON) Lincoln Financial Group Mass Mutual Nationwide Financial New York Life Insurance & Annuity Principal Financial Security Benefit Life Waddell & Reed The more I read the great postings on this forum, the more infuriated I get by some of these scammers, and thus my preference to wash our hands of this annuity junk and move to a 403(b)(7) or a traditional IRA, but I recognize that we have to make the best with what we have for now. What looks least bad to you? Does anything look better than least bad? Many thanks. David American Century is definitely the best of the bunch. I invested my 403b with them when I first started teaching in the early 1990's and it performed well. They are not the lowest cost mutual fund family by any means but way better than the other stuff on the list. They are sort of at the high end, expense-wise, of the low cost no-load funds. I switched to Vanguard in the mid 90's once I had read more and realized Vanguard was the low cost leader.
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