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pbm

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  1. pbm

    Vanguard 403b

    We have a similar situation where I teach, but the SD and our teachers' association hasn't even communicated a single word about any of the upcoming changes to their employees. I found out about the new rules and the possibility that our new vendor list wouldn't include low-cost companies like Vanguard when I tried to transfer my AIG Retirement monies into a new Vanguard account. The SD would not approve the transfer even though at the time (November 2007) Vanguard was an approved vendor, and they let me set up an account to which I have contributed for the past year. SD's business office told me they had placed a hold on all transfers until they completed their compliance (without notifying anyone, of course.... I raised a bit of hell, which only got me in a bit of trouble with the superintendent and was never able to transfer from AIG to Vanguard. Now we are told that low-cost vendors like Fidelity and Vanguard will not be on the approved list because they refuse to sign on to the SD's new policy. So I would like advice from all of you financial wizards out there. I have about 10K in the AIG account that I tried to close last year and move into Vanguard. I will not be able to contribute to my Vanguard (403(b) because it will be "frozen" beginning on Jan. 1, 2009, since they will no longer be an approved vendor. My plan is to stop contributing to 403(b) since our only options will be expensive insurance annuities, most likely AIG (where I currently have 10K invested) and MetLife. I plan to open an IRA (I haven't decided on Traditional or Roth...) with Vanguard. My questions are: (1) Can I change my current, soon-to-be-frozen Vanguard 403(b) into an IRA without any penalty? (2) Can I transfer/move my maximum IRA contribution of 5K (I'm 46) from AIG to an IRA with Vanguard? Do I get hit with any taxes and penalties for doing this since I'm really just transferring money from one retirement account into another? I would like to continue making this kind of transfer each year until my AIG is completely closed. Is this a prudent move, or should I just go with the IRA and leave my AIG alone? (3) What does "frozen" mean? Can I contribute AFTER tax dollars to that account after 12-31-08 (if I'm not able to turn it into an IRA)? As always, thanks for any advice you might have.
  2. pbm

    457 Regs (vendors)

    Thanks, Steve. My other question is about transferring from a 403(b) into a 457. We currently have Vanguard with a 403(b), to which I've been investing for several years. Vanguard will no longer be an approved vendor for 403(b) after December 31. If our SD creates a 457 that includes Vanguard as a vendor, are teachers able to transfer their 403(b) monies into the 457? Are there penalties for doing so? Patrick
  3. pbm

    457 Regs (vendors)

    Our SD has written its new policy to conform with the new 403(b) regs, and as seems to be the case elsewhere, low cost vendors like Vanguard and Fidelity are not accepting the SD's policy and will no longer be vendor options to our teachers. We currently do not have a 457 at our SD. Does a 457 fall under the same regulations as the new 403(b) rules? I am asking because I am thinking that it's possible for the SD to offer some of the vendors we are losing for 403(b) with a 457. Does that make sense? Is this possible? Or does 457 have the same requirements as the new 403(b) regs?
  4. Thank you for responding. I'm unclear as to how this might be a taxable situation for me. How can I be taxed on 403(b) funds if I never touch those funds. In other words, I will be transferring from one 403(b) account vendor to another: AIG to Vanguard, then, possibly, from Vanguard to a newly approved vendor once the school corporation completes its approval process and if Vanguard is not included in it.
  5. Hello. I apologize if this isn't in the right forum section. I have some questions about my 403(b) investment and the effects that the new IRS rules will have and where my SD currently is in rewriting their policy for vendors and employees. I have about 15K in an AIG-Retirement account, which is currently on my SD's approved vendor list. I want to transfer all of my AIG funds into a Vanguard account, also currently on my district's approved vendor list. My SD's benefits specialist will not sign off on the Information Sharing Agreement for 403(b) Contract Exchanges Form that is required for my requested transfer to take place. She stated that the SD is currently rewriting their policy for approved vendors, that they have hired a consulting firm to help with this, and that Vanguard may not be approved when the new list is created. She said it may take up to two years for the new vendors to be approved and for the hold on transfers to end. On the other hand, she allowed me to create a new payroll deduction to my new Vanguard account since Vanguard is on the current vendor list. Needless to say, all of this is very confusing and seems to put me in a Catch-22 scenario, specifically that the SD is not allowing me to transfer my funds from one approved vendor to another (presently) approved vendor, yet they are allowing me to start a new payroll deduction to the vendor that they aren't allowing me to transfer my funds into.... I am appealing the SD's interpretation of the rules with the intention of making my transfer. My question is, I am preparing to make a formal request that the funds transfer be allowed since the new laws don't go into effect until 1/1/2009 and since Vanguard is currently approved. Is my thinking correct here; is the SD able to prevent me from transferring funds from AIG to Vanguard if the new law doesn't go into effect until 1/1/09 and if Vanguard is on the current approved list of vendors? If my reasoning is correct and the transfer is allowed, is this a wise decision on my part since Vanguard may NOT be approved when the new rules for vendors and vendor list are created? Should I just hold out with AIG until then, or should I complete the transfer now if my appeal allows me to do so and then hope that Vanguard is on the new list? I don't think that I want to have two accounts once the new vendors are approved (and if Vanguard isn't); I don't want to have my large investment in Vanguard where I may not be able to continue with payroll deduction and then start a new account from scratch where my payroll deduction goes. What do the new IRS rules state about grandfathering me after the new law takes effect and if my transfer is made since I already have established a Vanguard account and since the SD has presently approved payroll deduction into that Vanguard account? If I make the transfer and if the SD does NOT approve Vanguard on the new vendor list, will I still be able to contribute to my Vanguard account through payroll deduction, or will I have to transfer my account to a newly approved vendor where payroll deductions are allowed. I hope that all of this makes sense to someone; it doesn't make much to me. Thanks for any advice or explanations!
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