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Everything posted by gerryborn

  1. Years ago I rolled 2 years worth of teaching service to an IRA. I would now like to buy these years back. I will cost me about $4K. My question: Can I put this money back in a 457 account and roll it over to the State plan? or do the 457 distribution limitations prevent me from moving my money while employed? Thanks for your help. Gerry Born
  2. There was no mention of this at the State website: http://www.gms.state.ga.us/employee/defer-ques1.asp Last night I had a 25 minute conversation with a Great-West rep. She said that the Georgia plan only had a $12 a year account fee for the 457 and $24 for the 403b. She said that each fund charges its fund expense fee; that is all. Is this plan a really good plan or is she lying to me?
  3. I heard today that Georgia’s Peach State Reserve 403b/401k/457 plan administered by Great-West Retirement Services is a very expensive plan. Does anyone know about Great-West? I just got off the phone with a rep and learned that the 457 plan costs $12 a year plus the underlying fund fee. There are lots of Vanguard Institutional funds at incredibly low prices. The S&P 500 Index costs .05%! The Wellesley Income fund cost .20! All the Vanguard Index funds are inexpensive. There is a 403b plan that costs $24 a year plus the underlying fund fee. This option sounds like a no-brainer. Am I missing something here?
  4. I heard today that there is a Morningstar report suggesting that Valic is less expensive than TIAA-CREF. Has anyone else heard this from a Valic rep? Is it true? I just got wind of this today; I would love to see this report. From what I have seen from Valic’s prospectus this appears to be impossible. Could this be a case of data mining?
  5. gerryborn


    Steve, I believe T-C charges a surrender charge if the Traditional Annuity is in a Retirement Annuity or Group Retirement Annuity (GSA). There is not a surrender charge for Supplemental Retirement Annuity (SRA). I believe that is why the SRA and GRSA traditional annuity rates are lower than the GRA tradtional annuity rates. I think the info below will clarify. If I am wrong on this, somebody please bring it to my attention. Gerry http://www.tiaa-cref.org/pubs/html/retire_strategies/chapter5c.html Each TIAA-CREF retirement product has a different set of rules regarding cash withdrawals: Retirement Annuities only allow cash withdrawals from TIAA-CREF variable annuity accounts. Group Retirement Annuities (GRAs) allow cash withdrawals from both the TIAA Traditional Annuity and TIAACREF variable annuities. However, you can withdraw cash from a traditional TIAA GRA only during the 120-day period following termination of employment, and you’ll incur a 2.5 percent surrender charge. After that, funds may be withdrawn over a five-year period without a surrender charge. Supplemental Retirement Annuities (SRAs) and Group Supplemental Retirement Annuities (GSRAs) are entirely cashable. As long as you comply with IRS regulations, you can withdraw cash from a TIAA or a CREF SRA or GSRA at any time. IRAs are entirely cashable, as long as you comply with IRS regulations
  6. gerryborn


    Connie, If your heart is set on Vanguard, you should contribute to TIAA-CREF and roll the money over as you see fit. I suggest this since T-C has no surrender charges. It is a little bit of a hassle, but you can accomplish your goal of investing in Vanguard. You will have to set up a frozen 403b account with Vanguard. Then you can direct T-C to make the transfers. I would park my money in T-C's traditional annuity account. Gerry Born
  7. Baba, Here is a link to a 127 page MetLife prospectus: http://www.metlife.com/WPSAssets/11094347761083860029V1FPPSProductProspectus05012004.pdf When you understand the fees beginning on page 8, let me know. I would not invest with this company due to their high fees. Your district may have another MetLife offering, but I imagine it is much of the same. That is: bloated fees and big surrender charges. The highlight of the prospectus is the use of the Peanuts characters. They give me a warm and fuzzy feeling, but not enough to give up 35%-50% of my retirement savings. Gerry Born
  8. Jim, One major reason I like TIAA-CREF for 403b accounts is their lack of surrender charges. That was a major factor as I looked for additions to my district's 403b plan. I feel strongly about being able to move my money from one plan to another in the event of rising expense ratios. Believe me, if TIAA-CREF fees started to shoot up, I would not hesitate to move my money to Vanguard. If I had invested money with another company, I would be at their mercy. If their fees went up, I would have to either accept them (and lose money via the fees) or transfer my money out (and lose money via surrender charges). It looked like a win-win situation for the insurance companies and a lose-lose situation for me. Another factor in T-C's favor is their history of offering solid funds at a low-cost. When I compared that to other companies offering annuities at over 2% a year with surrender charges, I just couldn't talk myself into investing with a traditional 403b provider. TIAA-CREF appeared so good to me because my other choices appeared so bad. Until some other company offers me solid funds at lower rates and without the surrender charges, TIAA-CREF looks like my best choice. Gerry
  9. Jim, I agree that my district is to blame for only one 457 choice. We definitely need other alternatives, so I hope to get other choices added. A beef with Valic? Not at all, my beef is with expensive investment products. Valic just happens to be the product in my district, so they were named in my post. If Equitable (or any other company) were my only 457 choice, my post would have been directed to them. Do I expect Valic to make changes for me? Not really, but it doesn't hurt to ask. I emailed my post to Valic, and they replied back saying that they would pass my request to someone. Let's see what they come up with. If they can't offer me a plan worth doing, new 457 plans will have to be established. Gerry
  10. Bill, Do you think VALIC's record keeping, 1-800 number and website merit over 1% of my investment return a year? My God how does TIAA-CREF or Vanguard manage to make any money at all? Believe me they have made plenty of money. The insurance companies have made lots of money too but often at the expense of ignorant investors. Once you know the market price of funds, you realize that most annuities are rip-offs. What I don't need from Valic or any other investment company is the hand holding. I will make my allocation decision and live or die with it. I don't need some rep telling me where to put my money. I sure don't need him charging me at least an extra 1% for "managing" my money. I can manage on my own thanks. The problem with my district's 457 plan is that we have only one provider. To build on your analogy, we have only one "dealership". Since there is no competition, our dealership has no reason to offer competitive prices. For this reason I am doing all I can to “open another dealership” in my district. Our current dealership charges $100 for an oil change while I know the market price is $20. Why should I pay four times the market price? Actually, it’s even worse than that in the 457 world. A generic S&P 500 Index fund costs 1.4% from our current 457 provider, Valic. Georgia’s state plan, the Peach State Reserve 457 plan, has Vanguard S&P 500 Index shares at .05%. That means our current dealership charges 27 times more for the same investment product. I cannot bring myself to invest into Valic’s 457 plan in its current state. That is why I have tried to cut a deal with them. Gerry
  11. Joel, I liked your point about "valued added." Regardless of its quality, 403b / 457 advice doesn't come free. TSA salesmen provide advice that I don't want. An RIA would provide advice that I don't want either. Employees like me should be offered choices of funds that have razor-thin expenses and no surrender charges (or whatever they are called by the company). Some educators have no need for advice, good or bad. I am one of those people. That's why I have made Valic aware of my special investment requirements. I do not want Valic's typical fee-laden products. I WANT WHAT I WANT AND I WANT IT NOW!!!!!!!!!!!!!!!!! GOOD FUNDS AT GOOD PRICES WITH NO HANDCUFFS!!!!!!!!!!!!!!!!!!!!! PLUS, KEEP THE ADVICE!!!!!!!!!!!!!!!!!!!! Gerry
  12. Dear Valic, My district, Troup County School System, has a 457 plan with you, and I would like to begin investing with you. Before investing any money with you, I require special conditions. First, I would like to invest in the Vanguard Target Retirement 2025 Fund (VTTVX), but unfortunately you currently do not offer this choice. Obviously, you will have to add this fund. Since you already offer some Vanguard funds, it should be very easy for you to add them. Second, I are willing to pay you two basis points for managing my 457 accounts. This means that my total expense ratio will be .25% (VTTVX’s 0.23% expense ratio + .02% to you to manage our accounts). I realize that these fees are below what you usually charge, but I will need the money during my retirement. My account will be very easy to service since I will never need to see or speak with a Valic sales rep; you will only need to invest my money and let Vanguard handle the rest. Since all Valic will be required to do is invest my money with Vanguard, I feel that my offer of two basis points is a generous one. However, if Vanguard ever offers institutional shares of this fund, I expect Valic to lower the expense ratio accordingly. As I said, your fee will always be .02% above the fund’s expense ratio. Third, if I ever decide to move my money from Valic to another institution, I will not be charged any type of surrender fee or any other penalty for moving MY money. I feel that it is imperative that Valic realize that my retirement money is MINE first and foremost. Just because I choose to invest through you does not mean my money will magically become your money. Finally, all prospectuses and contractual documents will be written in a very simple and easy-to-read style. Please do not add layer upon layer of conditions to our agreement, or I will simply refuse to sign it. I hope you will consider my request. I look forward to hearing from you. Gerry Born LaGrange High School LaGrange, Georgia
  13. I guess a horrible 403b retirement plan is better than no plan at all. I personally would rather take longer summer vacations and frequent more happy hours than pour my money into most 403b money pits. I feel very fortunate that my district added TIAA-CREF last year. It does not bother me that a T-C isn't lurking in the teacher lounge. I have a basic understanding investing and retirement planning, so I know what is good for me. I have greatly helped my retirement by removing the TSA middleman from retirement savings. While many teachers view these sales reps as "friendly, helpful guys" offering impartial advice, I view them as thieves. I can't change my perception of them; I've tried to see it their way, but it seems that my money is in peril if I invest with them. Just because many teachers don't understand retirement investing doesn't mean that all should be punished with inferior retirement plans. All employees deserve good retirement plans--even teachers.
  14. Hawk, You are guilty of telling the truth. Naturally, “financial advisors” do not like the fact that you are exposing them. Can you imagine how it must feel to have 20+ clients asking tough questions like: “Is it true that Vanguard is a better deal than what you offer?” “Why should I pay 27 times the market place price for your fund?” (This is a true example: In Georgia Peach State Reserves offers Vanguard S&P 500 Index at .05% while many variable annuities offer an S&P 500 Index at 1.4% to 1.5%!) “Why do I have to pay a fee if I want to move my money from your company?” “Why is my money suddenly your money when I invest it with you?” I could make millions of questions like these, but the bottom line is that most 403b “financial advisors” should not be trusted. They are salesman first and foremost. They stand to gain from the financial ignorance or indifference of our co-workers. You are doing your co-workers a great service by shining light on the tremendous abuses taking place in the 403b market. Keep exposing these charlatans for what they are: thieves Arthur Schopenhauer: All truth passes through three stages: First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. First, "Ha ha, low-cost funds are better than what we offer! Index funds?! Now, that's funny! You get what you pay for!" Second, ROBERT OLSTEIN, CHAIRMAN, OLSTEIN FINANCIAL ALERT FUND says "look, the index funds, John Bogel, who should be enrolling in Karl Marx University, OK..." ( http://www.foxnews.com/story/0,2933,108135,00.html) Roy Roemer says, “This forum and site is underwritten by TIAA- CREF, who wants this whole industry to itself, eliminating choices…” (http://bwise.ibforums.com/index.php?act=ST&f=2&t=340) Third, "Of course a low-cost retirement plan is better than a high-cost retirement plan." Folks, the retirement planning truth is now in the second stage. Be prepared for numerous attacks and half-truths if you threaten this multi-billion boondoggle. If enough people speak out and cause serious reform, investment firms and insurance companies stand to lose billions in fees. That’s billions, not millions. Of course they will fight to protect their turf. Gerry Born LaGrange, Georgia http://webpages.charter.net/gerryborn/MYWEB.HTM#fl
  15. gerryborn

    Lausd 403b's

    Roy, I've spent plenty of time educating myself about 403b / 457 products. Frankly, it’s pretty boring stuff until you realize that high-cost investments lower retirement savings by hundreds of thousands of dollars. That really caught my eye. The bottom line is that most 403b / 457 products are not competitive products when compared to TIAA-CREF and Vanguard. Most products charge astronomical fees and have punitive surrender charges. I imagine “financial advisors” are getting nervous. Finally, when I petitioned my district for 403b / 457 changes, I did not request that any current providers be dropped. All I requested was that I be allowed to have a low-cost option. That did not bother the district’s CFO, but I imagine it worries the hell out of most insurance companies offering 403b / 457 retirement plans. I am doing all I can to educate myself and co-workers about the 403b market. Check out my website at http://webpages.charter.net/gerryborn/MYWEB.HTM#fl I am obviously an HTML rookie, but eventually I’ll get a decent site up and running. Gerry Born
  16. Does anyone know what kind of retirement plans 403b / TSA sales reps have? Do they also have to buy high-priced variable annuities to plan for their retirement? Are they subject to surrender charges? Do any of them have 401k plans with Vanguard, etc? If they have retirement plans with other firms, why?
  17. Is the Variable Annuity Scadal Bigger Than the Mutual Fund Scandal? Last week I emailed a question about 403b variable annuities to Paul Merriman at soundinvesting.com . The following day I received an invitation to ask my question on his show. If you would like to hear what he says about 403b variable annuities, go to: http://www.soundinvesting.com click "listen" and go to the current show (11/28/03). My question shows up around minute 30. Mr. Merriman agreed that the variable annuities used in most 403bs are an outrage. He used the expression, "raped and pillaged." Gerry Born
  18. From the October 13, 2003 edition of the Wall Street Journal, page C10 This week’s variable annuity with the highest total expense is VALIC’s Growth fund. This sub-account charges 3.67%! It should be noted that American Skandia Life Assurance provide VALIC with some stiff competition. Skandia had multiple offerings with total expenses of 3.38%. Better luck next week Skandia. I hope readers don't mind me posting this information. I plan on doing it weekly.
  19. From the October 13, 2003 edition of the Wall Street Journal, page C10 This week’s variable annuity with the highest total expense is VALIC’s Growth fund. This sub-account charges 3.67%! It should be noted that American Skandia Life Assurance provide VALIC with some stiff competition. Skandia had multiple offerings with total expenses of 3.38%. Better luck next week Skandia. I hope readers don't mind me posting this information. I plan on doing it weekly.
  20. From the October 6, 2003 edition of the Wall Street Journal: The MF INVESCO Enrg within the AUL Variable Annuity has total costs of 12.87%. Can this possibly be correct? The next highest expense ratio was in the Allmerica Select Resource II annuity. The Eat Van WW Hlth sub-account has an expense ratio of 3.9%. These high-fee annuities are this weeks “winners.”
  21. From the October 6, 2003 edition of the Wall Street Journal: The MF INVESCO Enrg within the AUL Variable Annuity has total costs of 12.87%. Can this possibly be correct? The next highest expense ratio was in the Allmerica Select Resource II annuity. The Eat Van WW Hlth sub-account has an expense ratio of 3.9%. These high-fee annuities are this weeks “winners.”
  22. As a member of P.A.G.E. (Professional Association of Georiga Educators) I am interested in who we choose to endorse as a TSA provider. Last year we endorsed Valic. Last year I sent the following email to a P.A.G.E. representative who is involved in the TSA endorsement process. (This email included a spreadsheet; it is not included with this post.) The email read: Mr. Callahan, Thank you for your response. I look forward to seeing which company P.A.G.E. endorses after the next evaluation phase. I hope a cost-efficient, customer-friendly company receives our endorsement. As someone with input in the endorsement process, I am sure you realize that many P.A.G.E. members base their decision to invest with VALIC by virtue of its P.A.G.E. endorsement. Many of these same members do not understand how high fees and surrender charges negatively impact their retirement investments. Like you, I value the freedom of choice when selecting a retirement investment. However, restricting investment choices is not the issue; the issue is the endorsement of a 403b/TSA product that is in the best interest of P.A.G.E. members. You and all those involved in the endorsement selection have an awesome responsibility before you. Your decision will influence where thousands of P.A.G.E. members will invest for their retirement. For better or for worse, they base their choice on whichever company receives P.A.G.E.'s endorsement. Presently, VALIC offers no low-cost options; their least expensive fund is about 1.1%. I believe that in order for VALIC to maintain P.A.G.E.'s endorsement, they should do the following: First, they should provide a number of low-cost investment options with expenses from .2% to .3%. These fees are along the lines of Vanguard and TIAA-CREF products. Second, they should drop all surrender charges and make this change retroactive for all existing accounts. Third, they should make all expense and surrender-charge information readily available to all those who ask for it. Finally, any new products promoted to P.A.G.E. members must have straight-forward, easy-to-read prospectuses. With our 54,000 members we have the strength in numbers necessary to leverage these changes. I sincerely hope that P.A.G.E. will make these demands of VALIC. With VALIC's current fee and surrender-charge structure, many P.A.G.E. members find themselves in substandard retirement plans. Do these plans underperform their private-sector counterpart, the 401k, due to poor fund performance? Generally, no. The main factor in their substandard performance is their high costs. Later, when an investor decides to move his money to a more fee-friendly company, more money is extracted from the account in the form of surrender charges. As it stands, VALIC stands to make their money regardless of performance or service. During this process P.A.G.E. members bare all the risks associated with the investment. Without knowing it, many P.A.G.E. members investing with VALIC have "silent partners" in their retirement accounts. What do I mean? With the average expenses of about 2% (see attached spreadsheet), a return of 8% would net 6%. This seemingly small fee of 2% actually represents 25% of all investment earnings over the period (2/8=.25). In short, VALIC's fees are beneficial to VALIC and detrimental to P.A.G.E. members' investment return. This fact is undeniable. Unfortunately for VALIC investors, these fees are also extracted during periods of negative investment return. Once again, VALIC gains while P.A.G.E. members lose. Let me close by saying that I am not singling out VALIC. VALIC benefits greatly from the present 403b structure, but they are not alone. As the spreadsheet indicates, other companies are selling even more expensive annuity products to investors. As a member of P.A.G.E., I hope you will take expenses and surrender charges into account during the upcoming endorsement process. There are a lot of members depending on your judgement. Sincerely, Gerry Born LaGrange High School LaGrange, Georgia Today, I found out that P.A.G.E. is considering the following companies for our endorsement: VALIC ING Life Insurance & Annuity Company Fidelity Investments Horace Mann Insurance Lincoln National Life Insurance Co TIAA CREF Citistreet, LLC Relistar Life I only know about the Valic and TIAA-CREF plans. I know about T-C because I lead a petition to get them added to the 403b provider list in Troup County. How do these other plans compare to Valic and T-C? With the exception of Fidelity are the all annuity products? Which ones are real dogs suffering bloated fees and surrender charges? Gerry Born gerryborn@mail.com
  23. Joel, I was told to ask the Valic rep if this would be possible. I did receive some info via the benefits department last spring, but it appears that our 457b plan now uses a different Valic product--the Portfolio Director Plus plan.
  24. Greetings. My district has a 457b plan with Valic. The plan uses the Portfolio Director Plus product. Unfortunately, I could not find any details on this product at Valic’s website. Does anyone know where I could find information on this product? I need this information because: 1) I want to know if it would be possible to contribute to the Valic plan and then roll the money over to a TIAA-CREF plan. 2) I would like to know if it would be possible to move my money without being penalized. If there are fees, what are they? 3) I would also like to know if there are any short-term investments at Valic that would guarantee my principle until I decide to move my money. I found some information at Valic’s website that suggests it is possible to lose money in a money market fund! (http://www.aigvalic.com/valic2000/valicfiles.nsf/lookup/performance/$file/performance.pdf) Obviously, a money market that loses value is not an option. Can anyone provide me with some advice? Am I setting myself up to be boondoggled? Gerry Born
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