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Everything posted by kat92128

  1. Dan who??? Just kidding.. Great interview Dan. It really hit the basics in an easy-to-understand format. I'll copy this and give it to education colleagues who are befuddled by the 403b process. I expecially like how you gave some definitive maximums for expense ratios.
  2. http://www.utsandiego.com/news/2009/mar/17/1n17fringe00134-benefits-managers-work-questioned/?zIndex=68144; I agree with Dan. NEA has got to clean up its act. I wish I was surprised to hear that they are "in bed" with a high-cost 403b provider, but I'm not. Follow the money and you'll see where it leads. This reminds me of the Fringe Benefits Consortium (FBC) here in San Diego, the group that is supposed to offer low-cost investments and products to teachers. When all of the 403b rules changed a few years ago they "adopted" Nationwide Insurance as their conduit. Luckily, we still can invest directly with TIAA-CREF through CALSTRS, but as Tony said, most people do the annuities because it is easiest and they have not educated themselves. I was a sucker, too, until I switched last spring and cut my expense ratio by about 2/3. After attending an "informational" seminar last fall sponsored by the FBC, I was appalled at the products they were trying to sell teachers....like a high cost and probably unnecessary legal plans presented by a TV lawyer and personal money management by another group. Nothing about the seminar was informational; it was one big sales pitch. I did a little research and came up with an interesting article that appeared in the San Diego newspaper a few years ago. Check it out.
  3. It took me a while to figure mine out because I switched vendors last year and moved some stuff around. Overall I'm up between 2% and 3%. Luckily I invested more in Vanguard TIPS, which did very well. My TIAA-CREF STRS retirement 403b is in a 2015 moderate target retirement fund, and it gained around 4% for the last quarter. I'm happy with that. My stock mutual funds in my private IRAs were flat or down. My strategy is to pay off my car this year! Even though my loan interest rate is only 2.99%, it's close to my portfolio gains, so I'm going to chip away at it and save some interest. Other than that, I'm not changing my allocation right now. I'm pretty happy with my overall balance which is about 50/50.
  4. Hey Tony, Happy New Year and thanks for the post. I've been raising my eyebrows about Suze lately. She's been hawking this new Visa debit card on a bunch of shows. She says her goal is to change the financial reporting system so that debit card purchases will have a positive effect on your credit rating, much in the way credit card purchases (paid of course) do. I am confident, however, that there is a cost for this debit card, and that it somehow goes directly (or indirectly) to her. I've been a Suze fan over the years, but there have been a few instances where I'm smelling conflict of interest. This newsletter thing is just another example, in my opinion.
  5. I'd like to turn it in FAST, as I have trouble dealing with the FBC person who keeps convincing me that I'm doing fine with Nationwide (she's on vacation). BZ - I pasted a tiny portion of your original post above because I hope to goodness that you have at least decided to get out of Nationwide through FBC. They are killing you with expenses! At least 1% and probably more. How do I know this? It was this very board that helped me move my 403b out of Nationwide administrated by FBC in San Diego. I moved it all to TIAA and reduced my expense ratios by more than 2/3. Of course the FBC "person" is trying to convince you to stay; that's how she makes her money. Get out...now! (I'll let the others comment on where it should go.)
  6. I agree with the others about TIAA-Cref. That is by far my best option for 403b as a public school administrator among my allowable choices. After much research on expense ratios etc. TIAA was a much better option than the insurance companies, primarily for the cost. I am about 7 years from retirement, and have chosen their target retirement fund. Typically they will have a few options depending on your age and risk tolerance. Mine happens to be a moderate risk fund, which is well-balanced among asset classes and rebalanced each year on my birthday.
  7. Even if you could, I agree that it is a bad idea. But, I don't think a 403b allows for "day trading" anyway. In my 403b plan, I am able to adjust my asset allocations online (or on the phone), but then I am restricted from moving money around for something like 3 months into the future. That sounds like the opposite of day trading to me.
  8. Great post, Tony! Made me laugh. It reminded me of the financial seminar I attended last week sponsored by the San Diego FBC (Fringe Benefits Consortium), which oversees the 403b plans for participating districts. Bob Meeder, president of Meeder Financial, a company which says it manages billions in investments, gave a mind-boggling overview of the market by explaining T-bill rates, yield curve, secular bear markets, and European markets complete with charts and graphs. No doubt this guy knows his stuff. The people in the audience, half retired/half still in education, had that "deer in the headlights" look throughout much of the presentation. His final advice: Be patient...the market has to stabilize. Great! I thought. So someone with a balanced portfolio in line with their age and retirement goals should be okay, right? (I actually asked him this question). Yes, he said, but YOU (me) are the exception. Most people don't have a clue. One solution to that is to let Meeder Financial manage your investments for a mere .65 basis points. (Meeder is the professional money manager chosen by the FBC). I later learned that in order for that to happen, I'd have to put my investments back into Nationwide (the FBC's 403b plan). I've already been down that road; Nationwide's expense ratios are right around 1% now. Add the .65 for management and I'd be at 1.65%. No thanks, I'll stick with Pension2 (TIAA-Cref) at around .33% total expense ratio and take my chances on their target retirement funds. I'm no financial wiz, and it didn't seem that hard to me. And the part about reducing my costs by 2/3 really didn't seem hard to understand. I wonder how many educators signed up for "professional money management" that day?
  9. I voted the second answer....I'm nearly 58 and this roller coaster is making my stomach turn, but because of your sound advice I had been able to do the following before the latest "crash": 1. Rebalance all of my investments to be more in line with my age and retirement projections. Specifically I moved my Vanguard Growth fund into a target retirement fund, and my TIAA-Cref aggressive retirement fund into the moderate range. I also added a few more percentages in bond (TIPS...thanks Tony) into my direct Vanguard holdings. 2. I was able to transfer my previously expensive Nationwide 403b into TIAA-Cref, and lowered my expense ratios by about 2/3, so regardless of what the market does my investments won't be eaten away by hidden fees. My point here is that since I was in the best portfolio for me at this stage of life, I'm staying the course...right where I'm supposed to be. (Where's the Pepto Bismol???)
  10. I admire your tenacity, Buck. I hope others are reading your posts and getting the sense of frustration that you must be feeling right now. It's how we've all felt after learning that we were being ripped off in our 403b, but had few, if any, better alternatives. And that, my friend, is still the case with you. As others have said before, your choices stink. Unfortunately, you cannot move/rollover/exchange your existing 403b to any form of direct Vanguard fund unless you are: 59 1/2 OR are separated from your employer. i.e. fired or laid off. (If all of us could have simply rolled our existing, expensive 403b money directly into Vanguard, do you think there would be so much discussion and frustration on this board? NO...we all would have run, jumping for joy, to Vanguard.) Your only option with your current 403b (whether moving it or adding to it) is to stay with your current provider or move it to another name on your sorry list. You could cash out your 403b and pay heavy taxes and penalties, but no one here would recommend that. Our previous advice to you was sound: leave the 403b where it is and open a ROTH directly with Vanguard.
  11. http://www.irs.gov/retirement/participant/article/0,,id=211394,00.html; This should clarify it.
  12. Thanks for trying Steve. The fact that I don't understand what you wrote is a good indication of the complexity and "sneakiness" of this product. (Honestly, I usually understand most financial explanations!) My takeaway here is NO ANNUITIES, no investments with insurance companies. No problem with that since my Valic debacle. FYI, my TIAA-Cref 403b does have a percentage "traditional." Why do you consider that a "good annuity."
  13. Mark, I went to the prospectus you linked us to. I found your "example" references. There it is, in black and white. Am I correct in assuming that I would find this "example" on any prospectus of any fund I was considering? To be honest, I've never fully read a prospectus because the only thing I was really interested in (in the past) was the degree of risk. Although all of my funds are currently with Vanguard directly or Pension2-TIAA-Cref, this makes me want to go read some of the prospectus' I've got in a drawer!
  14. Can someone tell me, in simple terms, what is a Bonus Indexed Annuity? (I'm sure most of us are familiar with plain old variable and fixed annuities.)
  15. Well done, Mark, and I am the skeptic's skeptic! This is the best factual explanation I have ever seen about how insurance and investment companies rip us off through 403b's. When I tried to explain this to colleagues, it was difficult, because you could never actually "see" the fees on a line item, but everybody agreed that they were never realizing any gains on their investments. At one time, practically my entire school was with Valic! And that included me...never again. I hope that among us all, we can save a few hard-working young teachers from the pain we went through. Thank you. Kat
  16. Buck...Buck...Buck...no fees perhaps, but there will be an expense ratio, and it will probably be well over 1%. NO company is going to just hold your money, send you statements, and not take a cut in some way! You are way too trusting. The person on the other end of the phones doesn't know what he/she is talking about. I know we've advised you to let it sit because you don't really have any alternatives, but don't trick yourself into believing that you are not paying for it.
  17. Buck, I'm getting lost in all of these posts, but one thing I want to make sure you are clear on: 1. If you convert your current 403b to a ROTH you will have to pay income taxes on that money! Not good. There is no reason for you to convert any current investments to a ROTH. Leave the 403b money where it is, but don't add any more contributions to it. (Yes, as Tony says, you may not pay a commission, but you will certainly pay an expense ratio). 2. Open a ROTH with Vanguard on your own. I agree with putting it in the Vanguard Target retirement account. I would divide the maximum annual Roth amount and deposit it monthly, using dollar cost averaging, to maximize your returns. As they say on TV: "Final answer."
  18. Hey Dan....Wow! That doesn't even sound legal....but I'm no lawyer. In the world of public education, I've never heard of 403b matching (wouldn't that be nice), but I have always been instructed that 403b contributions have to come from payroll deductions.
  19. Charles, What a shame! What a ripoff. They all look like insurance companies to me, which means high fees, even if you can choose mutual funds under their umbrella. "Bucknuts" is going through a very similar situation on this board under the thread Newbie Question. He has received some great suggestions, some of which I'm sure would apply to you. To start, I'd read through that first for some food for thought, then post anything else you need to know here. Kat
  20. Buck: Your 403b is similar to a 401K in that your contributions are pre-tax; another words it reduces your adjusted gross income. So you are receiving a tax benefit from it already. You will have to check with your current 403b provider about surrender charges, etc. Since it is an insurance company, you will probably have surrender charges. I'll let Tony and the others advise you on what to do with your current 403b now... If you open a Roth with Vanguard (this you do on your own), you will pay an expense ratio for Vanguard to maintain/manage the account, but it will be very low. A ROTH is different from a 403b and a Traditional IRA in that you put in after-tax money. As a result, it grows tax free, and the earnings are tax free as well. The other upside with a Roth is that you can take out your contributions (not your earnings) without penalty before retirement age. When you eventually withdraw it in retirement, you will pay no tax on your withdrawals. You WILL pay tax on Traditional IRA withdrawals and 403b withdrawals when you take them as retirement income, and there are serious withdrawal penalites if you need to take them before retirement. A Roth is so flexible; I really don't think you can go wrong with it. I think you will get a lot of this basic information from Dave's "Teach and Retire Rich" book. When my daughter got married, I bought her "Young Fabulous and Broke" by Suze Orman. Some people don't like her investing advice, but I liked the way she explained the basics of finance to a young couple. Please don't take my word for any of this. Do your own research and educate yourself. I'm 57 and have made many mistakes along the way. Like Tony and others, I've had to learn the hard way. But you are young enough to create a very sound plan for yourself and your family.
  21. If these truly are all insurance firms, I would second steering clear. I don't know what your situation is, but I needed the tax deduction portion part of the 403b here in California because I do not own a home here. If you don't need the tax write off, (i.e. you own a home and/or have other tax deductions), I totally agree with Steve and Tony. Go with the Roth IRA for sure. If you DO need the tax write-off, and your adjusted gross income is $56,000 or less (that's for single; may be more for married) you can contribute to a Traditional IRA and get the write-off, even though your district offers a retirement plan. Look up the IRS regs for yourself. I second Tony's Vanguard suggestion. Their products are as good as you can find and the expenses are really low.
  22. http://www.403bcompare.com/Employee/MyEmployer/EmployerSearch.aspx; Buck, Are you in California? Many on this board are, so here is the link where you can find the companies that your employer offers for the 403b. If you work for a small school, like I do, your HR department will probably not have a clue about the companies. I checked a couple of large districts in California, and First Investors is listed there. To me it looks like an insurance company. I was in a similar situation. I had a 403b through Nationwide, and while they offered investments in mutual funds (Vanguard etc.) it was under their umbrella, and their fees were exorbitant. (More than 1%). The 5% you mention is highway robbery. Tony and Steve are right: find out who your employer offers for 403b and report the companies here. They (Steve etc.) can advise you as to the most financially advantageous ones. I recently switched out of Nationwide and cut my expense ratio by about 2/3. Good luck!
  23. Lisa, I recently moved my 403b from Nationwide to Pension2 with the guidance of this board. I slashed my expense ratio by two thirds. It took some paperwork and some perseverance, but it was worth it. Pension2 (TIAA-Cref) was pretty good, but it was a little cumbersome initially getting to the right person. When you call TIAA Cref make sure to tell them you are with Pension2 with CALSTRS. They have an entirely separate entity to deal with us, but you have to go through the main number first. Eventually, I got the name of a specific person that I could call, who helped facilitiate the rollover. I, too, am about 8 years from retirement. Good luck...just take it step by step. Kat
  24. Tony, I think it is because Dave Otto began his original work here in Southern California. The name of his book was also 403b Wise and it built its reputation here. I first ran into him at a STRS workshop quite a few years ago. (STRS is the teachers' pension in CA). He was the first person to ever tackle the ripoffs that were happening in the 403b/Variable Annuity debacle. I believe he and his wife were originally both teachers here. (Sorry, if I'm wrong, Dave, but that is what I remember.)
  25. J. If you read back to page 2 of this thread you'll see that I posted that teachers with a 403b option can also deduct a Traditional IRA if their AGI is $56,000 or less. Trust me, most new teachers are definitely in that range unless they have another source of income. If I'm wrong on that tax issue, please respond, but that is how I read the IRS code.
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