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detailgal

Lousy Plan..

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New here. Great site!

I work for an agency with about 30 employees. I am one of two or three who maxes out contributions. The 403B is in an ING annuity plan with a gazillion funds. I've left my contributions (2 years) in the money mkt due to indecision AND after thinking I could transfer to a USAA 403B setup, doing it and then hearing the riot act from the ING plan rep. She said I could not do this because of no "monitoring." Had to transfer back. I've since learned that our agency has a bare bones plan which means they do a good deal of the monitoring themselves. I've also learned more about the REAL total expenses and want, more than ever, to get out. The ING is an ERISA plan so it's up to my employer if she wants to okay my setting up a separate plan. (I do have to ask my accountant about the benefits/consequences of my getting out altogether.) The ING folks say she won't want to pay the costs of setting up a new/additional plan and any other costs. What if I use my current ING plan for the initial deduction and then transfer to the second plan?

 

My BIG QUESTION is, HOW DO I SELL THIS IDEA TO MY BOSS?

 

Thanks for any help!

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It would be great if you could get your employer to change your plan and go with another vendor. Most people don't get it. People hate to make a change. I'm going through this right now with my company. It's hard to sell when people don't care about investing for retirement, but don't give up. You need to get facts and figures together and present them to your boss. It needs to show how much money this plan is costing everyone. It's best to change the whole plan, because it will benefit everyone in your company. I suggest you go to Morningstar.com and go to discussions. You can post questions there and people will respond. The best forum is Vanguard. There are very knowlegable folk there. Good Luck!

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Dear detailgal,

 

Is your boss a member of the Plan? If she is, she should dump ING if for no other reason than her own self interest. Keep us informed.

 

Peace,

Joel

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Thanks Joel. May take me a while, but I will report back. One of the big things I have to figure out is if, with Erisa, my co. can have more than one plan and, secondly, what it will cost to get rid of the existing plan and/or move to a second one. More on that later!

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Hi detailgal,

 

Love the name. If only folks looked at the details of their 403(b)/retirement fees they would be as motivated as you. Here are some links from this site you may want to look at if you haven't already:

 

Options for Dealing with Poor 403(b) Investment Choices

http://www.403bwise.com/wisemoves/betterchoices.html

 

Sample Letter to Employer Requesting Better 403(b) Choices

http://www.403bwise.com/features/sampleletter.html

 

Fees and How They Affect Your 403(b)

http://www.403bwise.com/wisemoves/fees.html

 

Retirement Plan Fees - Easy-to-read information from US Department of Labor

http://www.dol.gov/ebsa/publications/401k_employee.html

 

Selecting Vendors for Your Defined Contribution Plan

http://www.403bwise.com/pdf/vendor_selection.pdf

 

Hope some of this is of help. Good luck and stay in touch.

 

Dan Otter

403(b)wise

 

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Hi detailgal,

 

ING is the investment provider for the Plan. You need to change the investment provider. In order to do so you need NOT change the "Plan". You need to get the decision makers to dump the investment provider (ING) in favor of a low cost investment provider like the Vanguard Group. I aassume there is some employer funding insofar as this is an Erisa 403(b). Ask the decision maker why would she want 97-98 cents on the dollar invested via ING when with Vanguard 99.5 cents (or more) is invested? To repeat you do not need to change the Plan in order to get a different investment provider.

 

Peace and Hope,

Joel

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Thanks DAN! Great info links.

JOEL, could you be more specific about how you are differentiating the Plan from the provider? I don't know that they can dump it. I've learned that the contract says that an individual account can't be closed until "end of service." (And as of now, that includes a 7 1/2 % "maintainence fee.") Also, if I do the option of the current 403(b) with a quarterly 90-24 transfer into a new, better 403(b), I will not only continue to be charged at least 1.25% (haven't located the additional plan rep fees yet) on the money mkt account, BUT will ALSO be charged a "deferred sales charge of 5% on each of those quarterly withdrawls. ("Goes away" after 10 years..8 to go) The only viable option, to the empoloyee, seems to be IF my employer would set up a 2nd plan. (HA!) In that case, I could make a one time 90-24 transfer and let the ING sit, with the remaining empoyer match contribs, until I "terminate service." Two steps left it seems. 1.) Call the plan rep and ask for actual real numbers that represent all costs over the 1.25 (ING says they deduct the fund's expenses from this amount and the remainder is what they get for admin. fees, although, shoot, how is that possible with some funds stating expenses over 1.25%?) 2.) Find out what it would cost the agency to have a 2nd plan. That's the Big Glitch for our small NON-profit. And then, how much it would cost each participant to make a change, sell funds etc.

ANY IDEAS?

Re: it being in the director's best interest to use another fund..the Plan rep calls her periodically to suggest re-allocation. She seems to enjoy the personal service (haven't heard of any one else getting these personal calls..) THe rep somehow got wind of my inquiring at ING about the financial considerations involved in transferring or withdrawing. She called the director saying that I could be jeopardizing the plan for the whole agency. I, on the other hand, received no call. Sorry to kvetch, just a little frustrating to have intelligent inquiry treated as threatening, even if it is. THANKS!!!

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Dear detailgal,

 

The Plan Document is where you get the rules of the "Plan". Get a copy of the Summary Plan Description (SPD). This document should have been drawn up by the attorney for the employer, representing the employer's best interests. It is clearly not in the employer's best interest to be legally wedded to a HIGH FEE Investment Provider. Just like the employer can change the Plan's auditor, without starting a 2nd plan, it has the right to change the Plan's Investment Provider in a like fashion.

 

THERE IS ABSOLUTELY NO REASON TO HAVE TWO 403(b) ERISA PLANS ONE OF THE LOADED VARIETY AND ONE OF THE NO-LOAD VARIETY. TELL YOUR BOSS YOU WANT ONE PLAN THAT IS IS IN THE BEST INTERESTS OF THE EMPLOYER AND EMPLOYEE (SURELY THE EMPLOYER WANTS A BETTER BANG FOR ITS MATCHING CONTRIBUTION!). RELATE TO HER THAT THE SOLUTION IS A NO-BRAINER....CHANGE FROM THE LOADED ING AS "INVESTMENT PROVIDER" TO A NO-LOAD INVESTMENT PROVIDER...TELL YOUR BOSS THIS IS NOT ROCKET SCIENCE.

 

PS: The Plan Provider is the EMPLOYER ...it is the employer that is voluntarily offering or providing the Plan to its employees. In order to implement the "Plan" the Plan Provider/Employer is responsible for selecting an Investment Provider.

 

Peace and Hope,

Joel

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