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Want To Invest In Fund Not Offered By Investment Company

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Over ten years ago, I was told I technically did not "own" the money I had invested in my 457(b) handled by Nationwide Retirement Solutions and could not roll it over into another plan as I changed employer. I understand this is no longer true. I am not pleased with the funds offered, and would like to invest elsewhere. How do I go about doing this? Thanks to anyone who can advise!

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Guest Sierra

Over ten years ago, I was told I technically did not "own" the money I had invested in my 457(b) handled by Nationwide Retirement Solutions and could not roll it over into another plan as I changed employer. I understand this is no longer true. I am not pleased with the funds offered, and would like to invest elsewhere. How do I go about doing this? Thanks to anyone who can advise!

 

 

Do you currently work for an employer that has a 457(b) Plan? You can roll the money into the current employer's plan. Do so only if you have a no-load menu. If these caveats do not apply roll the money into an IRA with the Vanguard Group.

 

Joel

 

 

 

 

Over ten years ago, I was told I technically did not "own" the money I had invested in my 457(b) handled by Nationwide Retirement Solutions and could not roll it over into another plan as I changed employer. I understand this is no longer true. I am not pleased with the funds offered, and would like to invest elsewhere. How do I go about doing this? Thanks to anyone who can advise!

 

 

Do you currently work for an employer that has a 457(b) Plan? You can roll the money into the current employer's plan. Do so only if you have a no-load menu. If these caveats do not apply roll the money into an IRA with the Vanguard Group.

 

Joel

 

 

Note: If you effectuate the rollover to an IRA and make subsequent withdrawals prior to age 59.5 you lose the exemption from the 10 percent penalty tax levied on premature distributions. 457(b) plans are the only plans exempt from this penalty tax.

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You can do a "trustee to trustee" trasfer of your 457 to a custodian that has better funds. There are no taxable consequences from such a transfer as long as you do not take possession. Beware of surrender charges from the Annuity Co. that presently has your account. See if there is a date in the future when surrender charges get reduced due to the attainment of a certain time frame or holding period imposed by the Annuity Co. I have done two such transfers for family members and they have done much better on their own with my assistance.

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Guest Sierra

You can do a "trustee to trustee" trasfer of your 457 to a custodian that has better funds. There are no taxable consequences from such a transfer as long as you do not take possession. Beware of surrender charges from the Annuity Co. that presently has your account. See if there is a date in the future when surrender charges get reduced due to the attainment of a certain time frame or holding period imposed by the Annuity Co. I have done two such transfers for family members and they have done much better on their own with my assistance.

 

Revenue Ruling 90-24 authorizes investor initiated "trustee to trustee" transfers from only a 403b investment to another 403b investment. This may be done while employed or not by a 403b employer. Because there is no employer established trust requirement there is no employer involvement.

 

The rules for moving money from a 457(b) plan are quite different. You cannot set up your own 457(b) account with an investment provider (ie Vanguard) to receive the 457(b) funds. You need to be currently employed by an employer that offers 457(b) investing and then you can initiate a rollover distribution from the old plan to the new plan at your discretion.

 

Peace and Hope,

Joel

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In a nutshell, you can move from one governmental 457 to another or one nongovernmental to another directly if both plans allow it. And you can roll governmental 457 funds into another plan or IRA (assuming you are eligible for a distribution), if they will take it; not all do because the reporting and withholding rules are different and a separate account has to be set up for the governmental 457 funds.

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Guest Sierra

You can do a "trustee to trustee" trasfer of your 457 to a custodian that has better funds. There are no taxable consequences from such a transfer as long as you do not take possession. Beware of surrender charges from the Annuity Co. that presently has your account. See if there is a date in the future when surrender charges get reduced due to the attainment of a certain time frame or holding period imposed by the Annuity Co. I have done two such transfers for family members and they have done much better on their own with my assistance.

 

 

Are you sure these transfers were 457 accounts or 403(b) accounts? Please clarify!

 

Joel

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In my experience with Nationwide and my 457(b) it happens like this. First the company you want to get into has to offer a 457(b) plan. Your employer also has to be willing to offer them as an alternative to Nationwide if you are attempting yourself to bring them in which is what I am doing. If your company already does offer them or is willing to get involved with them and offer them as an alternative you can then begin. So far, in my experience with attempting to bring in a new company, you will have to be willing to do all the leg work. If the new alternative fund company is not offered by your company the new alternative usually requires a minimum of 5 to 7 employees to defect and join them to even get started. So you need to get the minimum amount of employees to leave Nationwide and be ready to join the new company. You then have to fill out all the asset transfer paperwork. The new fund company will usually have a kit that you can print off in pdf form from their web site. In my case I also have to get my plan administrator to sign off also as willing to let me leave Nationwide. Once this is done your money can be rolled out of Nationwide into the new alternative company. Nationwide also required me to fill out their own asset transfer paperwork. So I filled out asset transfer paper work for both Nationwide and, in my case, Vanguard.

 

While filling out the asset transfer paperwork for the new fund company they will ask you to choose which funds and how much money or percent you want to go into each fund. You will also have to choose a beneficiary again. Then you mail it all in and wait. And believe me Nationwide was in no hurry. So I began overnight mailing everything to them and then calling to confirm that they got the paperwork. As I stated in an earlier posting in the end I learned I couldn't roll over from a 457(b) into a Vanguard 403. But this hasn't stopped me from trying to find an alternative, quality company, as an alternative. It is quite a bit of work. You will find most other people you work with don't want to think about it. It's to much trouble as far as they are concerned. They signed up, someone else told them where to place their money, and they no longer want to think about it. One of the things that makes me the most angry about Nationwide is that when you talk to them they act like its their money, not yours, and you have no business asking them about it. You may also find your plan administrtor isn't as involved or doesn't want to be as involved as you might like. They usually act as if it is just extra work you are placing on them. Sweet talk them and tell them you will do all the leg work for them. This included, in my case, distributing Vanguard promo flyers and talking with numerous City employees. Police, Fire, City Hall etc....

 

I hope this helps/Don't give up

 

Steve

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Guest Sierra

 

ja2ss: Do you work for a state or local government?

 

Joel

 

 

local

 

 

Find out if the 457 Plan for your state's employees allows local governments to opt in. Some states have great plans like NY State and allow opting in...other states do not. Your problems will be solved if your state has a no-load menu and allows for opting in by local governmental entities. Please get back to us with the answer.

 

Peace and Hope,

Joel

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Hi Steve,

You said: "One of the things that makes me the most angry about Nationwide is that when you talk to them they act like its their money, not yours, and you have no business asking them about it. You may also find your plan administrtor isn't as involved or doesn't want to be as involved as you might like. They usually act as if it is just extra work you are placing on them. Sweet talk them and tell them you will do all the leg work for them. This included, in my case, distributing Vanguard promo flyers and talking with numerous City employees."

 

Our hats are off to you. Your colleagues will never know that you are doing this for them. Many of the educators on this site have a story identical to yours with one addition. My union, under the previous leadership, said to friends of mine that Schullo is not welcome around here, simply because I was advocating for TIAA CREF to be an approved union 403b vendor. I went anyway. You have to confront the MFs with a smiling face and demand softly again and again what you want and why its good for the employees and members. That old leadership was thrown out of office in the next election because they treated other members similarily, who also had good ideas that just happened to be contra to the union's out dated ideas.

 

Hang in there, you are doing the RIGHT thing and never forget that,

Steve

 

 

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ja2ss: Do you work for a state or local government?

 

Joel

 

 

local

 

 

Yes

 

Sorry it took me so long to reply. I have been talking with Employee Fiducuary and trying to find time to call Fidelity. I also have been running up and down the stairs at City Hall talking with our plan administrator. It has been very helpful talking to all of you. I am not overly knowledgeable about investing in 401 k's, 403 or 457(b) plans. I do know how to recognize when something is broken though and I am a quick study. Nationwide should not be treating people like this. http://www.pionline.com/news.cms?newsId=43...TcwNzIxOTkwMjIx Here is a link you might be interested in. It seems Nationwide is currently being sued.

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Yes, ten years ago, 457(b) assets were considered to be the general assets of the employer. Since 2001, governmental employers who sponsor 457(b) plans must put the money in a trust. Non-profit agencies MUST still keep 457(b) funds available as part of the general assets of the employer (thus subject to creditor's claims if the employer has financial trouble).

 

I have not seen lodenson reply to the questions yet. Here are some of the most important questions that should be answered:

 

1) Are you still employed with this same employer who sponsored the 457(b) plan?

 

2) Is/was that employer a governmental employer or a nonprofit agency?

 

3) Do you plan to need to withdraw any of the money before you reach age 59 1/2?

 

 

If you still work there now, then according to Internal Code Section 457(b), the funds may not be made available to you except as follows:

 

A) You have reached age 70 1/2; or

 

B) Your 457(b) plan document allows for distributions for "unforeseeable emergencies" (and you are having one); or

 

C) You have not had any contributions to your 457(b) account for 24 months and your account is under $5,000 and your 457(b) plan document has language to allow a "de minimis" distribution, and you have not taken advantage of a de minimis distribution before; or

 

D) The employer terminates their entire 457(b) plan (why would any government agency ever do that).

 

Also, if you still work there, then the investment choices that are offered are the only options you will be able to pick from. Your employer, not your provider, has the authority to add or remove the investment options.

 

 

Ok, now, if you no longer work there, then you have some distribution / rollover options, but be very careful.

 

i) Distributions from a 457(b) plan that are NOT rolled over are NOT subject to the 10% early distribution penalty (tax). That means, generally, any taxable withdrawals before age 59 1/2 are only subject to income taxes. This is important when you read item iv) below.

 

ii) If your old employer was a governmental employer, AND you are currently working at a different governmental employer, AND your current employer has a 457(b), AND that plan has language to allow incoming transfers to be accepted, then you can do a direct transfer from your old 457(b) funds to your current employer's 457(b) plan. Other options do exist for a governmental 457(b) plan see item iv) below.

 

iii) If your old employer was a non-profit agency employer, AND you are currently working at a different non-profit agency, AND your current employer has a 457(b), AND that plan has language to allow incoming transfers to be accepted, then you can do a direct tranfer from your old 457(b) funds to your current employer's 457(b) plan. NO other rollover options exist from a nongovernment nonprofit agency sponsored 457(b) plan (you cannot rollover).

 

iv) Distributions from 457(b) plans sponsored by governmental agencies can allow rollovers to an IRA, to a qualified plan (like a 401(k) plan), to a 403(b) plan, or to another government sponsored 457(b) plan where you work. However, as soon as you have done such a rollover, the exemption from the 10% penalty tax is now gone (unless you rolled it into a governmental 457(b) plan). So, if you do end up using that rollover money before age 59 1/2, it is now subject to the 10% early distribution penalty.

 

Lastly, if the 457(b) you mention was sponsored by a nonprofit agency, then you are taxed when the distribution is available to you, even if you do not take the distribution!

 

The rules are not hard, but they're not simple, so be sure to ask questions.

 

I hope this helps.

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