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JudyS

Thanks, Scott D

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Scott D --

 

Thank you for your article on "free TPAs". This is a great article with good, supportive illustrations. I hope it will help the "deciders" in my district when it comes to designing the new plan for 403(b) products preparatory for 1/1/09.

 

 

Judy Schneider

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Thanks Judy,

 

Its an important issue. Unfortunately, even having a good, independent, non-product driven TPA may not insure low-cost providers on the list, I have a feeling we might start seeing low-cost providers getting out of the 403(b) market.

 

ScottyD

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Scotty --

 

I'm with you re: low cost providers getting out of the business. Recently I talked to the fellow who heads up the 403b section on one of the great no-load families, and they are still working on things, considering them, putting things together, while the insurance companies are sending out their minions to get in on the ground floor.

 

Given that withdrawals from retirment funds are at your tax rate (right?) it might be smarter to put your $$ into personal savings where you can lower the tax bite to 15% by taking dividend payments once you retire. In that sense, losing the pretax benefit may pay off somehow. At least for those of us looking retirement in the eye. Am I figuring this right?

 

Judy Schneider

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Judy,

 

While the big insurance companies pounce, the low-cost providers shiver. I think we will slowly begin seeing the transformation of the 403(b) from a multi-vendor environment to a single vendor environment, that is the only way I can see costs come down long term. Smaller districts need to partner with larger districts so they aren't left out in the cold with poor products.

 

As for contributing to personal savings rather than a 403(b) - it is a case by case thing, it might be best for some to do so, others it would be the wrong thing. I think someone who contributes to the Roth can't go wrong, unless they are in a high tax bracket (couldn't be too high otherwise they couldn't contribute) and know for sure they'll be in a low tax bracket in retirement.

 

The next several years are going to be rocky.

 

ScottyD

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