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Well its now official. Like in many other school districts, Vanguard has pulled out of my wifes district. A large district in Naperville, IL. The school district will not sign Vanguards documents and Fidelity is still up in the air. The only remaining choices/vendors are ALL insurance companies. This is such a crock of Sh^%!!!! We went from having such an excellent plan for the past 10 years to this mess. Thanks alot IRS for the huge disservice to all of the teachers accross america who understand the importance of keeping expenses low!! Yet another blow to the educators who are left no other choices but high cost insurance annuities, unbelievable!

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Well its now official. Like in many other school districts, Vanguard has pulled out of my wifes district. A large district in Naperville, IL. The school district will not sign Vanguards documents and Fidelity is still up in the air. The only remaining choices/vendors are ALL insurance companies. This is such a crock of Sh^%!!!! We went from having such an excellent plan for the past 10 years to this mess. Thanks alot IRS for the huge disservice to all of the teachers accross america who understand the importance of keeping expenses low!! Yet another blow to the educators who are left no other choices but high cost insurance annuities, unbelievable!

Thank you for expressing those sentiments, ft6. I've been thinking the same thing, as well. Yes, the IRS will now have wonderful compliance ... and many employees will have lousy choices.

 

There is a Latin expression: qui bono? "Who benefits?" Just who is benefiting from these great new regulations:

 

1) The IRS, which must have order, ORDER in zee complianze wit der regulationz.

 

2) The insurance companies, which have less competition from the low cost vendors.

 

It's difficult to see how employees are gaining any benefit at all from this !@#$.

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Well its now official. Like in many other school districts, Vanguard has pulled out of my wifes district. A large district in Naperville, IL. The school district will not sign Vanguards documents and Fidelity is still up in the air. The only remaining choices/vendors are ALL insurance companies. This is such a crock of Sh^%!!!! We went from having such an excellent plan for the past 10 years to this mess. Thanks alot IRS for the huge disservice to all of the teachers accross america who understand the importance of keeping expenses low!! Yet another blow to the educators who are left no other choices but high cost insurance annuities, unbelievable!

Thank you for expressing those sentiments, ft6. I've been thinking the same thing, as well. Yes, the IRS will now have wonderful compliance ... and many employees will have lousy choices.

 

There is a Latin expression: qui bono? "Who benefits?" Just who is benefiting from these great new regulations:

 

1) The IRS, which must have order, ORDER in zee complianze wit der regulationz.

 

2) The insurance companies, which have less competition from the low cost vendors.

 

It's difficult to see how employees are gaining any benefit at all from this !@#$.

 

 

Well put AP, you hit the nail on the head with your last remark, the teachers are NOT gaining any benefit from any of this, in fact most are taking a step back. It is especially painful for those who had Vanguard or Fidelity in the first place and now because of these new b.s. rules and regs, they are losing these quality vendors. My wife and I don't keep up with the Jones' and because of this we have the ability to sock away almost 50% of our income. It would have been so nice to save 16,500 times 2 between her 403b and 457 and another 16,500 in 2009 in my 457. Unfortunately, it is looking like this won't happen because my gut tells me that Fidelity is also going to tell the school districts TPA, CPI Qualified Plan Consultants, to go stick it where the sun doesn't shine! Leaving us without a quality vendor for a 403b or 457. Way to go IRS

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To all,

Why are we as citizens of the United States who are saving for our own futures be subjected to all this? Seriously what can we do? How can the IRS, inept school systems, and insurance companies hold us hostage?

 

 

Tony

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Hi AP and Tony,

I think there will be a drop in 403b participation and perhaps more participation in the 457b. There has been too much bad PR rightly so about large insurance company annuity plans. The teachers who are savvy will never put future money into such plans and I doubt if the agents will get enough from the naive teachers to make up the difference, because of the bad PR for years and years.

Steve

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NY state offers a great 457 plan but not all school districts participate , even though they can.

 

My district's 457 plan is run by ... Surprise! Security Benefit! Just look at the fine print on the wonderful Security Benefit SFR (is that short for Sure !@#$ing Reamed?):

 

Account Charges – Account Charges Options 1, 2, 12, 13, 14, 30, 31, 32, 33 and 34: Asset

Based Account Fee: 1.00%. Options 3, 4, 5, 15, 16, 17 and 35: Asset Based Account Fee:

0.85%. Options 6, 7, 18, 19, 20 and 36: Asset Based Account Fee: 0.75%. Options 8, 9, 21, 22,

and 23: Asset Based Account Fee: 0.65%. Options 10, 11, 24, 25 and 26: Asset Based Account

Fee: 0.50%. Options 27, 28 and 29: Asset Based Account Fee: 0.35%. Administration fees of $0

to $40 may apply.

 

Perfectly clear, isn't it?

 

This, of course, is above and beyond the normal expense ratios.

 

And this is what my association endorses. I suspect that the district would not mind at all if it changed providers. In fact, the district's business manager told me as much. It is the association that is holding things back.

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Guys...there's an easy answer to this...don't contribute to the 403(b)

 

As long as your AGI is under the annual maximum ($105,000 married filing jointly for 2008), you can deduct all or part of your TIRA contributions. Otherwise, make the full contribution to your Roth IRA

 

For additional contributions, set up a taxable account and simply make your annual contributions there. Yes, its not tax deductible, but you have full control, you can keep your annual expenses to an absolute minimum (if you wish) and much of the future gain at withdrawal will be capital gain instead of ordinary income. In the end, there probably won't be much difference in terms of tax savings and expenses, when compared to those EXPENSIVE insurance 403(b) plans.

 

BruceM

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I'm fairly new to this site, and I love that others are feeling my frustrations. I had an account with a company called ValuTeachers, and I loved it. My money wasn't tied up in the market, and I never lost money when the market dropped. NOW, my school system dropped them as a provider, and just like you, I'm stuck with insurance companies to choose from. This is crap, and I hope that my system changes its mind next year... we'll see...

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Guys...there's an easy answer to this...don't contribute to the 403(b)

 

... and much of the future gain at withdrawal will be capital gain instead of ordinary income ...

 

BruceM

 

That is a great argument to make, Bruce. Congress could (may? will?) change that, but in the meantime, that is something to keep in mind.

 

I think that I am still going to be able to contribute to Vanguard, but I was thinking about also opening a 457, as well. Considering the poor choices I have in my NEA-endorsed 457 plan, your suggestion for opening a plain old regular account seems like a good one.

 

 

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That is a great argument to make, Bruce. Congress could (may? will?) change that, but in the meantime, that is something to keep in mind.

 

I think that I am still going to be able to contribute to Vanguard, but I was thinking about also opening a 457, as well. Considering the poor choices I have in my NEA-endorsed 457 plan, your suggestion for opening a plain old regular account seems like a good one.

 

 

 

How do you think you're still going to be able to contribute to Vanguard? Any new news?

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How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

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Bruce your suggestion regarding fully funding a Roth IRA followed by Index funds for additional money outside of a retirement plan is a route that I am planning to take unless Fidelity stays in the game, but if they don't we will lose a valuable tax deduction.

 

We are able to fully fund a 403b and a 457. This would allow us to shelter away 33,000.00 on a pretax basis, our combined annual income is around $160,000.00 per year and without this tax shelter we will be paying Uncle Sam more money rather than Fidelity. I believe that for couples or individuals in a high tax bracket that could afford to fully fund these 403b's/457's, but cant or wont due to the loss of low cost quality vendors, they will face a greater tax liability that can't be avoided.

 

I like Tony's suggestion he made sometime ago in an old post where the employee should be able to set up an account with the mutual fund co. of their choice and the employer would send the contributions to said company.

 

This will allow smart investors to stay with low cost vendors, and I would gladly assume all responsibility and sign whatever waiver necessary to be able to do so. To make this even easier to implement, I would eliminate all loan provisions whereby a person could not borrow against the account, this is a retirement account not a rainy day fund. I also realize that this will probably never happen but a person could only hope and wish considering there is nothing else left to do as we see school district after school district dropping the low cost quality vendors.

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How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

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I like Tony's suggestion he made sometime ago in an old post where the employee should be able to set up an account with the mutual fund co. of their choice and the employer would send the contributions to said company

 

FT6

 

 

Just want to clarify. You almost got it right. I don't think your statement as it stands above would be possible.

Could you imagine the nightmare an employer would have to go through to keep track of all those individually chosen companies ?

 

What I suggested was something like an enhanced IRA. Employees could invest up to 15,500 a year tax sheltered without their employer in the middle of the process. It would be done between the individual investor

and the mutual fund company of the employees choice. Record keeping would be strictly the responsibility of

the individual investor and the mutual fund company much like what is done with a standard IRA.

 

Actually this arrangement would save both the employer and employee money and put the responsibility squarely on the investors shoulders.

 

ALSO, I too have decided to stop using my 403B if and when Vanguard is eliminated. True you will lose some tax advantages but there are some ways you can still get some tax deductions. In Dan Otter's book he talks about medical & childcare flex programs. My wife and I take advantage of ours to the tune of $3,000 a year. So just see what other ways you can recop that tax shelter. Simple things like making sure the medical /dental insurance you pay monthly is pulled out pre-tax etc.etc.

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