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Vanguard 403b

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Was wondering if any one was aware what Vanguard will do with existing 403B accounts that have they have taken contributions from 1-1-2007 throurgh 12-31-08. Obvisously they will not deal with the OMNI group in New York State and will no longer be a participant within 403B plan after 1-1-2009.

 

I can't blame them OMNI is a terrible company to deal with. They told me that they will no longer offer Vanguard because they will not sign their ISA. They said if Vanguard went bankrupt the assets would not be protected, what a line of bull.

 

OMNI is offering a list of loaded mutual funds and insurance products, what a shame. TIAA CREF, T-Rowe Price, Vanguard are out. Fidelity they told me they were still in discussions with, but they will likely be out as well.

 

I want to at least maintain what I have with Vanguard in existing accounts. Will I be able to do this??? To have to transfer to a loaded fund company would make me sick.

 

Luckily the district offers state deferred comp 457 plan as of 10-15-08 so will be able to use this going forward. The 403B will be a joke.

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You will be able to keep your current accounts with Vanguard. It will just become a "frozen account"

 

 

I think if the IRS even thinks of forcing us to move our money to a company not our choice I then say its time for Civil Disobedience.

 

 

Tony

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If OMNI actually said that if Vanguard went bankrupt the assets wouldn't be protected than they are idiots. Given what I know about OMNI the comment wouldn't surprise me though. Assets in a mutual fund are not assets available to creditors of Vanguard. To insinuate otherwise is gross incompetence.

 

What is interesting is that it appears that OMNI happily sends money to entities that do NOT appear protected from creditors and who appear to NOT offer products directly. OMNI sends money to places that look like they are simply pass-throughs, they collect the funds and then re-send them off to the end product. Here is a link to their list of providers if you don't believe me, I'll just take a few off the list:

 

Carminucci Wealth Management

Carroll Financial

Confidential Planning

David Lerner Associates

Heather Agency, Inc.

 

Do any of these look like they are in the business of running a 403(b) product? Granted I haven't done all the research, but I've looked up several of the companies on OMNI's list and found out they are merely Registered Representatives or insurance agents who take the money and then forward it to a mutual fund or insurance company. Has OMNI actually done the due diligence to ensure that the money is safe in the process? What is to prevent the folks at "Heather Agency, inc" from simply forwarding the money to a fake product and then running (I'm not saying they would do this, don't even know them - just an example)?

 

So.....Vanguard could go bankrupt and lose your money, but Heather Agency is just fine! Sounds like a wonderful TPA.

 

ScottyD

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We have a similar situation where I teach, but the SD and our teachers' association hasn't even communicated a single word about any of the upcoming changes to their employees. I found out about the new rules and the possibility that our new vendor list wouldn't include low-cost companies like Vanguard when I tried to transfer my AIG Retirement monies into a new Vanguard account. The SD would not approve the transfer even though at the time (November 2007) Vanguard was an approved vendor, and they let me set up an account to which I have contributed for the past year. SD's business office told me they had placed a hold on all transfers until they completed their compliance (without notifying anyone, of course.... I raised a bit of hell, which only got me in a bit of trouble with the superintendent and was never able to transfer from AIG to Vanguard. Now we are told that low-cost vendors like Fidelity and Vanguard will not be on the approved list because they refuse to sign on to the SD's new policy.

 

So I would like advice from all of you financial wizards out there. I have about 10K in the AIG account that I tried to close last year and move into Vanguard. I will not be able to contribute to my Vanguard (403(b) because it will be "frozen" beginning on Jan. 1, 2009, since they will no longer be an approved vendor. My plan is to stop contributing to 403(b) since our only options will be expensive insurance annuities, most likely AIG (where I currently have 10K invested) and MetLife. I plan to open an IRA (I haven't decided on Traditional or Roth...) with Vanguard. My questions are: (1) Can I change my current, soon-to-be-frozen Vanguard 403(b) into an IRA without any penalty? (2) Can I transfer/move my maximum IRA contribution of 5K (I'm 46) from AIG to an IRA with Vanguard? Do I get hit with any taxes and penalties for doing this since I'm really just transferring money from one retirement account into another? I would like to continue making this kind of transfer each year until my AIG is completely closed. Is this a prudent move, or should I just go with the IRA and leave my AIG alone? (3) What does "frozen" mean? Can I contribute AFTER tax dollars to that account after 12-31-08 (if I'm not able to turn it into an IRA)?

 

As always, thanks for any advice you might have.

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