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JMacDonald

The 403b Mess.

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Hi,

When the new IRS 403b regs were announced, I didn't like them because it took away the safety valve of being able to transfer your funds. It turns out the consequences of the new regs are worse than expected. Besides making your views known to your school board, I would suggest writing to the IRS and telling your story to them instead of just complaining on this board. Also send a copy of you letter to Congressman George Miller. Mr. Miller has held hearing on 401ks. http://edlabor.house.gov/issues/strengthening401ks.shtml Here are the addresses:

 

Douglas H. Shulman

Commissioner of Internal Revenue Service

1111 Constitution Ave NW

Washington, DC 20224

 

George Miller

Congressman

2205 Rayburn House Office Building

Washington, DC 20515

 

Best Wishes,

Joe

 

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Joe,

 

 

You are 100% right. I wish someone with the knowledge and background would write some sample letters that we could adjust to suit our situations/cicumstances and forward it to the school boards and government officials.

 

A properly crafted letter as a sample would probably get us going with this. I'm just not the person do it it or I would.

 

 

You are correct . Complaining on this board is not going to solve the mess.

 

WE have got to start making ourselves heard. Any suggestions folks what we can do??

 

THis may be a good time to catch the ear of government officials.

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Joe and Tony --

 

I am a great believer in the power of complaining, if it's properly placed. George Miller is a fine place to start. Send copies to all your congresspersons and to the DOL as well as to your superintendent and school board members (i.e. make your letter do a LOT of work!) Make your letter short, specific, to the point, and it will help if you organize your points with bullets to make it clear. No big, long explanations are needed. Note that the insurance companies are working against you not with you, and given the new Democratic strength in Congress, it is fair to say that appropriate REGULATIONS are needed but the focus needs to be on the welfare of the participants, NOT the welfare of the insurance companies.

 

It doesn't have to be a perfect letter, but it does have to be sent.

 

JudyS

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Do you know if 403b distributions affect or are affected by GPO or WEP provisions?

 

Pat McCormack

 

 

 

 

 

 

Hi,

When the new IRS 403b regs were announced, I didn't like them because it took away the safety valve of being able to transfer your funds. It turns out the consequences of the new regs are worse than expected. Besides making your views known to your school board, I would suggest writing to the IRS and telling your story to them instead of just complaining on this board. Also send a copy of you letter to Congressman George Miller. Mr. Miller has held hearing on 401ks. http://edlabor.house.gov/issues/strengthening401ks.shtml Here are the addresses:

 

Douglas H. Shulman

Commissioner of Internal Revenue Service

1111 Constitution Ave NW

Washington, DC 20224

 

George Miller

Congressman

2205 Rayburn House Office Building

Washington, DC 20515

 

Best Wishes,

Joe

 

 

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Hi,

When the new IRS 403b regs were announced, I didn't like them because it took away the safety valve of being able to transfer your funds. It turns out the consequences of the new regs are worse than expected. Besides making your views known to your school board, I would suggest writing to the IRS and telling your story to them instead of just complaining on this board. Also send a copy of you letter to Congressman George Miller. Mr. Miller has held hearing on 401ks. http://edlabor.house.gov/issues/strengthening401ks.shtml Here are the addresses:

 

Douglas H. Shulman

Commissioner of Internal Revenue Service

1111 Constitution Ave NW

Washington, DC 20224

 

George Miller

Congressman

2205 Rayburn House Office Building

Washington, DC 20515

 

Best Wishes,

Joe

 

 

George Miller is not the congressman to write to because his committee has jurisdiction over retirement plans subject to ERISA (e.g., 401k) which are regulated by the Labor Department. The 403b regs were issued by the Treasury Department and are administered by the IRS. The House Ways and Means Committee has jurisdiction over 403b plans and you should write to Charles Rangel, Chairman of W & M.

 

Q1 What would you want congress to do- invaldidate the regs? Delay the effective date? Exempt public schools from compliance with the 403b regs

 

Q2 Why should 401k plans be subject to onerous regulations issued by the IRS and 403b plans should be exempt?

 

Q3 Should 403b plans be exempt from the limits on multiple loans under the IRC which apply to 401k plans?

 

 

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Intruder, Since I started this conversation, I will give you my answer: I consider you a troll on this board and will not engage you in any conversation.

 

Joe

 

 

But I dont give out incorrect information to posters. Chairman Rangel's address is :

 

1102 Longworth House Office Building

Washington, DC 20516

 

Fax 202-225-2610

 

 

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Intruder,

Ditto Joe's post. If we make mistakes, so be it. Many of us educators on this board who have followed the likes of Mr. Bogle have done very well financially without your "correct" information.

 

Furthermore, we know how to advocate, write, speak and communicate to the people we believe will help us on behalf of our colleagues well before you came along.

 

As in the words of President Elect Obama, "Thanks but no thanks."

Steve

 

Joe,

Thanks for those addresses.

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Hi,

When the new IRS 403b regs were announced, I didn't like them because it took away the safety valve of being able to transfer your funds. It turns out the consequences of the new regs are worse than expected. Besides making your views known to your school board, I would suggest writing to the IRS and telling your story to them instead of just complaining on this board. Also send a copy of you letter to Congressman George Miller. Mr. Miller has held hearing on 401ks. http://edlabor.house.gov/issues/strengthening401ks.shtml Here are the addresses:

 

Douglas H. Shulman

Commissioner of Internal Revenue Service

1111 Constitution Ave NW

Washington, DC 20224

 

George Miller

Congressman

2205 Rayburn House Office Building

Washington, DC 20515

 

Best Wishes,

Joe

 

I've e-mailed both my Congressman & a U.S. Senator complaining about this 403(b) mess, & have no replies. We are all being screwed by the IRS & the high cost providors. The only hope is help from the Obama admin.

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Joe, Tony, Intruder and all the rest...

 

As I suggested before, MAKE YOUR LETTER DO A LOT OF WORK! Intruder is right that Miller has been working on ERISA issues. However, most of the issues with 401ks and 403bs are similar -- there is lots of overlap. Send your letter to everyone you THINK might be involved, and especially to your own senators and congressmen. AND TO YOUR STATE INSURANCE COMMISSIONER!!!! So many 403b problems relate to these insurance companies, and insurance companies are not stupid. They are not federally regulated -- they have deliberately and assiduously avoided that. They are only state regulated so they avoid as much oversight as possible.

 

Just because you don't get an answer doesn't mean your letter wasn't read or acknowledged or didn't have an effect ... at least one of ours was never acknowledged but it did appear in the official congressional record.

 

JudyS

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Joe, Tony, Intruder and all the rest...

 

As I suggested before, MAKE YOUR LETTER DO A LOT OF WORK! Intruder is right that Miller has been working on ERISA issues. However, most of the issues with 401ks and 403bs are similar -- there is lots of overlap. Send your letter to everyone you THINK might be involved, and especially to your own senators and congressmen. AND TO YOUR STATE INSURANCE COMMISSIONER!!!! So many 403b problems relate to these insurance companies, and insurance companies are not stupid. They are not federally regulated -- they have deliberately and assiduously avoided that. They are only state regulated so they avoid as much oversight as possible.

 

Just because you don't get an answer doesn't mean your letter wasn't read or acknowledged or didn't have an effect ... at least one of ours was never acknowledged but it did appear in the official congressional record.

 

JudyS

 

 

Judy:

 

While it is true that fixed annuities which pay a guaranteed rate of interest such as 5% on contributions are only regulated by state insurance departments, variable annuities are regulated under federal law by the SEC as well as state insurance departments because the underlying investments are mutual funds which are regulated by the SEC under the Investment Company act of 1940.

 

However the federal securities laws only regulate the adequacy of disclosure, not the terms of the product for customers. The SEC would approve a VA product with an upfront 20% sales commission as long as the sales commission is disclosed in the prospectus.

 

Also all custodial accounts available in 403b plans are regulated by the SEC because they invest in mutual funds.

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Intruder -- ALL 403b accounts fall under SEC rules and regulations whether or not they are sold by insurance companies? Really? That would be a delight to me -- I am always looking for SOMEONE to write letters to! I will get in touch with the SEC and ask some questions....

 

If that is true, y'all, when you write letters to congressmen, COPIES need to go to whatever or whomever is in charge at the SEC.... And it's so easy these days when you don't even have to use carbon paper! Simple! Hmmmmmmmmmmmmmm................

 

JudyS

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Intruder -- ALL 403b accounts fall under SEC rules and regulations whether or not they are sold by insurance companies? Really? That would be a delight to me -- I am always looking for SOMEONE to write letters to! I will get in touch with the SEC and ask some questions....

 

If that is true, y'all, when you write letters to congressmen, COPIES need to go to whatever or whomever is in charge at the SEC.... And it's so easy these days when you don't even have to use carbon paper! Simple! Hmmmmmmmmmmmmmm................

 

JudyS

 

 

Judy:

 

If you had read my post I specifically stated that variable annities were regulated by both the SEC and state insurance departments. Fixed annuities which guarantee a specific rate of of interest are not regulated by the SEC because they are exclusively an insurance product. Custodial account 403bs are regulated by the SEC because they are registered as mutual funds.

 

As I noted the SEC only reviews the prospectus to determine if the material terms of the VA or mutual fund contract are disclosed, not whether the terms are reasonable or even fair.

 

What will you complain to the SEC about?

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Intruder.... C'mon! I once tried to read the paperwork associated with an NEA TSA -- I had it (just another in my long litany of investment errors). Very shortly I couldn't understand a cotton-pickin' thing. I suppose that spending 40 hours a week on it, working through all the definitions and diagramming the whole thing, it could have been understood in just a few months, but I don't have the willpower for that exercise.

 

Later I had occasion to discuss this with an attorney -- one who was peripherally involved with the NEA case, in fact. He laughed and told me that he was an attorney with the SEC in a previous life and HE couldn't make head nor tails out of the mess, either.

 

As we well know, and as Bernie Makoff could testify, the SEC has not been approaching their work with any high level of intensity.

 

There's plenty to talk to them about.

 

JudyS

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Intruder.... C'mon! I once tried to read the paperwork associated with an NEA TSA -- I had it (just another in my long litany of investment errors). Very shortly I couldn't understand a cotton-pickin' thing. I suppose that spending 40 hours a week on it, working through all the definitions and diagramming the whole thing, it could have been understood in just a few months, but I don't have the willpower for that exercise.

 

Later I had occasion to discuss this with an attorney -- one who was peripherally involved with the NEA case, in fact. He laughed and told me that he was an attorney with the SEC in a previous life and HE couldn't make head nor tails out of the mess, either.

 

As we well know, and as Bernie Makoff could testify, the SEC has not been approaching their work with any high level of intensity.

 

There's plenty to talk to them about.

 

JudyS

 

 

Earlier this year the SEC issued regulations allowing the use of a summary prospectus which provides asimplified explaination. TSA products that are variable annuities (such as those sold under the NEA program) are very difficult to read because they must include the disclosure required under state insurance laws as well as the SEC. SEC cannot eliminate the disclosure required under state insurance laws.

 

If you cant understand the investment strategy, material risks, taxation and fees/costs described in a prospectus in 10 -15 minutes you should not invest in the fund. Thats why index funds are recommended for retirement plans.

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