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ciaofiore

Fidelity No Longer An Option

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Hello everyone -

A couple years ago, this website was invaluable for me choosing my first 403b plan. I went with Fidelity and am so happy that I did so. I am very happy with them, (despite the current state of the economy).

 

Now I got the memo saying that Fidelity has not signed some third party agreement. I know this was brought up in some other posts, and just wanted to share that it has happened in my school district also.

 

My choices are now all insurance companies.. metlife, axa, aig valic (!) and others like that. I do not want to go with those. So I would like to stay with Fidelity, I guess getting a ROTH ira.

 

I am looking for advice on the easiest way to do this. And I assume I should just leave the 403b I had with Fidelity and not touch it until retirement age... is that right?

 

Thanks for your help, in the past and in advance,

-ciaofiore

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Hi ciaofiore,

Call Fidelity or write a letter asking them to explain to you why they did not sign the ISA. Use that information and talk to your school district.

 

In the mean time, you are correct, leave your current money with fidelity, go with the Roth IRA for future contributions and forget the 403b for now. Some say that Fidelity, the TIAA cREF, the TR Price and even our legendary Vanguard will return.

 

Good luck,

Steve

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Even when Fideliy is on the list, like they are at the CSU system in California, its their group annuity, with funds from PIMCO, Morgan Stanley etc... No index or spartan funds to be found.

 

Besides "the troubled" AIG, who is benefitting from these regs?

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Besides "the troubled" AIG, who is benefitting from these regs?

 

 

Lets see, how about the agents, the sales people, the brokers? But its too soon to tell, lets wait a couple of years.

 

Steve

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To all

 

A lot of folks are starting to see 401K and 403B's as failed experiments. I am starting to agree.

Why not an enhanced IRA instead? Where one can put up to $15,500 or more a year tax sheltered away without even getting the employer in the middle of it? What good are employers doing as supervisors of our accounts? They give us lousy choices with high fees and then charge us 1% or more on top of expense ratios to have some third party administrator supervise the mess they created with the devious help of those with vested interest .

 

 

Folks we are not getting our money's worth from these plans especially now that the only decent choices like Vanguard and Fidelity are being manuevered out.

 

 

Mr Obama and Congress please grab the SEC by the balls and lets start getting things right for the common working man and ######.

 

 

Tony

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A lot of folks are starting to see 401K and 403B's as failed experiments ... What good are employers doing as supervisors of our accounts? They give us lousy choices with high fees and then charge us 1% or more on top of expense ratios to have some third party administrator supervise the mess they created with the devious help of those with vested interest .

 

Tony

 

I couldn't have said it better myself. However, I can only imagine the resistance from those who benefit from the status quo to bring about this change.

 

Folks like the original poster are going to take a long, hard look at dumping 403b accounts and use IRAs and taxable accounts instead. In fact, if one is not going to invest more than $5K or $6K (for those over 50) per year, I can't imagine why he/she would choose a 403b with poor choices over a Roth IRA.

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Hi,

I also agree that by and large for all of the effort that some of us have done the last ten years to improve 403b, what have we got to reflects our efforts? Very little policy changes. I want to very much believe that more of our colleagues know a little more about these plans and how the agents and insurance industry have corrupted and continue to corrupt the 403b with the IRS assistance. The IRS timing was terrible. After a couple of years of anticipation, they give us a few weeks to transfer all of our money. Terrible!

 

As far as the no load industry, I think they are just as responsible for not having low fee choices and for letting the policy makers get away with the end result is that only high fee 403b vendors with their terrible products sign the agreements. I don’t understand, unfortunately, how the no loads learned to be so afraid to sign the old hold harmless agreements and now absolutely refusing to sign the new ISAs. The greatest factual omission in the last fifty years of 403b is how many times have individual educators sued or school districts have been found to be out of compliance by the IRS so much so that the insurance company would be required to pay all costs (the old hold harmless agreement demanded this stipulation). What were those costs paid by the insurance industry in the last 50 years? I have my theories, but with little evidence.

 

The only evidence that I have in my disposal about IRS compliance is what I have reported here several times in the past. In 2000, the IRS audited LAUSD and out of a sample of 900 employees, the IRS found about $2000 of over contribution!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! That’s it! And because of this example, the no load industry, by and large, says it is too risky to sign on with school districts! What!

 

As I said, I will never understand this thinking. Yes I have been told a hundred different ways regarding different business plans, yada yada yada, all so very logical, understandable only if you take the no load vendor’s side, but that doesn’t make it right. What is the evidence in nominal dollars that this is too risky for no loads? Where are the lawsuits? How much money has been paid by the insurance industry for being out of compliance at any time in the last fifty years?

 

The power of this secret costs the nation’s educators hundreds of millions of dollars in excess fees and rip off insurance coverage.

 

For the immediate future, we should discourage teachers from using the 403bs if all of the vendors are insurance companies.

 

What a sad turn of events.

Steve

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It too have lost Fidelity, Vanguard, etc as choices. I am over 50 and have been putting in close to $18,000 a year for the last couple years. I am morning the loss of these choices but am in a dilemma now on my best option of what to do with this money. I really want to be dollar cost averaging now and want to be buying in the next year or so when the costs of mutual funds are very low. If I choose one of these products I fear I will lose profits made to all kinds of charges and lose the advantage of having the money tax deferred. So do I take this money and just invest it in Fidelity with out the tax deferred advantage? What a shame? Maybe I will use the money to redo my kitchen :) Our district has also told us that we have to choose by Dec 1st or the money in Jan will not be put into a 403b and will be taxed and be in our regular paycheck which is Ok I guess. Is there a chance that in 6 months or so something will change?

Bob

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Roodo,

 

 

Don't redo your kitchen at the expense of your retirement. Review your new 403B choices and make sure you understand what you will be investing in and stay the heck away from insurance companies. Don't be swayed by a sales pitch!!!

 

If no decent choices exist especially because of fee structure then why not do a Roth IRA and then the left over amount above the Roth limit can be invested in a Fidelity or Vanguard Index fund or funds which are very tax efficient ?

 

Don't let a crappy 403b keep you from saving money. Explore tax managed and index funds from reputable low cost companies.

 

Insurance companies are a bridge to nowhere. Things must change for the better but the power we have is to NOT BY THE PRODUCT!!

 

 

Tony

 

 

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The only evidence that I have in my disposal about IRS compliance is what I have reported here several times in the past. In 2000, the IRS audited LAUSD and out of a sample of 900 employees, the IRS found about $2000 of over contribution!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! That’s it! And because of this example, the no load industry, by and large, says it is too risky to sign on with school districts! What!

 

As I said, I will never understand this thinking. Yes I have been told a hundred different ways regarding different business plans, yada yada yada, all so very logical, understandable only if you take the no load vendor’s side, but that doesn’t make it right. What is the evidence in nominal dollars that this is too risky for no loads? Where are the lawsuits? How much money has been paid by the insurance industry for being out of compliance at any time in the last fifty years?

 

 

1) Wow, if LAUSD is representative of school districts (I don't know if this is the case), then I'm puzzled about the regulations. What was the great need for all of this nonsense?

 

2) The only reason I can see for the great no load companies to not participate in 403b plans is that it does not make business sense for them to do so. They are in business to make money, and the risk-reward trade-off apparently does not make sense to them.

 

3) There may be a bright side to all of this. If income tax rates increase, then the 403b contributions that are made now will be taxed at a higher rate when they are withdrawn. Perhaps it would be better to make after-tax contributions now under what may be lower rates than in the future. The tricky thing to calculate is if the compound returns in a tax-deferred account would compensate for the possible higher tax rates in the future when withdrawals are made. I would love to see somebody analyze that.

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To all

 

A lot of folks are starting to see 401K and 403B's as failed experiments. I am starting to agree.

Why not an enhanced IRA instead? Where one can put up to $15,500 or more a year tax sheltered away without even getting the employer in the middle of it? What good are employers doing as supervisors of our accounts? They give us lousy choices with high fees and then charge us 1% or more on top of expense ratios to have some third party administrator supervise the mess they created with the devious help of those with vested interest .

 

 

Folks we are not getting our money's worth from these plans especially now that the only decent choices like Vanguard and Fidelity are being manuevered out.

 

 

Mr Obama and Congress please grab the SEC by the balls and lets start getting things right for the common working man and ######.

 

 

Tony

 

 

By "a lot of folks", who exactly do you mean? Us as investors or the companies themselves?

 

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Makouri --

I think he means "us as investors"... the companies are all staying in the business, except that the no load group seems to be dropping out of the 403b business. I wonder if it's because their reasonable fees are insufficient to cover the added responsibilities and expenses of the new regs. As I look at this landscape, the investment firms (Like Security Benefit, AXA, Lincoln, and so on) and insurance companies all know a good thing when they see it, though... at least that's my guess.

 

JudyS

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To all

 

A lot of folks are starting to see 401K and 403B's as failed experiments. I am starting to agree.

Why not an enhanced IRA instead? Where one can put up to $15,500 or more a year tax sheltered away without even getting the employer in the middle of it? What good are employers doing as supervisors of our accounts? They give us lousy choices with high fees and then charge us 1% or more on top of expense ratios to have some third party administrator supervise the mess they created with the devious help of those with vested interest .

 

 

Folks we are not getting our money's worth from these plans especially now that the only decent choices like Vanguard and Fidelity are being manuevered out.

 

 

Mr Obama and Congress please grab the SEC by the balls and lets start getting things right for the common working man and ######.

 

 

 

What is the SEC supposed to do? Make mutual funds offer their products to 403b plans at a low cost?

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Thanks to everyone who responded, I guess I really just needed a place to vent :). And, I am sorry for those of you going through the same exact thing in your districts.

 

Steve, thank you for confirming that it would be wise to just leave the 403b alone and to start a Roth IRA.

 

 

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Hi ciaofiore,

Times are rough and you deserve to vent. This current mess took a long time to build, starting at 12:00 noon January 20th, 1981 when the first lunatic started that "the government is the problem" crap and then removes the solar energy panels from the White House that his predecessor had installed!

Regards,

Steve

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