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bigcat

Newbie Needs Help Choosing Plan Vendor

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I recently started working for OSU and I want to open a supplemental retirement account 403(b)7 or 457. Their list of vendors is the following. I have no clue which one to choose. I'd appreciate recommendations. I know nothing about investments.

 

Advisory & Retirement Planning (2)

Aegis Financial Services (2)

AIG Retirement (3)

Ameriprise Financial, Inc. (2)

AXA/Equitable Life Ins. Co. (2)

CitiStreet (2)

Everhart Financial Group (2)

ING Financial Advisers (3)

Lincoln Financial Group (3)

Merrill Lynch (4)

Metropolitan Life Ins. Co. (2)

Nationwide “Best of America” (2)

Ohio Public Employees Deferred Compensation Program (5)

Security First Grp/MetLife Resources (2)

T. Rowe Price (4)

TIAA-CREF (4)

 

(2) 403(b) only

(3) 403(b) & 457

(4) 403(b)7 only

(5) 457 only

 

 

Can u folks recommend the "best" or maybe the top 2 or 3? I am not sure yet whether I want 403b or 457. Again, I don't know, everything I've read just highlights the fact that 457s don't have the 10% penalty but don't say what the "catch" is or what the disadvantage is. If there is none, I don't know why anyone would choose 403b.

 

Again, this is to supplement the pension benefit. They won't match anything so it would be just my pre-tax contributions. Also, I have money from three other 401k plans (previous jobs) that I would love to consolidate and probably rollover to this new 403b or 457.

 

Thanks in advance.

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You have two good choices for low cost, index investing:

T. Rowe Price (4)

TIAA-CREF (4)

 

Maybe look at:

Ohio Public Employees Deferred Compensation Program (5)

I am not familiar with Ohio but some state plans are good and others are bad. Many states use insurance companies as their providers so the fees are high.

 

Avoid the others. They are the usual suspects.

 

 

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I agree with mmcwenie. EXCEPT that if you have a couple of old 401(k)s, it would probably be wisest to roll them into an IRA where you have control. Vanguard is generally considered a fine choice for that, and all you have to do is call them up and they will tell you how to do it... they will send you some paperwork which you make out and send in and then THEY go and snag the $$ so you never touch it (thereby avoiding the risk of being accused by the IRS of actually taking possession of your $$ and having to pay taxes/penalty).

 

There is no magic in learning about investing... there's just a little bit of work. Start out by reading John Bogle's "The Little Book Of Commonsense Investing". Then come back here and ask what to read next and you will get lots of help. If you can figure out how to drive a standard transmission car or cook yourself a hamburger, you can be a reasonably good investor and (most important of all) avoid being a victim of the financial services industry.

 

You can do it. Good luck.

 

JudyS

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Thanks Folks. JudyS, can you say a bit more about your statement below? Does that mean I am not in control with a 403/457? Why is an IRA better for rollovers?

 

 

EXCEPT that if you have a couple of old 401(k)s, it would probably be wisest to roll them into an IRA where you have control.

 

 

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BigCat --

With a 403b, 457 or 401(k), your choices are limited to what is offered by the institution (school district, hospital board, state or whatever.) There are TYPICALLY management fees (i.e. from TPAs or whatever) between you and the company that holds your $$, making TWO sets of fees you have to pay. With an IRA, you can choose any company you wish (of course, most people here would prefer to us no-load companies like Vanguard, TIAA-CREF, T Rowe Price, Ariel and some others) and you pay ONE set of fees -- theirs. You can know exactly what those fees are and make an informed decision. There are virtually no opportunities for anyone to slip in a few extra costs when you're not looking which CAN happen when you have an insurance company or other investment firm as an intermediary. Also, you are not paying a salesperson (sometimes cordially referred to as an "advisor") In other words, by having an IRA you have an opportunity to maximize transparency and minimize costs and your choices are wide open.

 

Another site I often enjoy is www.fundadvice.com. There you can find several suggested low cost portfolios. Of course, if you want more assistance the sponsoring company would be glad to help for a fee, but their recommended portfolios are, IMHO, quite good. Just my individual opinion; not speaking for anyone else.

 

JudyS

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Thanks JudyS. This helps tremendously.

 

 

BigCat --

With a 403b, 457 or 401(k), your choices are limited to what is offered by the institution (school district, hospital board, state or whatever.) There are TYPICALLY management fees (i.e. from TPAs or whatever) between you and the company that holds your $$, making TWO sets of fees you have to pay. With an IRA, you can choose any company you wish (of course, most people here would prefer to us no-load companies like Vanguard, TIAA-CREF, T Rowe Price, Ariel and some others) and you pay ONE set of fees -- theirs. You can know exactly what those fees are and make an informed decision. There are virtually no opportunities for anyone to slip in a few extra costs when you're not looking which CAN happen when you have an insurance company or other investment firm as an intermediary. Also, you are not paying a salesperson (sometimes cordially referred to as an "advisor") In other words, by having an IRA you have an opportunity to maximize transparency and minimize costs and your choices are wide open.

 

Another site I often enjoy is www.fundadvice.com. There you can find several suggested low cost portfolios. Of course, if you want more assistance the sponsoring company would be glad to help for a fee, but their recommended portfolios are, IMHO, quite good. Just my individual opinion; not speaking for anyone else.

 

JudyS

 

 

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Folks,

 

So my "main" 401k, which is from a previous job so I can't contribute anymore, is with Fidelity Investments. I haven't heard Fidelity recommended here. From the feedback that I am getting here, it seems that what I should do then is to rollover the 401k to an IRA with TRowePrice or TIAA-CREF and separately open the 403b which is "sponsored" by my employer (OSU).

 

One thing I don't have clear is, and pardon my ignorance once again, If I want to contribute money to that rollover IRA (or any IRA for that matter), it would be after-tax dollars right? Since the employer is not the one putting the money on the account? Oh.. but so I guess the contributions are tax deductible so I guess I get something back when I file my taxes.

 

I am actually wondering if it is worth to move the 401k if I am not going to contribute to it. Since the only money I have left to save which is not much will probably all go the 403b, I would not be contributing anything to that potential rollover IRA.

 

Even If I had after-tax money to save, from what I am reading, most people actually invest on a Roth IRA since the long term benefits appear to be better than the yearly tax deduction.

 

One more thing folks, sorry for the long post... I need to choose between TRowe and TIAA-CREF, I take it they are both equally good. Are there any preferences for one vs the other one? (Both in terms of IRAs and 403b?)

 

 

 

Thanks JudyS. This helps tremendously.

 

 

BigCat --

With a 403b, 457 or 401(k), your choices are limited to what is offered by the institution (school district, hospital board, state or whatever.) There are TYPICALLY management fees (i.e. from TPAs or whatever) between you and the company that holds your $$, making TWO sets of fees you have to pay. With an IRA, you can choose any company you wish (of course, most people here would prefer to us no-load companies like Vanguard, TIAA-CREF, T Rowe Price, Ariel and some others) and you pay ONE set of fees -- theirs. You can know exactly what those fees are and make an informed decision. There are virtually no opportunities for anyone to slip in a few extra costs when you're not looking which CAN happen when you have an insurance company or other investment firm as an intermediary. Also, you are not paying a salesperson (sometimes cordially referred to as an "advisor") In other words, by having an IRA you have an opportunity to maximize transparency and minimize costs and your choices are wide open.

 

Another site I often enjoy is www.fundadvice.com. There you can find several suggested low cost portfolios. Of course, if you want more assistance the sponsoring company would be glad to help for a fee, but their recommended portfolios are, IMHO, quite good. Just my individual opinion; not speaking for anyone else.

 

JudyS

 

 

 

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