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Dan Otter

Rebuttal To: "do Annuities Makes Sense?"

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Joel,

 

To tell you the truth I never follow bills until they have passed. I just have to many I would have to follow as I do more then just retirement planning. If you have a copy I would be more then happy to read it and give you my opinion.

 

Bill Mahoney

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Federal law allows state and local governments to give their workers the option of contributing on a pre-tax basis to Deferred Compensation Plans created under section 457(b) of the Internal Revenue Code. Public school districts and public colleges can also offer their workers a second plan, known as a 403(b).

 

The 403(b) option allows public school teachers and others to double the amount of pre-tax income they choose to invest for retirement -- an option that most other government workers don't have. H.R. 3718 recognizes this inequity and extends the 403(b) universe to include all employees of state and local governments.

 

The hundreds of Deferred Compensation Boards on the state, county and local levels would be the logical agencies of government to offer a refreshing and superior low-cost 403(b) program and thereby eliminate, once and for all, the privately offered and commission-laden 403(b) programs that have been extremely hurtful to civil servants in this country for all these many decades.

 

I urge the establishment of a coalition to assure that this bill becomes law. The 403(b) like its younger 457(b) cousin must come under the auspices of state and or local government. The nightmare associated with the outsourcing of the 403(b) to private industry must become a thing of the past. Just like the Defined Benefit pension systems that public employees belong to are operated by government so should the 403(b)!!!

 

Peace and Hope,

Joel L. Frank

 

 

 

 

 

Ted Leber Posted: Mar 4 2004, 10:20 PM

 

 

 

 

 

 

Group: Members

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Joined: 2-March 03

 

 

 

Joel, I always want you on my side in a street fight.

 

Why do you think the folks we try to help here will not take up the banner and just make it happen ! After all, it is their future.

 

Perhaps, someday...

 

Cheers, Ted

 

 

 

Redwoods Posted: Mar 8 2004, 03:47 PM

 

 

 

 

 

 

Group: Members

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Joined: 2-March 04

 

 

 

To my friend Ted,

 

HR 3718 in my view is just what the doctor ordered. Upon becoming law the hundreds of Deferred Compensation Boards (public bodies) that have been offering 457(b) plans for many years will now be able to offer 403(b) plans as well!! The members of these Boards will be hard pressed to defend the 2 percent cost that 403b participants have been paying for all these too many decades.

 

Ted, I got a letter off to the sponsor, Virgil Goode, Jr. of your home state of Virginia. I want to work with his office for the passage of HR 3718. As a resident of Virginia could you get a call into his office and tell him that there is a guy you know from NJ that will not sit still until this bill is signed into law by President Bush? Ask his office for the kind of help they need. Hopefully, I can do something.

 

Thanks Ted,

Joel

 

 

 

 

2 replies since Mar 3 2004, 07:47 PM Track this topic | Email this topic | Print this topic

 

 

 

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Joel,

 

I do not see it passing as it would cost to much money tax wise to allow another group to be allowed to double dip on tax deferred savings. What would change the cost of 403b plans is if they would pass a law that would state that the public employer offering 403b plans would not be held responsible for any tax consequences for mistakes made in a 403b plan. That would do away with the need for hold harmless agreements and would bring a lot more low cost providers into this market place.

 

Bill Mahoney

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Hi all,

Just some thoughts about this thread.

In the investment world, intelligence does not guarantee anything. Although I do not know Ellie, I agree that Ellie is intelligent, but there is one other adjective that needs to be used: she is a sales person, always has and always will be. People in sales are for the most part are massively smart, worldly, and very personable. Along with celebrities and professional sport figures, it’s the sales people who make the most money in our capitalist society. Most CEO of major US companies started out as sales people. It’s talking, inspiring, encouraging and closing the deal. These talents are well compensated in our economic system. One of the reasons why Marx advocating making a direct connection between the supplier and the consumer, to save money for the consumer. Interesting, that is what we educators and consumers are advocating here. When we advocate staying away from annuities of all kinds in 403b plans and learn about Vanguard and TIAA CREF, we are also eliminating TSA sales person and the fireworks starts. When somebody such as Ellie advocates the need for the middle person and justifies the compensation by selling educators worthless and expensive benefits in annuities, the fireworks starts once again.

 

This issue remains like gum on our shoes is just what is the best interest of educators. We consumers of 430b products think we have the edge here. Since we are not compensated and we are beyond reproach; heck WE are the consumers. As consumers, Ellie is wrong. Smart, worldly and personable people can be wrong. She is wrong on all counts! As Hal indicated that she is vague. She offers no data and she is completely out of date. She like many of the pros who post here want it both ways, not condemn the product, but do not sell it either! It doesn't make sense because I am NOT a sales person. Sales people do have a true committment to their product, to other sales people and espcially the NTSAA. They really do believe that they are doing something good for educators. We consumers are saying that the TSA 403b product stinks and we tell them why, but always ends in deaf ears because we are talking to the wrong people. In the end, we have something powerful (Bogle's books, lawsuits against insurance companies, and a report that backs us up, Securities and Exchange report (2000) that specifically says that tax deferred plans such as 403b, 401ks, 457 should not be used in annuity plans).

 

But like the 60's song, "And the beat goes on..."

 

Steve

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Steve,

 

Neither Vanguard or TIAA CREFF will directly serve the market. They are willing to take transfers but they are not willing to do the set up work. The reason it would not be cost efficient for them to do so. You never replied to my point that condemning the product because it is misused by certain sales people and orginization, would be like condeming hammers because some carpenters use them instead of screwdrivers when using screws. You are also totally unwilling to realize that the vast majority of people want help with their investment decisions. In fact it is one of the largest discussions going on in the 401k world. On exactly who should be giving them this advice.

 

Also you could have the cure for cancer, but without a sales force no one would know about it. Life saving only get used because companies have sales forces out their educating doctors about their . Using an arguement from a system that is a proven failure proves that point.

 

The vast majority of people would never buy any financial product unless it was mandated by law, like car insurance, or some one sold it to them. Whether it be life insurance, IRA's, or 403bs.

 

I get so tired of you insulting any pro that wants to work in the 403b market. Once again the problem is not the product, it is the misuse of the product. Some day you might actually open your mind. But I highly doubt it. And having a closed mind hardly makes youy above reproach.

 

Bill Mahoney

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Bill,

 

Good to read your wise advise. I have always been one who valued your service to 403(b)Wise readers. I say: If only the buyer would spend more time/effort trying to understand the costs vs the benefits. But alas, its seems many folks just throw up there hands and say this is beyond me. It's not. But it takes an understanding that most teacher/investors who are investing in variable annuities are giving away almost half of their nestegg to fees after a 40-year investing career. So I suggest teachers need to take a hard second look at their priorities. I recommend teachers find a fee-only adviser.

 

Ted

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And then you have the teacher unions willing to endorse high cost providers in return for a fee/kickback. Ex: NYSUT/ING. The very organizations that lobby the state legislatures for improvements to the PERS benefit formula are swimming with the 403(b) sharks! The very same organizations that are opposed to private investment accounts for a portion of the SS payroll tax are swimming with the 403(b) sharks. So what else is new? HR 3718! This bill may be just what the doctor ordered. Let's put the 403(b) in the protective custody of the Deferred Compensation Boards with their built-in transparency. I believe this bill is a watershed opportunity. LET'S STAY FOCUSSED ON THE BIG PICTURE?

 

Did you see 60 minutes tonight, the one dealing with the dealer getting you the "best rate" for financing a car? They reported that the motoring public spends $1 billion dollars a year on UNDISCLOSED/HIDDEN fees. This is a fraction of the amount collected in UNDISCLOSED/HIDDEN fees by the 403b sharks!

 

Peace and Hope,

Joel

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