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Seeking Advice For 457b Placement

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I've been retired for 4 years and just now realizing that my 457b plan is not federally insured. It's through ING. I've spent many years building up this fund (just straight interest; no investments) and I can't risk losing it. I realize that the $250,000 FDIC protection is not permanent so I'm trying to figure out the best place to put it. I'm not interested in any investments or risk. My priorities are security and then any money making potential (I know there aren't a lot of options out there for a low risker). Would 2 seperate long term CDs be wise? ANY suggestions would be appreciated. Please forgive my lack of knowledge. I'm very green to all of this. I've just treated my 457b plan as a savings account for years now.

 

Thanks in advance!!

 

fallenlimbs@yahoo.com

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I've been retired for 4 years and just now realizing that my 457b plan is not federally insured. It's through ING. I've spent many years building up this fund (just straight interest; no investments) and I can't risk losing it. I realize that the $250,000 FDIC protection is not permanent so I'm trying to figure out the best place to put it. I'm not interested in any investments or risk. My priorities are security and then any money making potential (I know there aren't a lot of options out there for a low risker). Would 2 seperate long term CDs be wise? ANY suggestions would be appreciated. Please forgive my lack of knowledge. I'm very green to all of this. I've just treated my 457b plan as a savings account for years now.

 

Thanks in advance!!

 

fallenlimbs@yahoo.com

 

 

Hi tx,

Welcome!

I think to better help you decide on something that as you stated is nearly impossible "I know there aren't a lot of options out there for a low risker), never the less, I have some questions:

 

What is your goal for this money? Retirement? For descendents? Purchase toys?

 

Are you making distributions (withdrawing) now? If not now, when?

 

Goals are important, for example, it might not be in your best interest to invest in long term CDs for a short term distributions.

 

We are all here to learn, no apology needed. There are some good people here who can and will help you.

regards,

STeve

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Thank you so much for your response Steve. I would like for the money that is currently in my 457b fund to be my son's inheritance someday. So I don't plan to spend it, I just want to park it. If it were insured where it is now (in the deferred comp) I would just leave it but I just don't want to take a risk at waking up and seeing that the bank has gone under and my money is no more. So with that, any suggestions? Thanks again!

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Thank you so much for your response Steve. I would like for the money that is currently in my 457b fund to be my son's inheritance someday. So I don't plan to spend it, I just want to park it. If it were insured where it is now (in the deferred comp) I would just leave it but I just don't want to take a risk at waking up and seeing that the bank has gone under and my money is no more. So with that, any suggestions? Thanks again!

 

 

One problem you have is that this money is tax deferred. You need to find an FDIC bank or financial institution that accepts rollovers from your 457b plan. You do not want to cause a distribution event whereby the tax man comes a calling. I don't know any specific institution that does this, perhaps someone will chime in. I know my credit union will not accept tax deferred accounts.

Most of us here have our money in stock and bond mutual funds, but mutual bond funds do not have what you want, FDIC. Again, someone may have an option that I am not aware of.

 

Hiring a fee only professional might be helpful. But before you do hire somebody, here are some thoughts to mullover:

1. This money will be "parked" for as long as you live, 20* years or more and then it is passed on to your son. That is a long time in a low interest, safe and insured bond, going rate is about 3%, more or less. Even so, having all of this money in a bond is not diversification, putting all of your eggs in one basket. There are different types of bonds you might want to be aware of for options, GNMAs, intermediate, long term treasuries, treasury inflation protection securities.

 

2. Since you found this website and we are all about learning the basics of finance, it might be worth it to you to learn a little about bond investing. For example, going to a fee based financial planner, you want to know what they are doing and ask the right questions. I am not saying to go out and earn an MBA, I am suggesting that you read this webmaster's book, "Teach and retire Rich" by Dan Otter and read "Bond Investing for Dummies." I have read both of these books.

 

3. A final thought about losing money. You son will be inheriting a lot of money in the decades ahead. Realizing that this is not your primary problem, but you would want your son to use this huge windfall wisely. All of us have read and heard of very smart people who lost windfalls or life savings permanently, not because of stock market risks, or financial institutional defaults, but because of lack of basic knowledge to manage one's portfolio or knowing how to monitor a fee only financial planner.

 

Good luck,

Steve

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Since you are retired, you can roll your 457 account (assuming this is a governmental plan..) into an IRA at any bank or credit union. This will ensure your $250k FDIC or NCUA protection.

 

 

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Since you are retired, you can roll your 457 account (assuming this is a governmental plan..) into an IRA at any bank or credit union. This will ensure your $250k FDIC or NCUA protection.

 

 

Thanks Vince for the clarification. I knew there must be a way TX to roll over his money into an IRA with any bank or credit union that it has to be a governmental plan, without going into a mutual fund. I know VG allows it, but TX was not looking for more complications.

 

And TX,

Good luck and let us know what you decided. Other posters are considering their options similar to yours and it would be a learning experience for all of us.

 

regards,

Steve

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Well, this stuff is officially BRUTAL. Just when I think I’m piecing together a plan, I get discouraged. I’ve spent many hours the past few days researching and calling different banks regarding my deferred-comp situation. I really like the idea of NOT putting all of my eggs into one basket so I was considering putting some of the funds into some type of US Treasury bond(s) and then rolling the rest into a FDIC or NCUA insured IRA CD. I have an existing account with a credit union that is offering the same APR for a 3yr CD that they are offering for a 5yr jumbo CD. I notice a lot of banks doing similar promotions so that folks will still buy the CDs with the option to re-evaluate the economy in 3 years instead of 5. This go me thinking that this could be the ideal short term option for me because it would allow me to put all of my eggs into one well insured basket for 3 years, without paying any tax penalties, and still making a little interest. Well, then I call another bank and ask about their different IRA funds and when I mentioned that this money will eventually be an inheritance he said “there are much more efficient ways of handling this”. Of course he did not elaborate! So was he just trying to reel me in for their “financial planning services” or am I just WAY off?!?!?!

I know this is complicated, however I figure if anyone else has an even remotely similar situation now or in the future then perhaps someone on the boards here can save us all some serious cash, intimidation, and confusion.

I feel like I’m getting close to at least having some tangible options on my plate to choose from.

 

fallenlimbs@yahoo.com

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Hi tx,

You are in the RIGHT PLACE! I know its discouraging but don't give up. There is no hurry to make a decision today or tomorrow. Take your time. This is precisely why others let an expensive agent or pro do all of this stuff that you are doing right now. Then they take a piece of your nestegg each and every year in costs and commissions for years and DO NOTHING for you.

Believe me, you will not forget this process, so when you do talk with a pro, you will know the difference between a sales pitch from good objective financial information that is good for you. Looks like you are already learning that valuable lesson.

Let us know what options you found.

Learn a little each day and its OK to get overwhelmed. Just think of our students when they learn something new, its overwhelming at first but it becomes second nature later on.

Good work,

Steve

 

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I hope I'm in the right place. My wife is a teacher and has had a 457 plan through Vanguard for several years, no load index fund, very efficient. Vanguard is no longer on the district's approved list and most if not all all of the approved ones are insurance companies. I don't want an annuity, want a mutual fund. How do I find a better option? Does anyone know anything about the following companies (on their approved list)?

 

Ameriprise (American Express)

Equitable (457)

Horace Mann

Lincoln Investment Plan

Lincoln National Life

Met Life

Midland

NY Life Ins

Planmember/Securities

Kades Margolis -GWN

Legend Group

Security Benefits Group

AIG Retirement- (Variable/VALIC

 

Joe

 

Thanks

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