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ks-man

Rolling Over 403B

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My mom just retired from teaching and I want her to roll her 403b out of the district sponsored plan (high management fees) into an IRA with lower costs and more choices. I can easily help her (and my dad) invest the money into funds to suit their goals.

 

I'm thinking either Fidelity or Vanguard for the rollover. The most important thing in my mind is having the process be as easy as possible. The more effort on their part the more likely they will just leave it in the district plan as they don't want to deal with the hassle.

 

Does anybody know if one firm is better than the other from this point of view? Or if there is a different firm than I mentioned which they should consider that also offers a lot of choices with low fees?

 

Thanks.

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I think you are doing a great thing for your parents.

 

My experience with Vanguard was super when dealing with a roth transfer. They did all the work!! Go to their online site and look around -you will figure it out. The whole process can be done online without ever talking to a phone operator. If you stick with Fidelity Spartan funds, Fidelity is a great choice. Fidelity has very good customer service by phone.Their other funds can be a littke pricey. My personal opinion is to transfer their money into a Vanguard target Fund suitable for their stage in life. It won't get any easier than that especially if they are the hands off type which it appears they are.

 

Tony

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Guest Joel L Frank

My mom just retired from teaching and I want her to roll her 403b out of the district sponsored plan (high management fees) into an IRA with lower costs and more choices. I can easily help her (and my dad) invest the money into funds to suit their goals.

 

I'm thinking either Fidelity or Vanguard for the rollover. The most important thing in my mind is having the process be as easy as possible. The more effort on their part the more likely they will just leave it in the district plan as they don't want to deal with the hassle.

 

Does anybody know if one firm is better than the other from this point of view? Or if there is a different firm than I mentioned which they should consider that also offers a lot of choices with low fees?

 

Thanks.

 

 

Ks-man,

 

I'll tell you one thing, the hassle involved in a rollover transaction is nothing compared to the hassle of being a teacher.

 

Your comment is quite telling. Teachers, half your mother's age, complain about the hassle involved in getting a low cost plan. So they complain about the high fees and rationalize it away because of the hassle they will have to go through to effectuate change. Is this thinking process part of teachers' DNA?

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This might not be good.

 

My dad just sent me out all the stuff on my mom's 403b. It looks like one of her accounts had a deferred annuity product. The statement (through 3/31) shows there being no withdrawal charge but my dad wrote on the sheet that the interest rate expired in 4/12 and the new rate goes to 4/22.

 

I did some web searching and the product seems to have fixed interest guaranteed rate options of 2,3,5,7 or 10 years. The surrender charges are 7% for the first year declining 1%/year. It appears that when the old one expired they were put in a new 10 year product which I'm assuming means a brand new cycle of surrender charges.

 

I spoke with my dad. He said that he thinks this happened automatically (being rolled from the old product into the new one). I know there is an account representative who handles the investment of the 403b funds.

 

Are they likely SOL? Will they have any recourse in not having this explained to them?

 

If I'm correct I can't see it being worthwhile for them to take a 7% hit of a surrender charge to move the money out.

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This might not be good.

 

My dad just sent me out all the stuff on my mom's 403b. It looks like one of her accounts had a deferred annuity product. The statement (through 3/31) shows there being no withdrawal charge but my dad wrote on the sheet that the interest rate expired in 4/12 and the new rate goes to 4/22.

 

I did some web searching and the product seems to have fixed interest guaranteed rate options of 2,3,5,7 or 10 years. The surrender charges are 7% for the first year declining 1%/year. It appears that when the old one expired they were put in a new 10 year product which I'm assuming means a brand new cycle of surrender charges.

 

I spoke with my dad. He said that he thinks this happened automatically (being rolled from the old product into the new one). I know there is an account representative who handles the investment of the 403b funds.

 

Are they likely SOL? Will they have any recourse in not having this explained to them?

 

If I'm correct I can't see it being worthwhile for them to take a 7% hit of a surrender charge to move the money out.

 

 

Hi ks,

If you and your parents want this to be addressed, speak to the rep. Finding objective information about a particular insurance product is the equivalent of Alice going down the rabbit hole. Seriously, you need to talk to the person who knows this product and have him or her explain what is going on. Tell the rep you want this annuity transferred and ask to waive the surrender fees, if they have any.

Please spell out SOL.

Steve

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Hi ks,

If you and your parents want this to be addressed, speak to the rep. Finding objective information about a particular insurance product is the equivalent of Alice going down the rabbit hole. Seriously, you need to talk to the person who knows this product and have him or her explain what is going on. Tell the rep you want this annuity transferred and ask to waive the surrender fees, if they have any.

Please spell out SOL.

Steve

 

 

They're going to contact their rep and see what the deal is. I just have a bad feeling about all this. SOL = $hit out of luck

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These 403bs are the poster boys for the term 'the devil is in the details'. When my wife retired we rolled most of her 403b into a Vanguard account. They did the transfer paperwork. But it was not a simple transfer. We read all the details and talked to the rep (who was a decent fellow with an indecent product) and discovered we could roll most of the 403b over fee free because of the length of time contributions had been made and a provision that 10% of the portfolio could be transferred fee free each year. So there would have been a fee attached to the last few contributions which we held back and within a couple years transferred the residual amount over to Vanguard. Some policies allow a fee free transfer at a certain age (usually 55) some when a specific event occurs (retirement) or a certain % each year and funds held over a certain number of years (often 7). Learn the details and even if you end up with a proposed fee you can request a waiver and even if no waiver look at the cost of the transfer, it still may be worth it to pay the fees.

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Guest Joel L Frank

"A decent person with an indecent product". How could a person be decent if he knows the advantages of buying a no-load product but makes an employment decision to be a commission salesperson?

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