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kat92128

Leaving Education....what Would You Do With Your 403B?

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Hi everyone,

I've gotten such great advice from the sages here, so I'm going to throw out this topic and see where it goes.

 

There is a very good chance that I will be leaving education after this school year. I will be moving out of California to Texas to join my family. Although I only have 15 years in STRS, (CA's teacher retirement system), I will take my pension, and I plan to get a part-time job in Texas to make ends meet.

 

I have two 403b accounts: 1.) Current with CALSTRS Pension 2/TIAA Cref and 2.) a dormant 403b directly with Vanguard.

 

My inclination is to roll them both out of the 403b status and into an Traditional IRA. I would use Vanguard. My current overall asset mix is about 50 stocks/50 bonds, and my 2012 return was almost overall.

 

I'd like your thoughts on this rollover idea and also asset allocation. Thanks is advance! Kat

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Didn't mention your age. I would roll it over simply because you have more control over your choices namely , any fund you want. Also your Vanguard

403b account probably has a higher expense ratio than you will get in an IRA through admiral shares. Thats the way is in my accounts with vanguard.

 

A 50/50 portfolio sounds reasonable.

 

 

Tony

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Guest Joel L Frank

For most, a 403b that includes T/C and Vanguard would suffice going forward. Unless you are directing your thoughts to invest in a Vanguard fund(s) that is not available thru your dormant 403(b) plan I do not see the compulsion to rollover to an IRA.

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i would roll everything over into a Vanguard IRA.

 

As Tony mentioned, even if you have the best Vanguard 403(b) available (which we teachers do have here in Texas by the way) you are still paying higher fees than you would with an IRA. Vanguard does not make its lowest fee Admiral shares available to 401(k) and 403(b) accounts that are managed by Vanguard. They charge the higher fee investor shares as a way of recouping the administrative costs that Vanguard incurs by managing the accounts.

 

Some non-Vanguard 403(b) accounts do have Vanguard admiral shares available but then you are paying management fees to some 3rd party. My wife, for example, holds Vanguard Wellington Admiral shares in her 403(b) administered by Standard Insurance but is forced to pay an outrageous 1.25% management fee for the privilege.

 

Point is, unless you have some extraordinary plan such as the Federal TSP plan, you will amost certainly reduce your fees and increase your flexibilty by rolling everything into Vanguard IRA.

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