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How Long For 403B Contributions To Appear?

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My 403b contributions take as long as 20 days after payday to arrive in my account. I hate the wait! And it seems to always be on a day with .5 to .7% gains that it buys! The luck. ha-ha!

 

Are these waits fairly normal?

 

Thanks.

 

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We use Security Benefit's NEA DirectInvest and new contributions show up almost immediately. I haven't measured it exactly but 0-2 days?

 

...I'm apprehensively waiting for the bear market that causes each purchase to be worth less than a day or so earlier. So let's enjoy the record highs while they last!

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Same in LAUSD 0-2 days, I am told. Not sure about the 20-day delay. But it sounds like it's within the IRS or DOL regs. Others who know the regs can chime in. What I do know, before the 2007 regs, districts had up to a year to make contributions!

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Thank you. I am going to kindly ask about this at work at a good time. By the way, I may get the funds a tad early because the markets are up so far today especially VNQ (I have the fund equivalent), and it has been a bad month for VNQ, so that probably seals it that I will buy more today on a 100bps higher price!

 

2 days sounds awesome. It might be a trick where the TPA keeps it a while, not sure.

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It might be a trick where the TPA keeps it a while, not sure.

 

 

This 20 day( or longer) lapse before posting used to happen to me when I was with an unnamed annuity insurance company. Conspiracy theories said that the company collected all the contributions nationwide and deposited them in a money market long enough to earn interest on the money before disbursing it to mutual fund accounts. Have no clue if its what they do or not but in this day of instantaneous electronic transmission, transactions can and should be posted immediately or within a few days.

 

Having said that I don't think its a big deal. If you understand dollar cost averaging you will realize that you will buy high sometimes and buy low other times so over many years it really doesn't matter as markets will always go up and down. The important thing is that you read or quarterly statement to make sure all your money did go into your account at around the same time each month.

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I've got the same problem. In my case, the district uses a county board of education to process the funds (I'm not sure why). They don't distribute the first-of-the-month contributions until the 15th of the month. Then, with some vendors (including CalStrs pension2), they actually mail a physical check instead of an electronic transfer, which can push the deposit very late in the month, after the 20th.

 

In practice, it is more of an annoyance than a problem, but it isn't entirely trivial--if one accumulated a million dollars over a career, at 7% that three weeks the money sat uninvested would have been expected to net more than $4000, if my arithmetic is correct.

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I've got the same problem. In my case, the district uses a county board of education to process the funds (I'm not sure why). They don't distribute the first-of-the-month contributions until the 15th of the month. Then, with some vendors (including CalStrs pension2), they actually mail a physical check instead of an electronic transfer, which can push the deposit very late in the month, after the 20th.

 

In practice, it is more of an annoyance than a problem, but it isn't entirely trivial--if one accumulated a million dollars over a career, at 7% that three weeks the money sat uninvested would have been expected to net more than $4000, if my arithmetic is correct.

 

 

Thanks! Yes, I know it is not a massive deal, but I would rather get the money in the market sooner. I also agree that it is not necessarily trivial.

 

If someone contributes $1500 per month and the money goes in on the 20th, 2/3 of the year the account was $1500 short.

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I don't mean to sound flip or condescending but I am amazed how some of you guys are able to calculate how much money you lose by not getting your money posted within a few days instead of a few more days. Other similar calculations have also been posted in other threads. Are you all math teachers?

 

These calculations seem to be based on hypotheticals like "if one accumulates a million dollars then". I think its much more important to try and save as much as you can based on the principles we discuss here and not begin to get too overly focused on the smaller details that don't matter as much and the calculations that won't matter if you don't save more. Its also important to lower fees too and there is nothing wrong to wanting rock bottom fees but minute differences in expense ratios won't matter much if you are not saving more than average amounts starting at a young age.

 

 

Tony

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I completely agree that savings rate should be everybody's #1 priority.

 

But when you're already maxing out your 401k and investing 70% of your take home pay then it's time to dig into secondary issues. Either that or sell your home and move your family into the woods. Sadly my wife can't handle living with the mosquitoes in 90 degrees & 80% humidity :)

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I don't mean to sound flip or condescending but I am amazed how some of you guys are able to calculate how much money you lose by not getting your money posted within a few days instead of a few more days. Other similar calculations have also been posted in other threads. Are you all math teachers?

 

Tony, I'm surprised at you. Us non-math teachers are sensitive to the effect of costs on our investments. The three-week time lag between the paycheck and the retirement account is a kind of cost. Imagine if they held your money at zero interest rate for six months before investing it--would you still be unconcerned? Nobody suggested that this was a huge retirement-endangering problem, but there is no doubt that it would be better for 403b investors if their money is invested in their retirement accounts on payday rather than weeks later, and I think discussing that is entirely on-topic here.

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If this issue were happening to me it wouldn't just be about the (probably small) effect it has on my retirement. It would be more about the fact that some organization is potentially profiting off of me against my will and without even providing me a service.

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Guys or Gals

 

Let me explain

 

I was just trying to say, make sure you don't fall victim to just seeing the trees but not the forest. I have helped many teachers over the years set up simple but reasonable asset allocation with the good companies available to us-Aspire in the 403B and Blackrock in our 457B among a sea of annuities products charging 2-4% .I added them into mostly index funds and target funds made up of index funds through Aspire or our Blackrock 457

 

.Later some of the same folks I helped came back and attacked me for various reasons-their balances went down and it was my fault, they discovered a yearly fee and they overreacted. On another occasion someone complained that the Target retirement plan account i put them in was under performing and someone they knew told them that their annuity was doing better. Another freaked out when a contribution didn't post to their paycheck YTD stub. I also had math teachers tell me exactly how much money they would have in their retirement under their plan by a certain date and they could retire based on a calculation. Guess what? The math teacher calculations didn't come to pass as planned and some of those math teachers older than me are still working. Others ended up pulling money out because of financial difficulties with no thought of the consequences of that decision. I begged them not to but they did anyway.

 

 

The only calculation that really matters( after having a low fee and index fund diversified set up) is the magic of compounding and the effect of time on that money.It will happen only with being a consistent saver and leaving the darn investments alone. And chances are you will need to save more than $100.00 a month to make good things happen. More like 25-35% of your income. Everything else just amounts to small potatoes. I state this from my experiences and having made many mistakes myself. Don't sweat the small stuff, instead look at the big picture.

 

Tony

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