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Halle23

Fidelity, USAA or MetLife

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I am a teacher who has had a 403b plan for 11 years with metlife. I naively didnt realize there was such a discrepency in fees. The rep who was managing my account has retired and I am thinking of switching over to Fidelity or USAA. I am a little freaked, because neither one has a face to face rep who manages (ie, put on a rebalancer). I dont know what to do and I would love some advice as I have NO IDEA where to begin and certainly dont want to lose money.

Thank you so so much!!

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Halle23, welcome to the forum! Please don't be freaked out, because that "face to face" costs way too much! And it's not really needed or desirable. The "face" is actually a salesperson and is not looking out for your best interests. The more expensive what s(he) sells you, the more s(he) makes. 

You're very fortunate to have Fidelity on your vendor list. They are actually the very lowest cost vendor of all, even lower than Vanguard. You can choose from a long list of funds, but there are only a few that we recommend on 403bwise. They are low-cost index funds that are as diversified as possible. You'll find them on the 403bcompare.com website.

You should begin by stopping contributions to your Metlife 403b. Then set up a 403b account with Fidelity. If your district has a Third Party Administrator, you'll need to fill out their paperwork. After the Fidelity account is all set up, you can get to work with the transfer of your MetLife balance to Fidelity. 

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No, it's not hard. I just checked the 403bcompare site for Fidelity and I think one of the Target Retirement funds would be ideal for you. Fidelity calls them Freedom Index funds. (Be sure to choose one with "Index" in the title.) These are "fund of funds", made up of the different index funds that are needed to be completely diversified. You can choose one that has the stock to bond ratio you want. There's a retirement date assigned to the funds, but most of us prefer to use that as only a rough guide. If one is uncomfortable with the asset allocation for your retirement date, it's fine to choose another date. Because this is a retirement account, you can change funds later if you want, with no income tax due.   https://www.403bcompare.com/products/68#/investmentoptions

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Halle23, what state are you in? Does your district have a 457 vendor list? Some states have excellent 457 plans that K-12 employees can use in addition to the district's 403b plans.

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You are so helpful! I am in Virginia. That was another question that I was going to inquire about. If a 457 was worth it or should I be looking at Roth IRAs or some thing else? Thank you!

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457(b)

Deferred Compensation Plans

Fidelity Investments

Lincoln National Life Insurance

Lincoln Investment Planning

Metropolitan Life Insurance Company

ReliaStar Life Insurance Co. (A VOYA Company)

VALIC

VOYA Financial

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Virginia has a good state-wide 457 plan that you can use--you're lucky! I see you just posted the 457 list and Fidelity is on it also. A Roth IRA with a low-cost vendor like Vanguard or Fidelity is a very good choice early in a teacher's career when your salary is lower than later. So you have lots of good choices for retirement investing. About how much per year  do you expect to be able to put towards your retirement? Do you have a spouse to help use these excellent options?

I'll be back later.

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Hi! I am currently trying to max out my 403b.  My husband has also maxed out his TSP. We hope to have a little more to invest once kids go into public school. I am not sure how long I will be in the school system, as my husband could be relocated in the next few years.

It is kind of up in the air...Thank you again so much! This is all really helping.

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That's great that both you and your husband are at the maxing out stage! I don't know what Fidelity funds are available in their 457, but expect they are probably the same ones as in their 403b. Fidelity has a great number of expensive, managed funds but they are also trying hard to compete with Vanguard's very low-cost index funds. I suspect Fido's index funds are loss-leaders. If you stick to Fido's index funds, you'll have excellent funds. 

Are you both contributing to a Roth IRA? If your combined income is too high to contribute directly to the Roth, you can do the "backdoor Roth". Do you know about it? 

If you are trying to max out your 403b with MetLife, maybe you should go ahead and plan to finish of 2017 with them. You can get the Fidelity 403b set up which can take a week or 2 and start contributions in January.  

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Just now, Halle23 said:

We are not contributing to a Roth. Ive never heard of the backdoor Roth... Is there a benefit to staying with Metlife for 2017? TIA:)

The only benefit I can see in staying in MetLife for the rest of 2017 is that you will be able to max out your 403b for the year. It takes at least a week or 2 or more to get a new provider and your district organized so that you are able to make contributions. There may be a Third Party Administrator involved also. I would continue to contribute while you are getting Fido set up. As soon as you can contribute to Fido, I would stop contributing to MetLife. 

In addition to contributing 18k per year to his TSP and 18k per year to your 403b and possibly 18k per year to your 457, both you and your husband can contribute 5.5k (5.6k if 50) per year to an IRA. The IRA can be a traditional IRA (tax deductible) or a Roth IRA (not tax deductible but not taxed when distributed). The contributions but not the earnings can be withdrawn at any time without a penalty. The earnings can be withdrawn without penalty after age 59.5 and 5 years. 

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You CAN open an IRA at a bank but it will be a very expensive IRA. The beauty of an IRA (the "I" stands for Individual) is that YOU get to choose the provider, not your employer. So you should choose a very low cost provider for your IRA, either Vanguard or Fidelity. In your case, I would choose Fido because that's where your 403b (and 457?) accounts will be. All 3 accounts can be on one statement which is convenient. If you move to another school district and it has Vanguard but not Fido on it's 403b and 457 lists, you can move your IRA accounts to Vanguard for simplicity. Or not.

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So I have a small retirement Roth IRA, that I opened a long time ago (which has really barely anything in it) but I opened that at a bank. So I am thinking I will max out my 403b open a small 457 to see if I can slowly max that out as I get acclimated to the change in pay. Should I open a Roth before I max out 457? or just start a small one in addition to the start up of the 457? Again, so so helpful! Ive been holding off, because I didnt understand a lot of this!

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