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aeljr

MA Teacher needs help picking 403b Plan

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aeljr

Your attachment did not load for me . I can't open it  Could give a bit more info about yourself? Age, where you work, your retirement choices and other info you think might be helpful for us to know. The more introduction you give us the better.

 

Tony

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Thanks Tony.

I'm just shy of 40 working in the Cambridge public schools.  I'm contributing to my pension, but besides that currently have minimal other retirement savings. I'm not sure what retirement choices would be helpful (I'm looking to retire sometime around age 60/65). 

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Hi All - Here is my list of options:

Thank you!

 

American Funds - PenServ (Mutual)

Ameriprise Financial Services  (Annuities/Mutual)

AXA Equitable (Annuities)

Commonwealth Annuity & Life Insurance (Annuities)

Great American Financial Resources (Annuities/Mutual)

Horace Mann Insurance (Annuities)

Lincoln Investment Planning (Mutual)

Mass Mutual Life (Annuities)

MetLife (Annuities/Mutual)

MetLife Insurance (Annuities/Mutual)

Oppenheimer Funds (Mutual)

Security Benefit (Annuities)

Variable Annuity Life Insurance (Annuities)

Voya Retirement (Annuities)

Waddell & Reed (Mutual)

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Aeljr

Sounds like that little bell went off in your head that its time to get serious about retirement. Good news is you have a pension.  Good news too is it's not too late for you to start saving. Please consider purchasing Dan Otter's Teach and Retirement book. It's inexpensive, available on this site, and it will be a great introduction if you feel you need to learn more about saving as a teacher.

If I were you I would go with Security Benefit's NEA Direct Invest and invest in their index fund choices.  None of your other choices excite me but Voya or Lincoln might offer options.

I would focus on Direct Invest with Security benefit. Go to the Security Benefit NEA Direct Invest website, fill out the application form and send it in.  We can help you with investments once you have a plan set up. You can also use the search on the top of this page to type in Security Benefit/NEA Direct invest and you should get some info from previous posts. This topic has been covered quite a bit in the past.

 

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Although your vendor lists Security Benefit as an annuity provider, it is also a mutual fund, custodial account provider. Security Benefit (SB) has joined the NEA (the national teachers lobby/union organization) to offer a super low-cost 403b plan called NEA Direct lnvest. This is the only low-cost option on your vendor list. It is internet and phone based, not local rep based. Many posters here are using it. It allows you to choose low-cost Vanguard Admiral funds.

Because you are in MA, you should have access to the state-sponsored 457 plan. It is very low-cost and can be used in addition to your use of the 403b plan.

https://mass-smart.gwrs.com

Funds:  https://docs.retirementpartner.com/ioag/98966-01_IOAG.pdf

ADMIN FEE: 0.0075%

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Thank you, this is a really helpful start.  I'm realizing that I already have a SMART plan (457) from a previous summer job with the state.  It doesn't have much (a couple thousand), and I have not been contributing to it.  Would there be any benefit to contributing to this instead of a 403b?

Thank you for the recommendation of Dan Otters book.  I'll look into it!

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Your 457 plan does have one advantage over a 403b plan and that has to do with its distribution. There's a early distribution penalty of 10% is you distribute from your 403b plan before age 59.5. The penalty doesn't apply if you are over 55 when you leave your school district. I retired at age 56 and made use of this 403b feature.

With the 457 plan, there is no penalty on a distribution, no matter your age, if you have left the plan sponsor's employment. This feature of the 457 makes it especially valuable to those folks hoping to retire early. Of course a distribution with either plan will result in taxable income. When I retired, teachers could not contribute the max to both a 403b and a 457 plan. 

I would check with your district and see if the SMART 457 plan is on their 457 vendor list. If it is not, you should be able to get it added. I would contribute to the very low-cost SMART plan first, and if you can max it out eventually, then start contributing to the NEA Direct Invest 403b in addition.  

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If I’m reading that 457b document correctly, it looks like it has domestic funds for 0.01%, international funds for 0.08%, bond funds for 0.04%, and target date funds for 0.15%. If all they add on is a 0.0075% administration fee, then this is the lowest cost option.

I’m enrolled in Security Benefit’s NEA DirectInvest and it is a fantastic plan. I documented it here. However, if I’m reading the 457b information correctly then it only makes sense to use Security Benefit if you’re already maxing the 457b.

...also if you’re looking for some reading material to get up to speed then check out the Investing 101 page I wrote. IMO it gives you most of the information you’ll need in a 5 minute read.

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