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Paige

PLEASE HELP!! Young teacher with a 403b

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Great suggestions here. I echo Tony's sentiments about starting a Roth IRA with Vanguard. They can help with everything including the transfer process. Excellent info on the 457. These plans are often lower cost because their is more employee oversight required. 

Also, I am doing a free webinar Get Wise to the 403(b) on the 403(b) on Wednesday, September 11 from 7-8PM EST that you might want to sit in on. 

Let us know how it goes! - Dan 

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On 8/28/2019 at 8:40 PM, raido_me said:

Hello everybody,

Sorry I've been away. I'm by no means an expert on how Massachusetts does things but, I have figured some stuff out through asking questions and experience. I believe to be compliant with 403b laws, school districts/towns are required to have an "expert" on all things retirement benefits. I've been in a small district where they were decidedly non compliant as their person who dealt with these things was far from knowledgable (Paige, it sounds like that may be the case in your district). Other, often times large districts, will hire an outside company to deal with these matters. I've have to deal with TSA Consulting Group with a few of the larger districts. They often take over all responsibilities for the towns/cities. The good news is that TSA Consulting is all over the country. If a district works with TSA you can easily figure out what options are available by looking on their website. I imagine many people outside this discussion would be interested in this. I'll join the FB group and post it there as well

https://www.tsacg.com/individual/plan-sponsor/

Like I said, Chicopee isn't on there. Sorry, Paige. But all is not lost. I did some searching around the interwebs and I found the form that Chicopee uses for payroll deductions. Its a bit dated but school systems aren't known for keeping these things up to date. Looks like you do have options, but none of them are Fidelity or Vanguard:

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But there is a ray of hope in this otherwise dreary info dump. I believe the state 457 plan is available to all.  I spoke with one of their representatives a few years back and did a little bit of investigating myself and here's what I remember. The state plan has 2-3 different options depending on how much assistance you would like with your plan. You can go it alone or pay different fees depending on how much help you want. They do offer some low fee index funds in the mix. The representatives are hired by the Mass Treasury Dept. and as such don't work for commission. They won't try to over sell you more than you need and have your best interest in mind. Given your options with Chicopee, I would recommend going the 457 route. Below you will find a site map with the various district representatives. Chicopee is on there. Best of Luck! Keep us informed.

 

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This is incredible! Thank you all so much. Things have been hectic - school year has just started as well as my second job! You guys know how it is. I’m going to move towards the process of switching to the 457b. Have to do my research! Any tips along the way? Have I completely lost the money I’ve already put in? Switching the Roth IRA to Vanguard sounds like the right move as well. Should I keep my life and disability insurance with Mass Mutual or do we think there’s something better out there? I finally feel like I’ve found some real guidance! Thank you everyone. I know it’s taken me a while to respond to this but I have been reading the posts and am thinking about this everyday. It is towards the very top of my back to school to-do list! 

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Paige

I'm glad you are back. I'd see about getting the 457b plan on the  district books and then we can help you pick the funds. I think you will need to convince your school system to add it. 

1 hour ago, Paige said:

Should I keep my life and disability insurance with Mass Mutual

I would drop it and buy these policies independent of annuities or investments. Look into term insurance and check to see if you may already have liability insurance included in your employment package of benefits. Ask. Are you sure you even need life insurance? Do you have kids? are you married?

1 hour ago, Paige said:

Switching the Roth IRA to Vanguard sounds

Yes. Call Vanguard and they will tell you about the paperwork you will need to fill out. Expect to fill out paperwork with Mass mutual as well. If you get stumped we can help you . After the transfer (it can be a slow process sometimes so don't be discouraged)goes through we can help you pick an appropriate choice.

 

I don't want you to be discouraged. You can do this.

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On 9/3/2019 at 10:21 PM, tony said:

Paige

I'm glad you are back. I'd see about getting the 457b plan on the  district books and then we can help you pick the funds. I think you will need to convince your school system to add it. 

I would drop it and buy these policies independent of annuities or investments. Look into term insurance and check to see if you may already have liability insurance included in your employment package of benefits. Ask. Are you sure you even need life insurance? Do you have kids? are you married?

Yes. Call Vanguard and they will tell you about the paperwork you will need to fill out. Expect to fill out paperwork with Mass mutual as well. If you get stumped we can help you . After the transfer (it can be a slow process sometimes so don't be discouraged)goes through we can help you pick an appropriate choice.

 

I don't want you to be discouraged. You can do this.

Thank you so much for your support! It is a little discouraging because I do feel lost and overwhelmed, but it's so nice to know I have found people on here to lean on and come to for help! I don't have kids and am not married so I think dropping the insurance sounds good. I will be calling Vanguard tomorrow. I'm meeting with HR Thursday about my health insurance, so I can bring up the 457 plan at that meeting. Does it need to be added to the district if the state plan is available for all? I'm a little confused as to how that works.

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Paige

Your system will have to add the state program to your choices. This will have to be done through minimal paperwork which your school system can do fairly easily. They can contact the state plan reps for guidance. I would convince your district that the  state 457b its a much better low cost plan than what is currently offered and would offer an alternative to what is currently offered-annuities and  higher expense ratio products and other fees which your system actually warns you about on their webpage!!

Of course  remind the powers that be not to consult with mass mutual on this because obviously it would take business away from them so they won't be supportive and may attempt to convince the system from adding it. You need to realize this. The 403b can be a dirty little business and you need to realize this too, that it's not about helping you, its about sales, profits,  and commissions. They get the gold mine and the investors get the shaft.  Getting your system to the 457b would be a good move because the 457b state plan will have more oversight and ethics AND MUCH LOWER FEES with no salivating salespeople in the middle of it all.

Now your system may use the argument that the 457b might not offer Advisor assistance. Remind them that the plans have do it yourself plans that are managed internally making it easy not to use an advisor. Just push that you and others deserve alternatives to what is being currently offered.

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Paige

I want to commend you on your persistence and attitude on this issue. You truly are a special person. Years ago when I pushed teachers , many in your age group, to ask for changes in our 403b plans they didn't show much interest. Some teachers also reacted as if I was the Anti-Christ for going against insurance companies. Your stand up attitude will help not only yourself but others as well. Teachers deserve better choices.

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Thank you so much Tony! Your words of encouragement keep me going!! I'm glad to have everyone on here because I would be so lost if I didn't!

I'm in the process of moving my Roth IRA over to Vanguard, which is no problem at all. They were super nice and helpful when I spoke with them!

Now I never mentioned that this may be my last year in this district. I am planning on staying in Massachusetts, but will either be moving next summer to Barnstable County with my boyfriend or there is a possibility of the Boston area OR even him moving back home here where I would stay in Chicopee (that is unlikely). I've already started talking with some of my coworkers and the union reps in my school about our poor 403b options and how I would like our district to get the 457b state plan. While, I do think this is something our district needs whether or not I stay here, do you think it is worth it for me to change over this year or wait until I move districts?

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Paige

If you are leaving your current employer you could still bring the 457b plan to the districts attention.

It would be a good practice so you could then push your new employer to adopt it if its not on their list.

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I agree, Tony. Thank you.

Update: All is going well with the transition to Vanguard. Again, their customer support is great. 

I am organizing my filing cabinet and found in my retirement folder paperwork from when I worked at a summer camp for the town (West Springfield - not Chicopee) during college. I knew I had a very small investment through this job (I hadn't even chose it - it was automatically deducted from my paycheck) but I didn't know anything about it. I'm looking over the paperwork and it's a 457(b) OBRA-PST Plan... How does this change things for me? Also, my first year out of college I worked as a para in Agawam. As of 12/31/2018 I have $1,844.19 in my Annuity Savings Fund (I'm guessing my pension?) Do you guys have any recommendations for what I should do with the money in these other accounts?

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13 hours ago, Paige said:

I agree, Tony. Thank you.

Update: All is going well with the transition to Vanguard. Again, their customer support is great. 

I am organizing my filing cabinet and found in my retirement folder paperwork from when I worked at a summer camp for the town (West Springfield - not Chicopee) during college. I knew I had a very small investment through this job (I hadn't even chose it - it was automatically deducted from my paycheck) but I didn't know anything about it. I'm looking over the paperwork and it's a 457(b) OBRA-PST Plan... How does this change things for me? Also, my first year out of college I worked as a para in Agawam. As of 12/31/2018 I have $1,844.19 in my Annuity Savings Fund (I'm guessing my pension?) Do you guys have any recommendations for what I should do with the money in these other accounts?

I once had about $75 in a 401K from a non-teaching summer job that I did years ago.  They kept sending me statements, but I didn't do anything with it because I figured it wasn't worth hassling over such a small amount, and that I would just wait and spend it at age 59.5 and buy a nice dinner or something.  A couple years ago, I guess they wanted to clean things up, and they asked me to either cash it out (taking an IRS penalty) or roll it over to a different account.  I did exchange it over to Vanguard, but for all the calls, paper work, and trips to the post office, it probably wasn't worth the 75 bucks.  Your amounts are over a thousand, so I think this would definitely be worth the hassle of exchanging it to Vanguard.

 

 

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Such great interaction here. Thanks everyone for assisting. And Paige, thanks for being such a great advocate for yourself. - Dan 

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9 hours ago, Admin said:

Such great interaction here. Thanks everyone for assisting. And Paige, thanks for being such a great advocate for yourself. - Dan 

Thanks Dan! I'm so happy I found you guys. I'm learning a lot but still have a long ways to go!

Just to update you guys, I did contact the agent from Mass Mutual last week out of courtesy and respect. I let him know that I would like to cancel my life insurance, and also informed him about me switching over my Roth IRA and how I will eventually be changing my 403b over too. He asked if I wouldn't mind sharing why, and so I did. Below is that part of the conversation. I wanted to share his response with you guys and ask your opinion (yet again lol). I've always really liked him and think he is a nice person, but it's hard to know who and who not to trust.

Hi Nick,
 
Thanks for getting back to me. I did have a nice summer, but no big trips this year. Thank you for asking.
 
When I first started teaching, I was working with an agent from Northwestern, as you might remember. From the very beginning, I never felt fully confident or educated in the financial decisions I was making. I've known investing and saving for retirement is important and is something I should be doing now, but that was all I've ever really known. I didn't like how that made me feel, knowing I was going into all of this kind of blind, when I should be educating myself, so that I can make the best possible decisions for my future.
 
I've felt much more comfortable working with you than with Northwestern. I appreciate how personable you are and how you genuinely seem to care.
 
I did some research this summer and started taking the right steps towards becoming more educated on investments and finances. I specifically started looking into financial advice for teachers. I listened to some podcasts and joined forums online, speaking with other teachers. The repeated advice I got was to choose companies other than insurance ones like Mass Mutual. I hadn't realized this at the time, but Chicopee Educators' website also actually advises against going through insurance companies for investments. I hadn't compared Mass Mutual with other options, which I should have done. I am going with Vanguard for my Roth IRA, and eventually plan to find something else for my 403b. I would like to get something with lower fees and lower (or no) surrender schedule.
 
For the life insurance, I am trying to pay off my debt and feel that money would be made more useful if I put it towards my student loans.
 
You have been wonderful to work with, and I truly do appreciate all of your help. I want to be sure I'm making the best decisions for my life and my financial future. I hope you understand.
 
Will you please let me know what I can do to cancel the life insurance? I still am keeping the disability and the 403b for now.
 
Thank you, Nick. Please enjoy your weekend.
 
Best,
 
Paige

 

Hi Paige, 

 

Wow thanks for the lengthy response! I appreciate your due diligence.

 

If you’d like to talk further one day on the phone or in person I would be happy to clarify some points of confusion here.

 

To briefly summarize, your Roth is not in an “expensive insurance company account”, reading online can be confusing. In fact, your Roth can go into Vanguard Funds which was the original plan but we needed to get to the $500 mark to satisfy their minimums. There are no extra insurance fees or charges on that account. You pay the expenses associated with the funds you choose. AKA Vanguard’s expenses, or Fidelity, or whomever you choose to use. If you go direct to Vanguard you can only use vanguard funds, so you limit yourself and pay the same costs. 

 

Chicopee 403bs have a very limited selection. MassMutual is one of a handful of providers and all the providers are insurance company based. So we didn’t really have any other options to choose from. I am not tied to one company, I can quote anyone, but only those approved by the city. 

 

There is a big misconception that Insurance companies charge excessive fees. Some of the biggest 401ks in the world are administered by MassMutual, Voya, Brighthouse, etc. Some of our plans are cheaper than Vangaurd & Fidelity. It just depends on the type of plans you are choosing. So don’t let generic articles and people scare you. If we were truly that uncompetitive we wouldn’t exist in the investment markets, especially in today’s fee conscious society.

 

As far as the insurance goes we can call in and request the cancelation forms, just like we did at Northwestern. If you want we can do it together or you can call. But you have to be on the line. Have you been listening to Dave Ramsey?

 

Let me know if you want to chat more. I am happy to help clarify any questions or confusion.

 

Thanks,

 

Nick

 

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