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tormund

SC Changing Vendors Questions

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My wife was with Valic for the State Optional Retirement Program (ORP; 401a) and also she opened a 403b with them. I found out they have her in managed/prferred services with extra fees and in annuities and stuff after we got married.

Later she opened a 457 and 401k for the state deferred compensation plan (DCP) with Empower Retirement and we got into funds with low fees that we self manage.

Finally she switched from Valic to TIAA during open season for the 401a.  There are also lower fee funds here than with Valic, and it's self managed.

So she's contributing right now to TIAA 401a, Empower 457, and Empower 401k. This is great, but I want us to move existing money to minimize the admin burden of monitoring fees, mistakes, etc.

She's getting the run around on moving funds out of Valic. Empower is saying they think you can't rollover anything unless you meet certain criteria. They said SC Public Employee Benefit Authority (PEBA) has certain rules. I know the IRS allows you to move funds between administrators. Also she said one of her school admins says you can change contributions amount but once a year.

We should be able to move the 401a funds from Valic 401a to TIAA 401a right?

Can we move the Valic 403b to Empower 457? If not, what about moving to the Empower 401k? If not, what about the TIAA 403b?

Can employers limit you to only changing contributions once a year to retirement plans?

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I think it would be smart to consolidate these plans into your lowest cost option if you can and to avoid complexity and mistakes.   Also, dump the annuity. It might not be a good deal as most usually aren't. If she separated from service from any previous place of employment and   she accumulated those assets there, she can transfer those particular assets to an IRA or if she is 59.5 years of age .

Seems like she has got a lot going on here that is confusing. I don't think you can rollover a 403b plan to a 457b plan unless it's a government plan. Rollovers are not permitted from a 403b plan to a 457b plan of a non profit employer. So you may be stuck there. But ask directly anyway as there may be exceptions. I think however you can under certain circumstances move the Valic 403b to a 401k if both are offered by your employer. You certainly should be able to move from one 403b plan to another. Employers may be able to limit  you to changing contributions amounts to once a year if it's stated in the plan document, however in my personal situation I could make changes any time I wanted to. Do you have access to online tools that allow you to make changes yourself directly?

  401(a) plans are similar to 403b plans I believe but are less known and  are so customizable, the terms and conditions are dictated by the sponsoring employer, rather than by specific IRS guidelines.  You need to call the companies you want to transfer your money to  see if they will except the exchange and see if all you want to do is possible.

DISCLAIMER  I'm no expert here and I don't know the rules your employers past and present may have imposed, I'm just trying to help  Maybe others can give you better guidance, plus I know very little about 401a plans. I'm sure you can go to the IRS website and your wife's employer document to see what you can and cannot do. Always look for details in writing and don't trust the spoken word because many folks may be uninformed of the actual facts.

 

Tony

 

 

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19 hours ago, tormund said:

My wife was with Valic for the State Optional Retirement Program (ORP; 401a) and also she opened a 403b with them. I found out they have her in managed/prferred services with extra fees and in annuities and stuff after we got married.

Later she opened a 457 and 401k for the state deferred compensation plan (DCP) with Empower Retirement and we got into funds with low fees that we self manage.

Finally she switched from Valic to TIAA during open season for the 401a.  There are also lower fee funds here than with Valic, and it's self managed.

So she's contributing right now to TIAA 401a, Empower 457, and Empower 401k. This is great, but I want us to move existing money to minimize the admin burden of monitoring fees, mistakes, etc.

She's getting the run around on moving funds out of Valic. Empower is saying they think you can't rollover anything unless you meet certain criteria. They said SC Public Employee Benefit Authority (PEBA) has certain rules. I know the IRS allows you to move funds between administrators. Also she said one of her school admins says you can change contributions amount but once a year.

We should be able to move the 401a funds from Valic 401a to TIAA 401a right?

Can we move the Valic 403b to Empower 457? If not, what about moving to the Empower 401k? If not, what about the TIAA 403b?

Can employers limit you to only changing contributions once a year to retirement plans?

It's great that you got the 401a shifted from Valic to TIAA during the open period. The Valic 403b can't be shifted to anything other another 403b plan as long as she is with the same employer. Those are IRS rules. I think you should talk to TIAA and ask if you can transfer her Valic 403b balance to their 403b. You might have to wait until the open period if the Valic 403b is part of ORP. 

Quote

Each year, there is an open enrollment period (January 1 to March 1) during which you may change service providers:

https://peba.sc.gov/state-orp-enrollment

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4 hours ago, krow36 said:

The Valic 403b can't be shifted to anything other another 403b plan as long as she is with the same employer.

Krow,

Are you sure?  Is this rule specific to Valic?  I'm reading  a 403 b can be transferred to a 401 k if both are offered by the same employer. just curious

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On 7/13/2020 at 9:10 AM, tony said:

Gosh this topic has got my attention because there seems to be so much contradictory information on this topic. The more I read t the more confusing it gets. I really think it all comes down what the employer allows.

This chart might help.

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Yes, it IS confusing, and I have searched repeatedly over the years for IRS information on this question. Without luck! That IRS rollover chart would seem to say 403b to 457b is allowed if the 457b plan will put the 493b in a “separate account” within the 457b. However posters have confirmed that the 403b must be with a prior employer. So the IRS chart is incomplete on that detail, probably because in the for-profit world, an employer would not offer 2 different plan types?? Maybe you are right and it’s not an IRS rule but the employer’s 457b plan rule?

This IRS publication discusses 403b to 403b contract exchanges within an employer’s plan, but there is no mention of exchanges between a 403b plan and a non-403b plan, both with the current employer. https://www.irs.gov/publications/p571#en_US_202001_publink1000239748

I’m going to ask Scott D about this because it comes up frequently doesn’t it?

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Thanks for responding Krow. I figured if anyone could make sense of it it would be you. If it's confounding you than it truly must be confusing because you are excellent in figuring this kind of stuff out.

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Tony I emailed Scott D and he replied:

Quote

 

There is no legal way to transfer a 403(b) to a 457(b) or vice versa while employed (assuming the accounts are with that employer). Technically one could use the CARES Act to do so, but that’s only for 2020 and a bit complicated.

It’s just not allowed (I wish it were).

You can always move money among the plan type, but not between plan types.

If one is over age 59 1/2, it would be possible assuming In-Service Withdrawals are allowed and either plan allowed for transfers in.

 

I bolded what holds if the plan types are both with the current employer. So it's clear that  tormand should pursue the transfer of his Valic 403b balance to a TIAA 403b during the next open period.

For those readers who aren't familiar with ScottyD, his user name on this forum, Scott Dauenhauer is a Certified Financial Planner and long-time advocate for better 403b plans. He is Dan Otter's partner in their 403bwise podcasts: https://teachandretirerich.libsyn.com/page/1/size/25 

Dan and Scott are the administrators of the FaceBook 403b Group:

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I think Scott's statement that I bolded covers it. It means that you can change providers within a 403b, or within a 401k. But if the plans are different types with the current employer, you cannot move a plan balance into a different plan type. So, no 403b -> 401k or visa versa, and that goes for other plan types. If the plan is with a previous employer, it can be allowed by the plans.

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So I figured that the 403b vendors is some secret list. I found an old email that lists the vendors. You can change them on the PennServ website for SC PEBA employees. The vendors are American Funds, AXA Equitable, Horce Mann Insurance, Metlife/FASCore, Reliastar Life Insurance, VALIC/AIG, Voya Retirement Insurance and Annuity Company. Looks like all annuities for some reason.

We've stopped contributing to the 403b since we can contribute to state DCP with empower for their 457 and 401k.

We've been told by the district that my wife can't move her 403a funds (state ORP) out of open season. So she was able to move her contributions to TIAA, but she has to wait until JAN to move the funds since she didn't check the right box. We were under the assumption that the state ORP vendors (VALIC/AIF, TIAA, Metlife, and MAssMutual) all had 403b options. But as I stated before, they don't.

I was able to cancel the guided professional services with VALIC which was 0.4% a year, and move funds from the 8 random ones they had her in for the 401a to VINIX, VSCIX, VEMAX, and VBTIX with low ERs. The best fund I could get with VALIC for the 403b has a 1.4% expense ratio for the VASGX (Vanguard LifeStrategy Growth Fund).

We're going to email all the 403b vendors to get fund options and I'll report back. Right now we're putting most of our funds towards the empower 457. But would be nice to get the 401a moved to TIAA so we don't have two 401a accounts to manage and to get the 403b somewhere with lower ER. Looks like as you all stated, I'm stuck with 403b and can't move it to 401k or 457.

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