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msucurt

Please help with 403b / Roth IRA decisions

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Just found this forum and I have learned a lot already. I will give a quick synopsis of my situation and hopefully not bore you. I would love any and all input/advice on what I should do going forward:

age: 46

occupation: high school chemistry teacher 20 years

retirement:

  • in FRS (florida pension). When I retire in 10 years, I will get roughly $3,000/month (obviously more if I enter the DROP teacher program)
  • 403b (VOYA - $14,000) and (National Life Group - $5,000) (havent contributed in quite some time)
  • Roth IRA (American Funds - $13,000) (havent contributed in quite some time)

Our County offers the following 403b Vendors:

403(b)

  • AIG Retirement Services (VALIC)
    (800) 426-3753
  • Equitable
    (866) 294-3522
  • Horace Mann Insurance Company
    (800) 999-1030
  • Horace Mann Retirement Advantage
    (844) 895-0980
  • IPX_American Century Services, LLC
    (844) 788-3474 ext: 5
  • National Life Group
    (800) 579-2878
  • PlanMember Services
    (800) 874-6910
  • ReliaStar Life - Subsidiary of VOYA Financial
    (877) 882-5050
  • Security Benefit Group
    (800) 888-2461
     
    I am currently speaking with an EQUITABLE (AXA) rep, but after doing some research, I am having 2nd thoughts about switching my 403b to Equitable. As a matter of fact, I know for sure I WILL NOT BE DOING THAT. I dont want an insurance company handling my investments. They are purely salesmen and I am not interested. 
     
    So, I am looking to open up a 403b with either FIDELITY or VANGUARD. With that being said, our county doesnt have these companies as a vendor, so what is the best course of action to open up a Fidelity or Vanguard 403b? (call them or look for someone local that can help me with this process?)
     
    In regards to my ROTH IRA, should I leave it with American Funds or also switch those to either Fidelity or Vanguard?
     
    Sorry for the long post and questions, but my head is spinning with all this. Please take it easy on me as I am trying to learn and feel like I need to do urgently get this taken care of. I would like to be moderate-aggressive in my contributions to make up for some lost time so to speak. At this point ,what would you do?
     
    I also have around $5-7,000 as well to invest in my retirement. 
     
    thanks!
    Curt

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Welcome, Curt.  You are correct to avoid Equitable and most of the others.  Ed La Fave, also based in Florida, has documented various great-to-decent options (including Planmember direct) here: https://educatorsfightingforfairness.wordpress.com/floridas-best-403b-457b-vendors/ 

If you poke around Ed's website you will probably find other useful info.  I suspect Ed will jump in here when he sees your post: he'll be an outstanding resource for you.

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You have one  very good option. NEA Direct Invest.  Go to the Security Benefit homepage and look for the link. Then fill out the paper and pick the Vanguard funds it offers. The choices are enough for you to adequately diversify your account at rock bottom cost.

Remember, its a direct option so you do not use an advisor. Pick your funds, send the paperwork in and you will be good to go.

I would definitely transfer your IRA over to Vanguard and  consider it as part of your overall allocation, not separately. Call Vanguard. They can help you directly. You will need to fill out some basic paperwork . They will do the rest.

https://www.securitybenefit.com/individuals/product/nea-directinvest

You can Pick Vanguard Total Index Fund, Vanguard Total International, Vanguard Intermediate Bond Index, , and you can add a little small cap index too if you wish.  You will have to decide on the percentages you want in each fund and then once a year rebalance the portfolio.

Hope this helps 

Tony

P.S. Be very careful about soliciting any advice or help from a Security benefit rep or advisor. He/she may try to steer you away from this suggestion and into expensive funds. You must do this without advisor contact.

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That 5k to 7k that you want to invest for your retirement can be used to fund a Roth IRA for 2020. You can have more than 1 Roth IRA account, so I would set one up with Vanguard. It can be empty until you put money in it. Then you can fund it and then get Vanguard to help you transfer the AF Roth IRA. 

On this webpage, click on “Enroll Now” to access the steps to get started on the NEA Direct Invest 403b.

https://www.nearetirementprogram.com/nea-directinvest

Let us know if you need help with NEA Direct Invest forms. Don't expect much help from Security Benefit. And none from NEA. NEA Direct Invest is a super-low-cost 403b plan but there's no hand-holding or advice with it.  

 

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18 hours ago, msucurt said:

I am currently speaking with an EQUITABLE (AXA) rep...I know for sure I WILL NOT BE DOING THAT

You're right, their plan is awful and you don't need to investigate further.

Luckily for you Security Benefit's NEA DirectInvest 403b is an elite offering that's competitive with Fidelity and Vanguard. When I was with my ex, I enrolled her in that plan. I documented the plan here.

18 hours ago, msucurt said:

I am looking to open up a 403b with either FIDELITY or VANGUARD.

You'll only be able to do that if you get your district to add Fidelity and/or Vanguard to the approved list of vendors. I was able to get Orange County (FL) to add both of those vendors and documented some of the steps I went through in my blog. I'd be happy to help you do the same.

This process can take a long time so keep in mind that Security Benefit's NEA DirectInvest is still an elite plan and VERY much worth investing in.

19 hours ago, msucurt said:

In regards to my ROTH IRA, should I leave it with American Funds or also switch those to either Fidelity or Vanguard?

American funds are known for having large expense ratios and/or loads (i.e. sales fees that go to marketers). What you really need are total market (i.e. diversified) index funds at rock bottom expenses. You can achieve that with Fidelity, Vanguard, Schwab, and a bunch of other vendors. If it were me, I'd move the IRA to my vendor of choice and make sure I maximize diversification while minimizing costs.

You may want to read the Investing 101 page I wrote.

19 hours ago, msucurt said:

feel like I need to do urgently get this taken care of

You should feel that this is an important task to get taken care of. You should not feel time pressure. This is a "slow moving" problem so take your time, understand what you're doing, and get it done. The difference between getting this done tomorrow and getting this done in January isn't terribly significant. Just don't give yourself an excuse to procrastinate and you'll be fine.

19 hours ago, msucurt said:

I would like to be moderate-aggressive in my contributions to make up for some lost time so to speak.

In my opinion, there is no such thing as making up for lost time. The past is done and you are where you are. That's it.

If I were you I'd stick with the basics:

  1. Select an "asset allocation" (split between international stocks, domestic stocks, and bonds) such that if stocks drop by 50% your overall portfolio will drop to a level that prevents you from doing something foolish like selling stocks or withholding additional investments. You need to take on as much risk as possible such that you'll stick with the plan in bad times and maintain your sanity during drops that will happen.
  2. Minimize spending, which maximizes savings.
  3. Invest in total market index funds at rock bottom costs.
  4. Try your best to maximize tax advantaged accounts (IRA, 403b, 457b, etc.) before using a taxable account.

 

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18 hours ago, tony said:

You have one  very good option. NEA Direct Invest.  Go to the Security Benefit homepage and look for the link. Then fill out the paper and pick the Vanguard funds it offers. The choices are enough for you to adequately diversify your account at rock bottom cost.

https://www.securitybenefit.com/individuals/product/nea-directinvest

You can Pick Vanguard Total Index Fund, Vanguard Total International, Vanguard Intermediate Bond Index, , and you can add a little small cap index too if you wish.  You will have to decide on the percentages you want in each fund and then once a year rebalance the portfolio.

Hope this helps 

Tony

 

https://www.nearetirementprogram.com/nea-directinvest

 

Just want to make sure this is the correct page? Click "enroll now", fill out paperwork, call and they will take care of the rest? Sorry for the questions

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37 minutes ago, EdLaFave said:

You're right, their plan is awful and you don't need to investigate further.

Luckily for you Security Benefit's NEA DirectInvest 403b is an elite offering that's competitive with Fidelity and Vanguard. When I was with my ex, I enrolled her in that plan. I documented the plan here.

in the process of filling out paperwork and getting that started.

You'll only be able to do that if you get your district to add Fidelity and/or Vanguard to the approved list of vendors. I was able to get Orange County (FL) to add both of those vendors and documented some of the steps I went through in my blog. I'd be happy to help you do the same.

This process can take a long time so keep in mind that Security Benefit's NEA DirectInvest is still an elite plan and VERY much worth investing in.

I definitely think I will go with them for my 403b. After hearing all of you and doing research, they seem very good.

American funds are known for having large expense ratios and/or loads (i.e. sales fees that go to marketers). What you really need are total market (i.e. diversified) index funds at rock bottom expenses. You can achieve that with Fidelity, Vanguard, Schwab, and a bunch of other vendors. If it were me, I'd move the IRA to my vendor of choice and make sure I maximize diversification while minimizing costs.

So, would I just go to Vanguard's website, call a rep and get them to set up my account and  roll my current Roth IRA over to them? Then choose my funds?

You may want to read the Investing 101 page I wrote.

You should feel that this is an important task to get taken care of. You should not feel time pressure. This is a "slow moving" problem so take your time, understand what you're doing, and get it done. The difference between getting this done tomorrow and getting this done in January isn't terribly significant. Just don't give yourself an excuse to procrastinate and you'll be fine.

In my opinion, there is no such thing as making up for lost time. The past is done and you are where you are. That's it.

If I were you I'd stick with the basics:

  1. Select an "asset allocation" (split between international stocks, domestic stocks, and bonds) such that if stocks drop by 50% your overall portfolio will drop to a level that prevents you from doing something foolish like selling stocks or withholding additional investments. You need to take on as much risk as possible such that you'll stick with the plan in bad times and maintain your sanity during drops that will happen.
  2. Minimize spending, which maximizes savings.
  3. Invest in total market index funds at rock bottom costs.
  4. Try your best to maximize tax advantaged accounts (IRA, 403b, 457b, etc.) before using a taxable account.

so, in short, here is my order of operations:

1) transfer my existing 403b plans to NEA Direct Invest

2) Set up a Roth IRA with Vanguard and transfer my existing account to them? I have $13,000 total in those accounts, how should I go about using this?

3) I have an extra $5,000 to invest. Shall I choose another company for another Roth IRA. Perhaps open up one with Fidelity? 

thanks so much for the help!

my replies are in red. Thanks a million so far.

Curt

37 minutes ago, EdLaFave said:

 

 

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17 minutes ago, msucurt said:

So, would I just go to Vanguard's website, call a rep and get them to set up my account and  roll my current Roth IRA over to them? Then choose my funds?

Yes. It can be done entirely online, but Vanguard is happy to help over the phone too.

19 minutes ago, msucurt said:

1) transfer my existing 403b plans to NEA Direct Invest

2) Set up a Roth IRA with Vanguard and transfer my existing account to them? I have $13,000 total in those accounts, how should I go about using this?

3) I have an extra $5,000 to invest. Shall I choose another company for another Roth IRA. Perhaps open up one with Fidelity? 

This is what I would do.

1. Decide on an asset allocation that you can live with in good times and bad times.

2. Establish a Security Benefit NEA DirectInvest 403b account and begin funding it.

3. Rollover your IRA to the vendor of your choosing. Vanguard is great.

4.  Decide on whether your want new IRA contributions to go to Roth or Traditional.

5. Direct whatever excess money you have to your 2020 IRA contribution limit.

6. If your old 403b plans are with your current employer, consider rolling them over to the NEA DirectInvest 403b. You'll have to learn about surrender fees and such, but I can't imagine this isn't a good idea.

7. If your old 403b plans are with an old employer, consider rolling them over to an IRA. You'll want to consider surrender fees and the fact that this makes doing a Backdoor Roth IRA less desirable (although that doesn't seem like an issue for you).

I wouldn't have IRAs at two different vendors if I could avoid it. It isn't a problem financially/mathematically, but I just wouldn't want one extra bit of complexity that isn't giving me something in return.

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I'm not going to lie.....I am becoming overwhelmed. Called NEA and spoke to a rep. I was told to go here and start paperwork.....i am doing that.

On Step 3, I am completing the "incoming funds request" form. On this form, I am getting to this section....

Provide Investment Direction. Please invest the funds (check one):

 As indicated on my existing account and the allocations on file.

 According to the investment allocations indicated below. Indicate whole percentages totaling 100%. Refer to the Fund Investment Options Sheet (Fund List) available online at www.SecurityBenefit.com on the Forms page. Indicate your investment preferences below using whole percentages totaling 100%.

I am not sure where to find the "fund investment options sheet (fund list) sheet. I think it is the one I have attached. If so, I dont see any Vanguard allocation categories. Please assist me here. I am not even sure I am on the correct page.

 

thanks

Curt

directInvest sheet.pdf

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Here’s my thoughts on setting up an account with Security Benefit's NEA Direct Invest:

On Step 1, print the Custodial Account Agreement and study it and the Privacy Statement. Your district may have a “plan number” for Security Benefit’s NEA Direct Invest option, or they may use the number for other Security Benefit options. You’ll have to find out from your district’s TPA (Third Party Administrator).   

On Step 2, your district probably has their own Salary Reduction Statement that you will have to use. You will get it from your district’s TPA. I would wait before submitting this form until Security Benefit tells you your account is set up.

On Step 3 on moving the 2 annuity accounts to the NEA Direct Invest account, I would also wait until your account is set up and receiving contributions from you. The transfer will involve using the annuity companies' transfer forms and usually takes several months. 

On Step 4, choose the method for submitting the Account Application to Security Benefit. If you don’t hear from them in about 2 weeks, call and find out if there’s a problem with your application. So Steps 1 and 4 are all you need to take care of for the time being. 

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19 minutes ago, krow36 said:

Here’s my thoughts on setting up an account with Security Benefit's NEA Direct Invest:

On Step 1, print the Custodial Account Agreement and study it and the Privacy Statement. Your district may have a “plan number” for Security Benefit’s NEA Direct Invest option, or they may use the number for other Security Benefit options. You’ll have to find out from your district’s TPA (Third Party Administrator).   

I have emailed HR asking about the "plan number". Waiting on a response.

On Step 2, your district probably has their own Salary Reduction Statement that you will have to use. You will get it from your district’s TPA. I would wait before submitting this form until Security Benefit tells you your account is set up.

Also emailed asking about this.

On Step 3 on moving your AXA account to the NEA Direct Invest account, I would also wait until your account is set up and receiving contributions from you. The transfer will involve using AXA’s transfer form and usually takes several months. 

Just to be clear, I never set up an AXA (Equitable) account. I was just thinking about doing so and decided not to. My 403b are currently with:

  • Voya Financial 
  • National Life Group

I think once my account is set up and i am contributing before I transfer my 2 403b (Voya & National Life Group). Correct?

On Step 4, choose the method for submitting the Account Application to Security Benefit. If you don’t hear from them in about 2 weeks, call and find out if there’s a problem with your application. So Steps 1 and 4 are all you need to take care of for the time being. 

Ok, so Step #1 is just a privacy statement (nothing to fill out) and Step #4 is the online form (docusign form). Fill that out and submit. Then just wait?

thank you so much for helping!!

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47 minutes ago, msucurt said:

Called NEA and spoke to a rep

You're probably better off NOT talking to anybody at Security Benefit. Even though NEA Direct Invest is an elite plan, Security Benefit is a predatory company.

You can read about the hurdles I had to overcome when enrolling in NEA DirectInvest here.

You can read the exact steps/paperwork I had to fill out here.

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29 minutes ago, EdLaFave said:

You're probably better off NOT talking to anybody at Security Benefit. Even though NEA Direct Invest is an elite plan, Security Benefit is a predatory company.

I agree

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