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msucurt

Please help with 403b / Roth IRA decisions

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mssucrat

Please don't feel overwhelmed and I hope we are not contributing to your confusion. You can do this on your own. Send in the paperwork carefully and pick from the vanguard funds mentioned and you will all set. 

Tony

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16 minutes ago, tony said:

mssucrat

Please don't feel overwhelmed and I hope we are not contributing to your confusion. You can do this on your own. Send in the paperwork carefully and pick from the vanguard funds mentioned and you will all set. 

Tony

Thanks Tony! I went through the Steps 1-4. Hopefully I did this correct. 🙂

Step #1 - Please review the Custodial Account Agreement (PDF) and Privacy Statement (PDF)

  • Completed this.

Step #2 - Next, you will need to print the Salary Reduction Agreement (PDF) and submit it to your school district's business office. Your school district may require additional paperwork to be completed

  • I have this form completed except for the "plan number". I am waiting on my HR person to get back to me and see what I put here?

Step #3 - Step 3: If you have assets with another provider, you may want to transfer them to your new account by completing an Incoming Funds Request and using one of the two options (mail or fax) to submit your document to Security Benefit.

  • I have 2 other 403b companies (Voya Financial & National Life Group). I will wait until my account is set up with Security, start contributing and then submit paperwork to get these transferred over. Correct?

Step #4 - Finally, complete the Account Application and use one of the three options (online, mail or fax)

  • Complete the DOCUSIGN online and submitted this. Allocated my 100% Vanguard funds in:
  1. VFIAX
  2. VTIAX
  3. VTSAX
  4. VSMAX

thanks!

Curt

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1 hour 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.

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.

I completed Steps #1 - 4. 

  • As for Step #2 (Salary Reduction Form). I am waiting on my HR person to let me know if I have a "plan number"
  • Step #3 - I think you suggested I wait on completing the "incoming funds request" form until my Direct Invest account is set up. 
  • Step #4 - Completed the online DOCUSIGN and picked my Vanguard funds and their percentages.

Again, I really appreciate yours and everyone's help. Its hard when I am teaching 6 classes a day and only a 25minute lunch. Its hard to just start filling out PDF forms, faxing, calling reps, calling HR , etc. You just dont have time. Its understandable why most people just dont go through all this because it can become overwhelming.

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You should use the 3 funds that Tony and Ed suggested:

  1. VTSAX Total Stock Mkt, this covers the complete US stock market, including that covered by 500 Index and Small Cap Index
  2. VTIAX Total Int’l Stock Mkt, this covers all international stock markets
  3. VBILX Intermediate term Bond Index, this is a good substitute for Vanguard's Total Bond Market Index funds. VBILX is 50% Treasury bonds and 50% corporate bonds.

Have you decided your asset allocation yet? That's the ratio of stocks to bonds. Also what percent, if any, of your total stocks do you want in international stocks?

OK on transferring your 2 annuity 403b balances to NEA Direct Invest account. Each of those companies will have their own transfer forms that will have to be submitted to Security Benefit and to your TPA. 

You are doing great, getting started on the process of getting a MUCH better 403b plan! We're sorry that it's as difficult as it is, but we've all been through the same frustrations. We're here to help you get through them as easily as possible. It takes patience. You will feel great when it's all done!

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18 hours ago, krow36 said:

You should use the 3 funds that Tony and Ed suggested:

  1. VTSAX Total Stock Mkt, this covers the complete US stock market, including that covered by 500 Index and Small Cap Index
  2. VTIAX Total Int’l Stock Mkt, this covers all international stock markets
  3. VBILX Intermediate term Bond Index, this is a good substitute for Vanguard's Total Bond Market Index funds. VBILX is 50% Treasury bonds and 50% corporate bonds.

On the Docusign form (step #4), i did this:

  • VFIAX - 35%
  • VTIAX - 30%
  • VTSAX - 25%
  • VSMAX - 10%

I would assume I can change this with NEA once my account gets setup. What would you recommend my %'s to be for (VTSAX/VTIAX/VBILX). Thanks!

Have you decided your asset allocation yet? That's the ratio of stocks to bonds. Also what percent, if any, of your total stocks do you want in international stocks?

OK on transferring your 2 annuity 403b balances to NEA Direct Invest account. Each of those companies will have their own transfer forms that will have to be submitted to Security Benefit and to your TPA. 

You are doing great, getting started on the process of getting a MUCH better 403b plan! We're sorry that it's as difficult as it is, but we've all been through the same frustrations. We're here to help you get through them as easily as possible. It takes patience. You will feel great when it's all done!

Also, on Step #2 (Salary Reduction form) and Step #3 (Incoming Funds form), I don't know what to put for "plan number". My HR person said I would need to contact our counties' 3rd party rep and see if they could give me one.  I don't want to do that if its not needed. Should I fax/mail this form to NEA regardless if I have a "plan number" or not?

 

thanks!

Curt

Step

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I'm guessing with no plan number sent in the form might be held up. You don't want that. I would go ahead and call your Third party administrator and ask them what the plan number is for your district. I think that is what I had to do if i remember correctly. You don't need to give any info to the administrator, Just say you need the number for "paperwork" I imagine it won't take a second to get it.

I find it hard to believe  your business manager (not HR) who is responsible for 403b transactions wouldn't have this information. They must have it somewhere in their data base. In my case it was quicker just to call the TPA and ask for it than  to put the business manager through all the motions of looking for it.

One thing is for sure, somebody has that number.

Tony

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25 minutes ago, tony said:

I find it hard to your business manager (not HR) who is responsible for 403b transactions wouldn't have this information.

This is a result of the fact that districts, even though they're responsible for these plans, basically outsource everything to the Third Party Administrator (TPA). So even though the district is technically in charge, the TPAs are often left to run everything as the districts defer to them. Add the fact that the TPAs are often corrupt and have financial incentives that run counter to employees and that explains why so many districts have awful plans.

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12 minutes ago, EdLaFave said:

This is a result of the fact that districts, even though they're responsible for these plans, basically outsource everything to the Third Party Administrator (TPA). So even though the district is technically in charge, the TPAs are often left to run everything as the districts defer to them. Add the fact that the TPAs are often corrupt and have financial incentives that run counter to employees and that explains why so many districts have awful plans.

It's amazing how many people in  school  district business offices and HR offices have no business or HR training and no ability whatsoever to guide their employees on 403b.457b matters.  They are just paper pushing positions.

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2 hours ago, msucurt said:

Also, on Step #2 (Salary Reduction form) and Step #3 (Incoming Funds form), I don't know what to put for "plan number". My HR person said I would need to contact our counties' 3rd party rep and see if they could give me one.  I don't want to do that if its not needed. Should I fax/mail this form to NEA regardless if I have a "plan number" or not?

Go ahead and contact the TPA for the NEA Direct Invest plan #. You have to deal with them as they are authorized by the district to administrate their 403b plan. By the way, the NEA Direct Invest option is a Security Benefit option, and is not administered by NEA, but by Security Benefit. All your correspondence should be with SB, not NEA.

Yes, you will be able to change the funds and their percentages later. 

 

Quote

 

On the Docusign form (step #4), i did this:

  • VFIAX - 35%
  • VTIAX - 30%
  • VTSAX - 25%
  • VSMAX - 10%

 

I think it might be wise if you included some bonds in your asset allocation, say 20% VBILX Intermediate term Bond Index. VFIAX 500 Index (large caps) and VSMAX Small Cap Index are covered by VTSAX Total Stock Mkt. There's a lot of duplication if you use all 3 funds. So I'd use 50% VTSAX, 30% VTIAX and 20% VBILX, or something similar.  

  •  

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3 hours ago, msucurt said:

On the Docusign form (step #4), i did this:

  • VFIAX - 35%
  • VTIAX - 30%
  • VTSAX - 25%
  • VSMAX - 10%

I know you are feeling overwhelmed, but if you'd like feedback on what you're doing then please tell us why you're doing it. What you've laid out isn't wrong, but it is unorthodox for a few reasons.

1. It doesn't include any bonds. I don't own bonds, but it is because I can lose half my portfolio and keep investing during the downturn. Will you sell your stocks when your portfolio drops 50% (notice I said when, not if)? Will you keep buying stocks in a downturn? Will you lose your mind in the process?

2. Related to the previous point, you should be thinking of your portfolio as the summation of all of your accounts. That's the right thing to do. So maybe you're planning to hold bonds in an IRA? That is generally fine, but I wouldn't hold bonds in a Roth IRA and hold stocks in a Traditional 403b. You want your highest expected performers to be in the accounts that'll have the least tax.

3. VTSAX represents the ENTIRE stock market. It is a fully diversified fund. VFIAX represents 500 large US companies, so by adding that to your portfolio you're implicitly making a bet that those large 500 companies will outperform the market as a whole. VSMAX represents small US companies, so by adding that to your portfolio you're implicitly making a bet that those small companies will outperform the market as a whole. These two bets are at least partially at odds with each other. Why are you making these choices?

...an extra tidbit on the last point, generally speaking making bets on certain sectors of the market is inadvisable. Some people like to make relatively small bets that small companies will outperform and that can generally be overlooked as long as they plan to stick to that bet FOREVER. There will be some years where it pays off and some years where it doesn't, so you have to be ready to stick through SEVERAL years of underperformance. If you're not ready to do that, and you will have to, then don't make this bet. I see no reason to stray from purity so invest in just VTSAX (minus some tax issues that aren't important for this discussion).

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25 minutes ago, krow36 said:

Go ahead and contact the TPA for the NEA Direct Invest plan #. You have to deal with them as they are authorized by the district to administrate their 403b plan. By the way, the NEA Direct Invest option is a Security Benefit option, and is not administered by NEA, but by Security Benefit. All your correspondence should be with SB, not NEA.

Yes, you will be able to change the funds and their percentages later. 

 

I think it might be wise if you included some bonds in your asset allocation, say 20% VBILX Intermediate term Bond Index. VFIAX 500 Index (large caps) and VSMAX Small Cap Index are covered by VTSAX Total Stock Mkt. There's a lot of duplication if you use all 3 funds. So I'd use 50% VTSAX, 30% VTIAX and 20% VBILX, or something similar.  

  •  

thanks so much for the security benefits advice. Tried calling them to get some info and of course got disconnected. Will try later. I like this actually:

So I'd use 50% VTSAX, 30% VTIAX and 20% VBILX,

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27 minutes ago, msucurt said:

thanks so much for the security benefits advice. Tried calling them to get some info and of course got disconnected. Will try later. I like this actually:

So I'd use 50% VTSAX, 30% VTIAX and 20% VBILX,

I'm not sure what info you were seeking from SB, but you may find that we can answer your questions a lot more easily. We've been dealing with NEA Direct Invest questions for a number of years. I realize it would be reassuring to talk to a well-informed SB rep and get a sense of the legitimacy of what you are contemplating. Unfortunately many posters have reported an experience similar to or worse than yours. SB doesn't make any money on NEA DI, in fact they make LOTS of money by selling their other products. So dealing with SB reps takes patience and perseverance. I wouldn't bother until it's necessary. NEA DI is a bare bones option for those who do not require hand-holding, but once it's set up, it's a super low-cost option and does an excellent job of allowing you to avoid those super-expensive annuity sellers. 

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10 minutes ago, krow36 said:

I'm not sure what info you were seeking from SB, but you may find that we can answer your questions a lot more easily. We've been dealing with NEA Direct Invest questions for a number of years. I realize it would be reassuring to talk to a well-informed SB rep and get a sense of the legitimacy of what you are contemplating. Unfortunately many posters have reported an experience similar to or worse than yours. SB doesn't make any money on NEA DI, in fact they make LOTS of money by selling their other products. So dealing with SB reps takes patience and perseverance. I wouldn't bother until it's necessary. NEA DI is a bare bones option for those who do not require hand-holding, but once it's set up, it's a super low-cost option and does an excellent job of allowing you to avoid those super-expensive annuity sellers. 

honestly, i am not looking for anything from them and would rather not speak to them on the phone. I am attempting to complete Steps #1-4 in regards to setting up my direct invest account.

On step #2 (salary reduction form), it asks for a "plan number". I dont know what to put there (ive called my HR and been given a TPA number to call, but of course I didnt get anywhere). I dont want to leave the field blank (see attachment) and fax the form off to SB and they come back and say I need that number or they cant move forward with anything. So that is where I am.

On step #3 (incoming funds form), (see attachment), it asks for a account number. I'm not sure what I put here because I dont have an account set up yet?

 

 

 

403b_salary reduction form.PNG

403b_incoming funds form.PNG

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Security Benefit can't provide you the plan #. It's up to the TPA or HR to tell you what they want to use. The plan # of each 403b vendor is usually listed on the TPA's website. The TPA probably doesn't have a unique # for SB's NEA DI, so try using the plan # for Security Benefit. If you submit the SB Salary Reduction Agreement to SB and they say it's the wrong #, then you will have forced the issue with the TPA. It's their job to supply the number. It won't help, but this confusion on the plan # has been reported repeatedly. The TPA will require you to use their Salary Reduction Agreement so SB's SRA is only required by SB, not the district.

Can you explain what you mean when you called the TPA and didn't get anywhere? Did you ask for the plan # for Security Benefit? The TPA is unlikely to have any knowledge of a vendor's various options. 

I think you are jumping the gun on the Incoming Funds Request. I realize that the SB instructions suggest you do so. First things first. Get the SB NEA DI account set up. Then contact the 2 annuity companies and request their transfer forms. You can't do anything with those transfer forms until you have the SB NEA DI account set up.  

NOTE: You have reported that the TPA supplied you with the plan #, and that it is your social security #. Thanks for that information!

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On 10/30/2020 at 5:47 PM, krow36 said:

Security Benefit can't provide you the plan #. It's up to the TPA or HR to tell you what they want to use. The plan # of each 403b vendor is usually listed on the TPA's website. The TPA probably doesn't have a unique # for SB's NEA DI, so try using the plan # for Security Benefit. If you submit the SB Salary Reduction Agreement to SB and they say it's the wrong #, then you will have forced the issue with the TPA. It's their job to supply the number. It won't help, but this confusion on the plan # has been reported repeatedly. The TPA will require you to use their Salary Reduction Agreement so SB's SRA is only required by SB, not the district.

Well, i finally think I got the "plan number" and filled that in and sent to my school's HR dept. 

Can you explain what you mean when you called the TPA and didn't get anywhere? Did you ask for the plan # for Security Benefit? The TPA is unlikely to have any knowledge of a vendor's various options. 

I think you are jumping the gun on the Incoming Funds Request. I realize that the SB instructions suggest you do so. First things first. Get the SB NEA DI account set up. Then contact the 2 annuity companies and request their transfer forms. You can't do anything with those transfer forms until you have the SB NEA DI account set up.  

I agree with this. I sent my Step #4 (account setup paperwork) in to them on Friday (Oct.30). I am not sure what the turn around is in regards to my account being setup. Once it is set up, I will contact my other 403b companies and request their transfer forms.

thanks!

Curt

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