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Salary Reduction Agreements

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I have a voluntary 403B account with the hospital with which I am employed. This voluntary plan is administered by Citistreet who is beyond bad. I do 90-24 transfers on a periodic basis and they are always messed up. When I speak to Human Resource Dept they will not let me set up a Salary Reduction Agreement with another mutual fund company, thus restricting me on how I can invest my VOLUNTARY contributions. If it were not for the sizeable tax reduction I would stop this foolishness immediatlely. Can I challege this in any way? This is a 403B-7, or mutual fund account.

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Hi,

I have been doing the same as you for years by transferring my 403b funds to Vanguard. However, that option may stop. Read this LINK that Dan has written about tranferring 403b funds.

 

Here is an excert:

 

"One new proposal may actually make things worse for fans of low-cost products. As it now stands, 403(b) participants are able to perform something called a 90-24 transfer of their money from an employer-sponsored vendor to any financial institution willing to accept the money, even one not offered by their employer. The 90-24 transfer has been a tremendous boon to the participant stuck with poor vendor choice. Unfortunately, this benefit may disappear.

 

Those worried about the loss of this provision have a few options: If you are contemplating a 90-24 transfer, look into completing it this year; contact the IRS with your concerns; and the best course of action: educate your employer on the benefits of offering quality investment choices. After all, benefits officials are also participants, so it is in their interest to have lower-cost products, as well."

 

I am unhappy about this proposal. I have decided that most of my future funds are going to be taxable if this proposal goes through. Best Wishes.

 

Joe

 

 

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