Aptenodytes wrote:The risk is larger for those who have the least flexibility. You haven't really told us anything about your flexibility. What amount is in the affected funds? How much of that could you mirror in accounts under your full control, such as IRAs or taxable holdings? You don't say what kind of employer match you get, or what your IRA eligibility is. Conceivably you might justify bringing your 401k/403b contributions to zero and maxing out IRAs.
Lousy employer offerings are discussed quite a bit here. The general movement is from bad to better, though frequently individuals move from decent to horrible when they switch jobs. Your situation is far from exceptional, I suspect.
I feel your pain with respect to small and value, but I don't see why anyone would overweight emerging markets.
redhounds wrote:A couple thoughts/questions:
1. Can you exchange your other accounts enough to keep your desired allocation? It's not really eating a loss if you keep the same portfolio-wide allocation.
2. Does her 403(b) account allow her to withdraw her balance while still working? It would have to be rolled over into an IRA within the required time limits, of course, but then you could move the current balance to Vanguard and invest it however you want and direct the new money going into her 403(b) into whatever funds work best for your allocation.
Texas hold em71 wrote:Or does her 403(b) have a brokerage window that would allow you to invest in other funds for a fee? Many 401(k) plans do this. Mine does not allow access to Vanguard but it allows access to hundreds of others for a transaction fee I am so far too cheap to pay.
ML 59 wrote:See if your new plan has the option of a fund widow to allow investment options beyond the listed choices. If it does, check to be sure that there are no additional fees for its use. If not, perhaps you can request this addition through your HR dept.
tiltmenot wrote:Hi Everyone,
This is my first post, but I have been lurking for a long time. I have learned everything I know about investing from this site and appreciate the wealth of information provided by helpful and insightful posters here. With a plan set in place around 5 years ago, our portfolio have basically been on auto-pilot, but a major event that I had not considered has occurred, leading me to my first post.
5 years ago, I decided on a heavily-tilted portfolio with 50% of my stock allocation going to domestic and the other 50% to international, with my domestic allocation divided equally between total market and small value and my international allocation divided equally between large, small, and emerging markets. Because my job's 403b did not have any suitable funds for small value, international small, and emerging market, I filled my wife's 403b, which is a Vanguard account, with these funds. During 2007 and 2008, I also bought some total stock and total international in taxable since they would be the most tax efficient funds.
Fast forward to this month when my wife's work (a college) announced the removal of most Vanguard funds from the retirement plan and states that she must move all her funds into the funds that will be part of the new plan during the month of October. At the end of the month, any funds that are no longer supported in the new plan will automatically be moved into a Vanguard Target Retirement fund. The new plan does not include any small value or international small choices. It includes an actively managed emerging market fund with an expense ration of over 1%. This means that we will have to sell our small value, international small, and emerging market and abandon our tilted portfolio. We will be forced to lock in our losses in international small and emerging market, two underperforming funds that I have been pumping money into in the course of 2012 and 2013 via rebalancing.
So I guess my question is:
1) Is this move (and its stipulations) by my wife's employer legal?
2) If the move is legal (and I am assuming it is), then aren't slice-and-dicers and tilters who rely predominantly on employer's retirement plan always at the risk of being forced to abandon their investment strategies at a moment's notice? Doesn't this mean that such risk should be considered before implementing a slice-and-dice or tilted portfolio? If I had considered this risk as a real possibility, I could have at least bought small value, international small, and emerging markets instead of total market and total international in taxable. Or I could have simply decided against tilting.
I don't think there is much I can do so I am not sure if this post belongs in this forum or in the Theory, News & General, but I would appreciate any thoughts on this situation.
Thank you for reading such a long message.
LH wrote: 1)state you are unhappy with choices and fees
2) you would want a brokerage option, failing this:
3)you would want to move existing money out to IRA (if you could just DO IT, ie, dont/try 1 or 2 maybe, consider if you have the right to legally move to money to IRA at your discretion, you may consider just doing it, transfer out 90 percent of money, and asking forgiveness later IF someone raises the issue, and agreeing not to do it in future). I did this with my HSA in fact. I did not ask permission, figuring they would not care. I just transferred 90 percent of the HSA money out the the vanguard associated HSA, and did that every year, then I talked to the HSA people my company used, and they said from thier pov, they didnt care if I just transfered all of it out, every year, after it was put in by my company, since anytime they get money from company in name of someone who has no current account, they just create a new account, and they cared zilch. I do not think my company even realized I did it.
stan1 wrote: It sounds like you were relying on having SCV, International Small, and Emerging Markets index available in the 401K/403b. Only a small percentage of plans would offer those choices. A 401K with Total Stock Market, Total International, and Total Bond would be considered very good.
ResearchMed wrote:Can your wife speak with someone in HR/Employee Benefits?
It's probably worth a try, in a helpful/inquiring way, without putting them on the defensive.
livesoft wrote:If you have carryover losses, then you can sell in taxable with lower tax consequences.
You may wish to do some double exchanges. Here's an example:
Sell small-cap international in 403(b). Sell Total Market in taxable.
Buy total market in 403(b). Buy small-cap international in taxable.
Note that there is no locking in of losses. You still have the same asset allocation and the same exposure to the funds you had before. There is no wash sale involved either, unless the Total Market sold in taxable is sold at a loss.
tiltmenot wrote:I guess I am being too picky about the specific funds. If you say that Extended Market is a good substitute for Small Value, then I guess I can make this work, as the new plan does offer Extended Market as the only domestic stock option that is not large caps. However, given Ex.M.'s growth-y nature, I did not think of it as a good substitute to Small Value. In the end, the question is how much difference does it really make? And perhaps, my answer to this question might be more than it actually does.
livesoft wrote: One can simply M* chart "growth of" VEXMX and VISVX. Surprise! Or maybe not.