Need Help with Old 403B RE no more contributions

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SimonJester
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Need Help with Old 403B RE no more contributions

Post by SimonJester » Sun Mar 02, 2014 12:52 pm

I'm wondering what DW should do in this situation. My wife's company just switched from a 403B to a 401K, both are held at Fidelity and have the same investment choices. The 403B cannot be rolled into the 401k due to IRS rules, so we now have money sitting in the 403b account with no additional contributions being made. However the account will still have a quarterly administrative / record keeping fee. The 401K account will also have this fee. So I am wondering if DW should just leave the funds as they are and continue to contribute to the same funds in the 401K.


Right now she is sits with about 34K age 33
23K in Vanguard Institutional Index fund
5K Vanguard Developed Markets fund
6K Vanguard total Bond Market fund

She has access to multiple Freedom K funds and a handful of Vanguard funds.
She does not have TSM so I was trying to use the Institutional Index and Developed Markets to get close to that.


So again do you just leave these alone hoping the dividends and gains will outpace the quarterly fees running about $8.49 a quarter.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

SimonJester
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Re: Need Help with Old 403B RE no more contributions

Post by SimonJester » Sun Mar 02, 2014 1:06 pm

Ok actually reading a little bit more in both Summary Plan Descriptions it looks like she will only charge the administrative fee once for all accounts.

So I guess the question is more focused on leaving the funds inside the 403B without adding to them.

Is it all a wash since she is adding to the same funds in the 401K. Im thinking along the lines of dollar cost averaging over her working years.

Im probably over thinking this and should just leave things alone and stick to our overall AA.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

dickenjb
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Location: Philadelphia PA

Re: Need Help with Old 403B RE no more contributions

Post by dickenjb » Sun Mar 02, 2014 1:11 pm

I would not lose sleep over $8 a quarter.

Can she roll the 403(b) to a Vanguard or Fidelity IRA?

retiredjg
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Re: Need Help with Old 403B RE no more contributions

Post by retiredjg » Sun Mar 02, 2014 1:18 pm

SimonJester wrote:She does not have TSM so I was trying to use the Institutional Index and Developed Markets to get close to that.
Institutional Index is the 500 Index. Developed Markets is an international fund. It might be good to have both, but they do not add up to Total Stock Market.

Since there is no additional charge (and maybe even if there were), there is no harm in just leaving the money in the 403b as it is.

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JamesSFO
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Re: Need Help with Old 403B RE no more contributions

Post by JamesSFO » Sun Mar 02, 2014 1:35 pm

If there is only the one quarterly fee and the investment choices are the same, just treat them as the same.

If you want portfolio advice, probably pays to edit the original post to list out all of the options + expense ratios for input.

Saving$
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Re: Need Help with Old 403B RE no more contributions

Post by Saving$ » Sun Mar 02, 2014 1:41 pm

Since there is no added admin fee by leaving the funds where they are, I would recommend that.
Rolling the 403b funds into an IRA would leave you with an IRA without basis, thereby creating a tax liability if you want to do a backdoor Roth. Leaving the funds in the 403b avoids this problem.

SimonJester
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Re: Need Help with Old 403B RE no more contributions

Post by SimonJester » Sun Mar 02, 2014 2:34 pm

retiredjg wrote:
SimonJester wrote:She does not have TSM so I was trying to use the Institutional Index and Developed Markets to get close to that.
Institutional Index is the 500 Index. Developed Markets is an international fund. It might be good to have both, but they do not add up to Total Stock Market.
Yes I sorry I forgot that is International.
She also has access to Vanguard Extended Market Index VIEIX ER 0.12%

Would this plus VANGUARD INST INDEX (VINIX) get closer to TSM?

The other Large cap funds and the two small cap funds have ERs in the 0.85 to 0.97 range.

dickenjb wrote:I would not lose sleep over $8 a quarter.
Can she roll the 403(b) to a Vanguard or Fidelity IRA?
No she cannot since she is still employed and they do not allow in service withdraws.

Thanks
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

retiredjg
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Re: Need Help with Old 403B RE no more contributions

Post by retiredjg » Sun Mar 02, 2014 3:31 pm

SimonJester wrote:She also has access to Vanguard Extended Market Index VIEIX ER 0.12%

Would this plus VANGUARD INST INDEX (VINIX) get closer to TSM?
Perfect. 80% Institutional Index plus 20% Extended Market equals the TSM. Or 4 parts to 1 part if you prefer.

There are a couple of ways to do this.

1) For the time being, just maintain the percentages as they are. Once the new account is larger, all of the money in the old account could be moved to just 1 fund and adjustments made in the new account. That way, you never have to balance the old account.

2) Leave this account at the percentages you want forever. Rebalancing within the account every year or so would be needed.

3) Put this account in the Freedom Fund K that suits her stock to bond ratio if (and only if) the expense ratios are very low. I'm not sure how the Freedom Funds (very complex and expensive funds) differ from the Freedom K funds, but they could be worth a look if the price is right.


The best choice is probably look at these accounts in light of all your retirement accounts - and make one portfolio out of all of it.

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