Sorting through 403b/457 options...

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wishful_thinking
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Joined: Sun Mar 12, 2017 3:23 pm

Sorting through 403b/457 options...

Postby wishful_thinking » Sat Mar 18, 2017 2:28 pm

I've gone through several old threads and learned so much about 403b/457 plans in general. I'm hoping for some advice about my options, which fortunately seem decent, but overwhelming. I'm hoping that others with more experience with any of these providers can help me clarify a few things before I enroll.

I have access to a 403b and contributions can either be made pre- or post-tax (Roth). There are about 15 different providers, but I've narrowed it down to Fidelity, Lincoln Investment Planning, ASPire, and Security Benefit Group after eliminating the insurance companies. Below is what I know about each from researching them. Hopefully this can help others with similar options too.

Fidelity
-$24 annual flat fee
-Access to pretty much all their funds, including premium class funds
-Question: Does this mean I can invest in the Premium Funds within the 403b even though they have a 10K minimum?
-Fund Options: https://401k.fidelity.com/static/dcl/sh ... POOLED.pdf

Lincoln Investment Planning
-Others have mentioned that there's a DirectInvest Option that would provide access to Vanguard funds
-I can't find very much on their website, so I'm going to call during business hours on Monday to request more information, but if anyone has links to more information about the direct plan, please let me know

ASPire Financial Services
-$40 annual maintenance fee
-0.15% administrative fee (based on total account balance)
-$75 transfer out fee (or $10 per transaction to take distributions over time)
-Basically an open platform with access to nearly any fund
-Questions: Online it lists Vanguard Admiral shares or Schwab Investor Shares which both have very low ER's. Because this is an employer plan, does this mean I have access to these fund classes without meeting the minimum investment amounts?
-Fund Selection: https://www.aspireonline.com/plan-types/403(b)-plan/fund-search

Security Benefit Group
-They have a terrible reputation but it seems they have a more recent direct investment option that's decent
-NEA ValueBuilder DirectInvest
-$35 management fee (for balances under 50K)
-NO FEE for balances over 50K
-$30 annually for paper correspondence (waived if enrolled in electronic correspondence)
-$25 withdrawal fee (but waived if you make the request through online portal)

I also have access to a 457 plan.

MA SMART deferred compensation plan:
-0.0975% administrative fee annually
-No other provider fees that I can find

Fund Options:
https://mass-smart.gwrs.com/wrFundOverv ... -01&db=pnp

Relevant Info:
Age: 28
Married Filing Jointly
State: MA
Tax Rate: 25% federal, 5.1% MA
Desired Asset Allocation: 90% Stocks/10% bonds
Desired International Allocation: 30%

No debt, 6 months emergency fund
Fully funding both of our Roth IRA's each year (invested in Vanguard Target Date funds)

Thoughts:
-I'm reluctant to go with Security Benefit Group because of their reputation and I haven't been able to get much information about investing options from either them or Lincoln. So I'm leaning towards Fidelity or ASPire. Fidelity's fees seem lower, so if there's a way to put together a decent three or four fund portfolio with the available options, I think that might be best. I'm not a fan of the relatively high ER of the freedom target date funds. ASPire is appealing because I'd have access to Vanguard funds (especially if I really have access to admiral shares), but the fees seem slightly higher.

Questions:

1) Can anyone with experience please clarify whether I truly have access to the share classes with lower expense ratios (Vanguard's Admiral Shares, Schwab's Investor Shares, Fidelity Premium Shares) without meeting any sort of minimums? I've looked all over for clear information about how this works, but can't find anything.

2) What provider offers the best fee structure and access to low-cost funds in your opinion?

3) Ideas about how to create a 3 or 4 fund portfolio with these options? It seems like this could either be done with the premium shares through fidelity or vanguard index funds through ASPire's platform. But specific recommendations based on my asset allocation would be helpful.

Mudpuppy
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Re: Sorting through 403b/457 options...

Postby Mudpuppy » Sat Mar 18, 2017 3:10 pm

I'd personally lean towards Fidelity for your 403(b) provider due to the flat annual fee with no other fees tacked on to other activities (just because a fee is supposed to be waived if you do xyz procedure doesn't mean it will be waived, they could claim you did xya procedure instead). So I would rule out Security Benefit due to all the potential fees if you don't follow xyz procedure precisely.

And I would rule out ASPire for multiple reasons. The transfer-out fee some managers charge annoys me to no end, so that would be a full no-go for me personally. The flat annual maintenance fee is much larger than Fidelity's, and then they also tack on 0.15% fees on top of that, so that makes ASPire much more expensive than Fidelity. The access to Vanguard funds is not worth all these fees.

So I would recommend Fidelity. If you use Fidelity's index funds, it's pretty easy to replicate a three-fund portfolio. For your 403(b) plan, I would suggest the following funds to replicate the three-fund portfolio:

Fidelity U.S. Bond Index Fund - Premium Class (FSITX, 0.05% ER)
Fidelity Total Market Index Fund - Premium Class (FSTVX, 0.045% ER)
Fidelity International Index Fund - Premium Class (FSIVX, 0.08% ER)

You can access the Premium share class at Fidelity in your 403(b) plan even if you don't have $10k to invest in it. Your overall employment pool meets the fund minimums for employer-sponsored plans, not you personally.

As for your 457(b) plan, it looks like they also provide index funds, although it's odd that they only have large-cap and small-cap stock funds, with no mid-cap funds available. But it looks like all of their index funds map directly to State Street Class I funds:

U.S. Bond Index Fund ==> State Street U.S. Bond Index Securities Lending Series Fund - Class I
Large-Cap Index Fund ==> State Street S&P 500 Index Securities Lending Series Fund - Class I
Small-Cap Index Fund ==> State Street Russell Small Cap Index Securities Lending Series Fund - Class I
International Stock Index Fund ==> State Street Global All Cap Equity Ex-U.S. Index Securities Lending Series Fund Class I

So you could use these four funds in your 457(b) to build the three-fund portfolio. To replicate total U.S. stock market with only large-cap and small-cap funds, I'd recommend a ratio of 90% large-cap to 10% small cap.

BashDash
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Re: Sorting through 403b/457 options...

Postby BashDash » Sat Mar 18, 2017 3:28 pm

If I had access to fidelity I would choose them. I just transferred to Security Benefit and I know have access to a two fund portfolio of total stock market and total intermediate admiral funds. The website is great and I set up bi annual rebalances. It is free for me since I have over 50k. I was very apprehensive to use them for reasons you mentioned but so far it has been great. I am in the NY 457 too. What I prefer about that is I can access the money before 59 if I seperate from my job for some reason.

krow36
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Re: Sorting through 403b/457 options...

Postby krow36 » Sat Mar 18, 2017 5:00 pm

wishful_thinking wrote:Questions:
1) Can anyone with experience please clarify whether I truly have access to the share classes with lower expense ratios (Vanguard's Admiral Shares, Schwab's Investor Shares, Fidelity Premium Shares) without meeting any sort of minimums? I've looked all over for clear information about how this works, but can't find anything.

2) What provider offers the best fee structure and access to low-cost funds in your opinion?

3) Ideas about how to create a 3 or 4 fund portfolio with these options? It seems like this could either be done with the premium shares through fidelity or vanguard index funds through ASPire's platform. But specific recommendations based on my asset allocation would be helpful.


CalSTRS (CA state teachers retirement system) requires all venders to give the details of their 403b offerings and put them on 403bcompare.com. Most venders use generic plans in all the states so it's an excellent source of info for the plans offered to K-12 schools throughout the US. Here's a link to Fidelity's listing of funds they offer in their generic 403b plan. https://www.403bcompare.com/products/68 ... entoptions
Notice that there's a number of Premier class funds offered. The initial investment minimum doesn't apply.

Security Benefit's Direct Invest uses Vanguard Admiral class, with no minimums.
Lincoln's DIY (not widely available at this time) allows use of Vanguard Admiral class, with no minimums.
Aspire allows use of Vanguard Admiral class with no minimums

Mudpupy has listed the same 3 or 4 fund portfolio for both the 403b and the 457 that I would choose. You are very fortunate to have 2 fantastic options! :D

wishful_thinking
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Joined: Sun Mar 12, 2017 3:23 pm

Re: Sorting through 403b/457 options...

Postby wishful_thinking » Sat Mar 18, 2017 5:33 pm

Mudpuppy, thank you for the thoughtful response. I agree that Fidelity seems like the best option. If I didn't have access to the Premium funds, I wasn't seeing too many with low expense ratios. But the three fund portfolio you suggested looks perfect. So I'm thinking something like this:

10% Fidelity U.S. Bond Index Fund (.05%)
60% Fidelity Total Market Index Fund (.045%)
30% Fidelity International Index Fund (.08%)

I increased the international allocation slightly from my original allocation after reading more about 3 fund portfolios and looking into my Vanguard Target Date's fund as a model. I wish there was an international bond index one but I don't see an obvious low-cost choice at Fidelity so I think I'll stick with this for simplicity.

BashDash, thanks for your input. I really like the advantage of accessing the 457 money before 59.5 too. We're both fortunate to have good 457 plans. How do you find the investment options with Security Benefits Group? I wasn't able to find out as much about the funds they offered online.

krow36 403bcompare has been enormously helpful. I've used that, along with the Teach and Retire Rich podcast, to start to understand and research my options. Thanks for clarifying about the fund minimums. I couldn't find a straight answer to that anywhere but assumed it was the case. That's certainly a huge advantage over my Roth IRA. Do you agree that Fidelity seems to be the best option in this case? I was initially leaning towards ASPire after listening to the Teach and Retire Rich interview but it seems Fidelity's costs would be lower. Security Benefit is tempting with the no fee over 50K. Maybe that's something to consider once my balance gets closer to that down the road.

The sad part of having these great low-cost options is that most teachers at my school have a 403b with AXA because they're the only company with a representative that comes in.

spencer99
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Re: Sorting through 403b/457 options...

Postby spencer99 » Sat Mar 18, 2017 6:47 pm

I second Mudpuppy's suggestion to go with Fidelity. I believe you can implement as good a three-fund portfolio at Fidelity as you can at Vanguard.

I used the three funds Mudpuppy suggested in my 403(b) while employed and have retained the investments in retirement.

wishful_thinking wrote: Fidelity's fees seem lower, so if there's a way to put together a decent three or four fund portfolio with the available options, I think that might be best. I'm not a fan of the relatively high ER of the freedom target date funds.


There's absolutely nothing wrong with the three-fund implementation and having separate funds can be easier to integrate into a portfolio spread across several providers (your 457), but if you're interested in a target date fund the Fidelity Freedom Index funds are preferred around here. They're built on Fidelity index funds and have a low ER.

Link: https://www.bogleheads.org/wiki/Fidelity

And ... although the international index fund Mudpuppy mentions, FSIVX, is commonly suggested (and one I used) there is a newer Fidelity international fund (FTIPX), introduced just last year, that some have mentioned as attractive because it follows a different index and adds small cap. I'm not suggesting the fund, simply suggesting you look at and compare your options. I don't know enough about this to know how much weight to place on how new the fund offering is (although I believe the index it follows has been around for quite awhile).

Link discussing this fund: viewtopic.php?f=1&t=194213

Good luck,

S

Mudpuppy
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Re: Sorting through 403b/457 options...

Postby Mudpuppy » Sat Mar 18, 2017 7:18 pm

wishful_thinking wrote:Mudpuppy, thank you for the thoughtful response. I agree that Fidelity seems like the best option. If I didn't have access to the Premium funds, I wasn't seeing too many with low expense ratios. But the three fund portfolio you suggested looks perfect. So I'm thinking something like this:

10% Fidelity U.S. Bond Index Fund (.05%)
60% Fidelity Total Market Index Fund (.045%)
30% Fidelity International Index Fund (.08%)

I increased the international allocation slightly from my original allocation after reading more about 3 fund portfolios and looking into my Vanguard Target Date's fund as a model. I wish there was an international bond index one but I don't see an obvious low-cost choice at Fidelity so I think I'll stick with this for simplicity.

My personal choice is to have 30% of my equity stake in international equities, which would be 27% (30% * 90% = 27%) for your desired asset allocation. I know there are arguments for higher or lower international equities, but that's just my preference.

I also do not hold international bonds, and that's a relatively new addition to the Vanguard Target Retirement funds. You can look on the Wiki for some of the pros and cons of holding international bonds: https://www.bogleheads.org/wiki/Develop ... _investing

And as you noted, your 403(b) and 457(b) plans do not provide an international bond index fund. If you want this asset in your portfolio, you'd have to hold it in your IRA.

One more thought. Since you are getting closer to age 30, you might also consider increasing your bond percentage above 10%, unless you have a relatively stable pension plan with your government job. I'm not familiar with how well the pension funds are doing in MA to speak one way or the other on that one.

honduranhurricane
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Location: boston, ma

Re: Sorting through 403b/457 options...

Postby honduranhurricane » Sat Mar 18, 2017 10:05 pm

Very interested in the thoughts on this post. My wife is also a teacher in MA with access to the same choices as the OP. We opted for the 457 vs 403 due to the structure differences of 457 vs 403 (portability and access post early retirement).

I did not spend to much time investigating the options in 403 given my bias to the 457, which has the low fee options noted in the OP and by other posters. I am delighted to see that FIDO is on the 403 menu, my initial cursory look I only noticed the high fee providers. Perhaps its time to add 403 to the monthly budget (we max out all our other tax deferred options and a person can 'double dip' by maxing both 403 and 457 annually, at least that is how I understand it).

Thanks and will follow this post.

krow36
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Location: WA

Re: Sorting through 403b/457 options...

Postby krow36 » Sat Mar 18, 2017 10:32 pm

wishful_thinking wrote: Do you agree that Fidelity seems to be the best option in this case? I was initially leaning towards ASPire after listening to the Teach and Retire Rich interview but it seems Fidelity's costs would be lower. Security Benefit is tempting with the no fee over 50K. Maybe that's something to consider once my balance gets closer to that down the road.

The sad part of having these great low-cost options is that most teachers at my school have a 403b with AXA because they're the only company with a representative that comes in.

I think Fidelity has the lowest fee generic 403b for K-12 employees. It beats Vanguard because they only use Investor class funds. Fido’s $24/yr fee is low and as the account balance increases, becomes almost insignificant if looked at as a percent of the balance. Fido deserves the $24. :happy

sawhorse
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Re: Sorting through 403b/457 options...

Postby sawhorse » Sat Mar 18, 2017 10:34 pm

The 457 plan options are excellent, and like you say, it gives you flexibility if you leave your job. In that way, you can even treat it as an emergency funding source in the case of unemployment. I would max that first unless you get a 403 match in which case I'd contribute to get the 403 match and then direct everything to the 457 before putting more into the 403.

Coato
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Re: Sorting through 403b/457 options...

Postby Coato » Sun Mar 19, 2017 7:30 am

"I think Fidelity has the lowest fee generic 403b for K-12 employees. It beats Vanguard because they only use Investor class funds. Fido’s $24/yr fee is low and as the account balance increases, becomes almost insignificant if looked at as a percent of the balance. Fido deserves the $24. :happy"

Yes.

403bcompare is a bit misleading for cost assessment since they 1) assume you have only $10k invested (which makes their .25 seem inexpensive) and 2) seem to take the average of all of the Expense Ratios on offer in total. (Which is a pretty strange assumption to make, but I guess they can't assume everyone does a low cost portfolio of broad indexes.)

At $10k Fido ($24) and Calstrs (.25) are even if you invest in the low cost options, but Fido gets cheaper as you accrue more money.

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Sun Mar 19, 2017 10:44 am

krow36 wrote:
wishful_thinking wrote: Do you agree that Fidelity seems to be the best option in this case? I was initially leaning towards ASPire after listening to the Teach and Retire Rich interview but it seems Fidelity's costs would be lower. Security Benefit is tempting with the no fee over 50K. Maybe that's something to consider once my balance gets closer to that down the road.

I think Fidelity has the lowest fee generic 403b for K-12 employees. It beats Vanguard because they only use Investor class funds. Fido’s $24/yr fee is low and as the account balance increases, becomes almost insignificant if looked at as a percent of the balance. Fido deserves the $24. :happy


Good point about the fee becoming less significant as the account balance increases. That is definitely a strong argument for choosing it over the ASPire option with an annual flat fee and a percentage of the total account balance. I think I'll definitely go with Fidelity and sign up seems like it can easily be done online which is a plus.

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Sun Mar 19, 2017 10:46 am

sawhorse wrote:The 457 plan options are excellent, and like you say, it gives you flexibility if you leave your job. In that way, you can even treat it as an emergency funding source in the case of unemployment. I would max that first unless you get a 403 match in which case I'd contribute to get the 403 match and then direct everything to the 457 before putting more into the 403.


Good point about the portability. I was reluctant at first to put more into retirement since I feel that the pension system is somewhat stable and my husband and I are also both maxing out our Roth IRA's. But looking at it as a tax advantaged way to save money that could then be withdrawn if I leave (or lose) my current job makes it easier to justify putting the money towards retirement. Thanks!

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Sun Mar 19, 2017 10:56 am

honduranhurricane wrote:We opted for the 457 vs 403 due to the structure differences of 457 vs 403 (portability and access post early retirement).

I did not spend to much time investigating the options in 403 given my bias to the 457, which has the low fee options noted in the OP and by other posters. I am delighted to see that FIDO is on the 403 menu, my initial cursory look I only noticed the high fee providers. Perhaps its time to add 403 to the monthly budget (we max out all our other tax deferred options and a person can 'double dip' by maxing both 403 and 457 annually, at least that is how I understand it).

Yes, I believe you can contribute up to 18K to a 457 AND an additional 18K in a 403b. Unfortunately, most K-12 teachers don't have 36K to pour into retirement accounts so it seems kind of odd that they have this option while people with much larger salaries don't.

I agree with maximizing your 457 contributions first. I think this is what I'm going to do as well. I'm in a unique situation this year because my husband's parents set up a custodial (taxable) account for him that has a large amount of capital gains. Our plan is to slowly pull money out of that account to live off of while contributing the max to my 403b and 457 to reduce our taxable income. We're hoping to get into the 15% federal bracket to avoid capital gains tax on the money we take out of the taxable account.

krow36
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Re: Sorting through 403b/457 options...

Postby krow36 » Sun Mar 19, 2017 12:48 pm

I think you plan to max out your tax deferred accounts and use other funds for living expenses is a good one. Don’t make the dumb mistake I once made on capital gains. Even though LTCG are taxed at 0% in the 15% bracket, they are added to all the other taxable income to determine how much is taxed at 0% vs 15%. In other words, they are included to see if there is any headroom in the 15% bracket. Be sure and use Taxcaster to determine how much LTCG you can add before total income (including LTCG) fills up the headroom. Any additional LTCG is taxed at 15%.

Mudpuppy
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Re: Sorting through 403b/457 options...

Postby Mudpuppy » Sun Mar 19, 2017 1:44 pm

wishful_thinking wrote:Yes, I believe you can contribute up to 18K to a 457 AND an additional 18K in a 403b. Unfortunately, most K-12 teachers don't have 36K to pour into retirement accounts so it seems kind of odd that they have this option while people with much larger salaries don't.

Faculty and staff at state-run universities also usually have both the 403(b) and 457(b) available to them. University hospital doctors or faculty in well-paid fields like engineering could easily afford to max both. And while starting K-12 teachers get paid very little, at least in California, the salary schedules at most school districts can bring them to $70k+ salaries after a master's degree (or two) and a decade or so of service. Probably not enough to max both accounts unless the spouse is earning a high salary, but the potential is there and it's good to have the option to max both.

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Sun Mar 19, 2017 2:59 pm

krow36 wrote:I think you plan to max out your tax deferred accounts and use other funds for living expenses is a good one. Don’t make the dumb mistake I once made on capital gains. Even though LTCG are taxed at 0% in the 15% bracket, they are added to all the other taxable income to determine how much is taxed at 0% vs 15%. In other words, they are included to see if there is any headroom in the 15% bracket. Be sure and use Taxcaster to determine how much LTCG you can add before total income (including LTCG) fills up the headroom. Any additional LTCG is taxed at 15%.


krow36, thanks for the reminder. I have considered this, and we plan to cash out the account slowly over a few years for this reason. My husband is also in grad school right now and receives a low stipend so I'm also looking into whether it would make more since to file married filing separately and have him claim the capital gains on his return.

Hoping you can help me understand one thing better: Say we take out 20K from the taxable account. How do we know how much of that 20K is capital gains (are therefore taxable)? For example, the account has around 150K. Of that, 75K is capital gains. We'll only pay tax on the 75K, not on the rest of the money. But when we sell shares is the total amount we receive added to our income or only the amount that is actually capital gains? Thanks for your help!

krow36
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Re: Sorting through 403b/457 options...

Postby krow36 » Sun Mar 19, 2017 9:08 pm

I don’t think there’s a benefit to filing “married filing singly”. I’ll admit I’m not familiar with the pros and cons of filing MFS. If his income is much reduced, that should make it easier to get in to the middle or lower end of the MFJ 15% tax bracket so as to have some headroom.

If the particular fund or stock you decide to sell has a current value of 150k with long term cap gains of 75k, the 150k goes into your taxable account. The 75k is taxed at the cap gain rates. That rate is usually either 0% or 15%, depending. That’s an advantage that taxable accounts have over tax-deferred accounts, where distributions are taxed at your income tax bracket rate which could be 25% or above.

Are you getting the cap gain amounts from the current institution? Folks sometimes mistakenly think that the cap gains are the difference between the amount originally invested and the current value. If dividends and cap gain distributions have been reinvested, the actual current LTCG will be considerably less. You need to get the numbers from the institution that’s holding the account, hopefully on the website of the internet account. If not there, ask for the numbers. Maybe you’ve already gone this information.

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Thu Mar 23, 2017 5:18 pm

krow36 wrote:If the particular fund or stock you decide to sell has a current value of 150k with long term cap gains of 75k, the 150k goes into your taxable account. The 75k is taxed at the cap gain rates. That rate is usually either 0% or 15%, depending. That’s an advantage that taxable accounts have over tax-deferred accounts, where distributions are taxed at your income tax bracket rate which could be 25% or above.


What do you mean by "the 150K goes into your taxable account"? I'm trying to understand how we know how much of what we sell is capital gains. In terms of our federal income tax bracket, if we sell 50K worth of shares in our taxable account, how do we know how much is capital gains and would therefore raise our income? Or is the entire 50K added onto your income in terms of figuring out what capital gains bracket we'd be in?

krow36 wrote:Are you getting the cap gain amounts from the current institution?


I got the 75K number from Oakmark's website (where the taxable account money is currently invested). I believe it accounts for distributions being reinvested because the original investment amount plus the capital gains doesn't equal the current account balance.

wishful_thinking
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Re: Sorting through 403b/457 options...

Postby wishful_thinking » Thu Mar 23, 2017 7:28 pm

I'm in the process of enrolling in the 457 plan. Following Mudpuppy's advice about funds, I went with an asset allocation of 90/10 stocks/bonds and 30% international, which gave me this:

10% U.S. Bond Index (.04% ER)
27% International Stock Index Fund (.09% ER)
57% Large Company Stock Index Fund (.01% ER)
6% Small Cap Stock Index Fund (.03% ER)

**The awkward large/small split is because there doesn't seem to be the equivalent of a total stock index, and there's no mid cap fund either

There are other options (https://docs.retirementpartner.com/ioag ... 1_IOAG.pdf) including the equivalent of a target date fund, which would automatically rebalance annually and get more conservative over time. It also includes a REIT fund.

Does this all look reasonable? Any recommendations or changes before I go ahead and start contributing? Thanks again for all the advice. I can't tell you how helpful it's been to get feedback.

CyclingDuo
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Re: Sorting through 403b/457 options...

Postby CyclingDuo » Thu Mar 23, 2017 8:17 pm

wishful_thinking wrote:I've gone through several old threads and learned so much about 403b/457 plans in general. I'm hoping for some advice about my options, which fortunately seem decent, but overwhelming. I'm hoping that others with more experience with any of these providers can help me clarify a few things before I enroll.

I have access to a 403b and contributions can either be made pre- or post-tax (Roth). There are about 15 different providers, but I've narrowed it down to Fidelity, Lincoln Investment Planning, ASPire, and Security Benefit Group after eliminating the insurance companies. Below is what I know about each from researching them. Hopefully this can help others with similar options too.

Fidelity
-$24 annual flat fee
-Access to pretty much all their funds, including premium class funds
-Question: Does this mean I can invest in the Premium Funds within the 403b even though they have a 10K minimum?
-Fund Options: https://401k.fidelity.com/static/dcl/sh ... POOLED.pdf

Lincoln Investment Planning
-Others have mentioned that there's a DirectInvest Option that would provide access to Vanguard funds
-I can't find very much on their website, so I'm going to call during business hours on Monday to request more information, but if anyone has links to more information about the direct plan, please let me know

ASPire Financial Services
-$40 annual maintenance fee
-0.15% administrative fee (based on total account balance)
-$75 transfer out fee (or $10 per transaction to take distributions over time)
-Basically an open platform with access to nearly any fund
-Questions: Online it lists Vanguard Admiral shares or Schwab Investor Shares which both have very low ER's. Because this is an employer plan, does this mean I have access to these fund classes without meeting the minimum investment amounts?
-Fund Selection: https://www.aspireonline.com/plan-types/403(b)-plan/fund-search

Security Benefit Group
-They have a terrible reputation but it seems they have a more recent direct investment option that's decent
-NEA ValueBuilder DirectInvest
-$35 management fee (for balances under 50K)
-NO FEE for balances over 50K
-$30 annually for paper correspondence (waived if enrolled in electronic correspondence)
-$25 withdrawal fee (but waived if you make the request through online portal)

I also have access to a 457 plan.

MA SMART deferred compensation plan:
-0.0975% administrative fee annually
-No other provider fees that I can find

Fund Options:
https://mass-smart.gwrs.com/wrFundOverv ... -01&db=pnp

Relevant Info:
Age: 28
Married Filing Jointly
State: MA
Tax Rate: 25% federal, 5.1% MA
Desired Asset Allocation: 90% Stocks/10% bonds
Desired International Allocation: 30%

No debt, 6 months emergency fund
Fully funding both of our Roth IRA's each year (invested in Vanguard Target Date funds)

Thoughts:
-I'm reluctant to go with Security Benefit Group because of their reputation and I haven't been able to get much information about investing options from either them or Lincoln. So I'm leaning towards Fidelity or ASPire. Fidelity's fees seem lower, so if there's a way to put together a decent three or four fund portfolio with the available options, I think that might be best. I'm not a fan of the relatively high ER of the freedom target date funds. ASPire is appealing because I'd have access to Vanguard funds (especially if I really have access to admiral shares), but the fees seem slightly higher.

Questions:

1) Can anyone with experience please clarify whether I truly have access to the share classes with lower expense ratios (Vanguard's Admiral Shares, Schwab's Investor Shares, Fidelity Premium Shares) without meeting any sort of minimums? I've looked all over for clear information about how this works, but can't find anything.

2) What provider offers the best fee structure and access to low-cost funds in your opinion?

3) Ideas about how to create a 3 or 4 fund portfolio with these options? It seems like this could either be done with the premium shares through fidelity or vanguard index funds through ASPire's platform. But specific recommendations based on my asset allocation would be helpful.


We are not huge fans of 403(b) plans - yet, that's what we have available with both of our employers. It's a standard ER fee for the administration of these plans. One of us pays .17 ER at TIAA, the other has the option of .18 or .20 ER depending on the plan. That's over and above the underlying fund choices. So even if one was using the underlying low cost Vanguard funds (which we do), the administrative fee is on top of that. Maybe - someday - a low cost provider will come in and undercut all the competition to the point that it overhauls the 403(b) industry in a transforming way that everyone gets to enjoy lower administrative fees.

Choose the plan you can that has the lowest combined ER fees (administrative fees + underlying fund fees) that you can. No need to be paying the "man" any more than you need to be paying him (or her). Fidelity sounds like your lowest cost provider.


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