403b help

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Determined
Posts: 93
Joined: Sat Aug 12, 2017 7:43 pm

403b help

Post by Determined » Sat Aug 12, 2017 8:13 pm

Hello,

I am new to the forum but have been reading the wikis and threads over the last four months. As of January both my parents have passed, and at 47 I have been on a steep learning curve as far as investing and retirement.

I have no loans or debts other than a manageable mortgage. I have 23 years in STRS. I have maxed out my 457 and my HSA . I have college money for my 11 year old. I have a 403b in Am Funds but stopped funding it when my employer dropped the provider I was using. I switched to the 457 that I fund directly in Lifepath35.

I have extra money to invest and I can enroll in a new 403b September 15. I have two questions.

1. It is extremely likely that I will be relocating next summer. I can job hunt in Ohio. Should I still start a new 403b?
2. i know nothing about my provider choices. Anyone have an opinion?
American Fidelity
Ameriprise Financial Services
Great American Financial Resources
Lincoln National Life Insurance Company
Metropolitan Life Insurance Company

Thank you for this wonderful resource.

Determined
Posts: 93
Joined: Sat Aug 12, 2017 7:43 pm

Re: 403b help

Post by Determined » Sat Aug 12, 2017 9:41 pm

i forgot to list my Roth IRA, and I do not get employer contributions to the 403b. I would like to be able to tax defer some extra money this year if I can, but perhaps there are better options.

MNGopher
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Re: 403b help

Post by MNGopher » Sat Aug 12, 2017 9:56 pm

I would not start a 403B with any of those insurance companies, especially if you will be changing employers within the next year.
They may have surrender charges and make it difficult to get your money to a new provider.

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FiveK
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Re: 403b help

Post by FiveK » Sat Aug 12, 2017 9:57 pm

Determined wrote:
Sat Aug 12, 2017 8:13 pm
1. It is extremely likely that I will be relocating next summer. I can job hunt in Ohio. Should I still start a new 403b?
2. i know nothing about my provider choices. Anyone have an opinion?
1. Yes (probably - see below).
2. We need a bit more information. See Investment Planning - Bogleheads.org, and then the link at the bottom of that post.

Determined
Posts: 93
Joined: Sat Aug 12, 2017 7:43 pm

Re: 403b help

Post by Determined » Sun Aug 13, 2017 11:50 am

Looking at the posting link was very helpful. I see I have a lot of organizing to do before I really have a handle on my investments. I know where they all are, but listing percentages will take me some time.

In regards to the 403b, I did some more reading as well as visited 403bwise. Although I would love to put a little more away in a tax advantaged account, my timeline and vendor options don't make sense. When I relocate, I will likely rollover my existing 403b since the fund fees at .7 are by far the highest of anything i have.

I will keep reading. Thank you so much.

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FiveK
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Re: 403b help

Post by FiveK » Sun Aug 13, 2017 12:03 pm

Determined wrote:
Sun Aug 13, 2017 11:50 am
Although I would love to put a little more away in a tax advantaged account, my timeline and vendor options don't make sense. When I relocate, I will likely rollover my existing 403b since the fund fees at .7 are by far the highest of anything i have.

I will keep reading. Thank you so much.
Perhaps include [Wiki suggestion] Invest in taxable or 401(k)? - Bogleheads.org, and the wiki article discussed there, in your reading.

MNGopher makes a good point about not investing in something (usually some form of annuity) that will charge a surrender fee, but especially because you expect a rollover in ~1 year, high fees now are much less important than using the use-it-or-lose-it tax advantaged space this year.

krow36
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Re: 403b help

Post by krow36 » Sun Aug 13, 2017 1:13 pm

The only provider on your list that offers a mutual fund custodial account rather than an annuity 403b is Ameriprise. Check them out on 403bcompare (run by CA State Teachers Retirement System). They sell class A and C Columbia funds (front and back loaded) which also have high ERs. However they offer 1 index fund MNSAX (small cap) with an ER of 0.45%, and the load is waived. There is no surrender fee. It might be worth investigating. You should avoid all their other offerings.

Mudpuppy
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Re: 403b help

Post by Mudpuppy » Sun Aug 13, 2017 2:09 pm

The providers for a 403(b) are the first step. The second step is seeing what investment lineup each provider has. Some otherwise decent providers might have horrible lineups for your district. Likewise, you can sometimes find decent lineup options with providers that generally have mostly fee-heavy insurance products. It all depends on how your district set up their plan with the providers. All this talk of surrender fees is important so you know they exist, but each district has quite a bit of liberty with how they set up their plan. Some districts are actually wise to the tricks and make things nice for their employees (rare, I know, but they exist).

If you feel comfortable posting the links to your plan documentation, we can provide more specific feedback as to whether or not you should invest, given your plan to move within the year.

Determined
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Re: 403b help

Post by Determined » Tue Sep 05, 2017 3:29 pm

krow36 wrote:
Sun Aug 13, 2017 1:13 pm
The only provider on your list that offers a mutual fund custodial account rather than an annuity 403b is Ameriprise. Check them out on 403bcompare (run by CA State Teachers Retirement System). They sell class A and C Columbia funds (front and back loaded) which also have high ERs. However they offer 1 index fund MNSAX (small cap) with an ER of 0.45%, and the load is waived. There is no surrender fee. It might be worth investigating. You should avoid all their other offerings.
I did not read this earlier, but this is exactly what I found when I spoke to Amerprise today. He suggested C shares as I am likely relocating next year. I would only need to hold it for a year. The ER is 1.75. He also suggested a 1% managed account if I wanted to roll my current 403b into it. He said they primarily use ETFs. I will ask about MNSAX.

I am anticipating significantly more pass through income than previously due to a strong July and August at the small business my brother and I now own.

Determined
Posts: 93
Joined: Sat Aug 12, 2017 7:43 pm

Re: 403b help

Post by Determined » Tue Sep 05, 2017 4:56 pm

Mudpuppy wrote:
Sun Aug 13, 2017 2:09 pm
The providers for a 403(b) are the first step. The second step is seeing what investment lineup each provider has. Some otherwise decent providers might have horrible lineups for your district. Likewise, you can sometimes find decent lineup options with providers that generally have mostly fee-heavy insurance products. It all depends on how your district set up their plan with the providers. All this talk of surrender fees is important so you know they exist, but each district has quite a bit of liberty with how they set up their plan. Some districts are actually wise to the tricks and make things nice for their employees (rare, I know, but they exist).

If you feel comfortable posting the links to your plan documentation, we can provide more specific feedback as to whether or not you should invest, given your plan to move within the year.
In the managed fund, the advisor estimates the cost would be 1.6% which includes his 1% fee. He suggested Active Risk Allocation Moderate Aggressive Portfolio if I transfer my current 403b which is in Am Funds. THe pdf he sent also lists Columbia Threadneedle. I am not sure how to find a link to plan documentation.

I am only looking at deferring $5700 from October-December. We can only enroll or make changes for March and October. I would readjust in March to finish out the contract year and defer the maximum for 2018.

Mudpuppy
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Location: Sunny California

Re: 403b help

Post by Mudpuppy » Tue Sep 05, 2017 11:12 pm

Don't use active management for that small of a balance and holding term. You'll lose too much to the fees. Basically, take everything that advisor told you with a huge grain of salt, because he stands to make more money if he can convince you to use active management and rollover your old 403(b).

Determined
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Joined: Sat Aug 12, 2017 7:43 pm

Re: 403b help

Post by Determined » Wed Sep 06, 2017 5:21 am

That is exactly where I am torn. I want to take further as an age of tax advantaged accounts, but I don't like would be paying.

Would I be better off investing in my Vanguard taxable accounts?

Mudpuppy
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Location: Sunny California

Re: 403b help

Post by Mudpuppy » Wed Sep 06, 2017 9:26 am

Determined wrote:
Wed Sep 06, 2017 5:21 am
That is exactly where I am torn. I want to take further as an age of tax advantaged accounts, but I don't like would be paying.

Would I be better off investing in my Vanguard taxable accounts?
Have you gotten complete fund lineups from Amerprise and the other vendors. If you are forced to call them to get this information, tell the representative you're not interested in a sales pitch and you want documentation on the complete fund lineup. Repeat as often as necessary until they agree to mail the documentation to you.

Until you have a complete fund lineup, you do not really know what your costs are for the 403(b).

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