Met with School 403(b) Adviser: Need Clarification

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buccimane
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Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 11:21 am

Good morning all,

So today I met with a representative of TransAmerica, which is one of the companies that offers 403(b) plans. We went over a couple of things, and I would just like some clarification/advice on the information he provided.

Background of me:
24y/o
No debt
~7k Roth IRA with Vanguard (2060 Target Retirement)
Monthly rent soon to be $900
$50,000 annual income

The meeting was with my co-workers and the adviser.

1. The adviser (NOT fiduciary) told us that since we contribute to a pension plan, we are not able to contribute to a Traditional IRA on our own. I searched the IRS website and found this, which seemingly contradicts his statement:
You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work.
So is the adviser misleading us, or are we not able to fund a Traditional IRA on our own?


2. I received his fund 'manual' and all funds have a Plan Service Fee of 0.310%. In his list, the funds that interest me are:

Vanguard Total Stock Market Index Adm
Vanguard Mid-Cap Index Adm
Vanguard Small Cap Index Adm

One of my co-workers in interested in the JP Morgan SmartRetirement 2050 R2.

I'm assuming I would just be paying his Plan Service Fee of 0.310% as well as the fee for the respective funds. Is this correct? Do you have any suggestions/advice regarding the funds mentioned above? I know with my Roth IRA I am at a 90/10 allocation, and I have read quite a bit on here about Vanguard Mid-Cap Index being a good fund to diversify with.

The Adviser assured that there are no other funds besides the 0.310% service fund on his end. I assume I can trust him with that, and the only other cost incurred will be the Vanguard fee.

As always, I appreciate all the advice given on this forum. :sharebeer
A man convinced against his will is of the same opinion still

chevca
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Re: Met with School 403(b) Adviser: Need Clarification

Post by chevca » Tue Mar 13, 2018 11:30 am

Yes, you can contribute to a Traditional IRA. Having a workplace plan can factor into the IRA being deductible. That may be what they meant or said and there was misunderstanding. Or, they're hoping y'all don't know and just contribute to their plan.

Yes, you would pay the fee to the plan and the Vanguard fee (ER). So, with TSM being like .04 ER, you would pay .35 in total fees. Not great, but not the worst deal out there either. Choosing the low cost funds you like is probably well worth using the plan to save for retirement.

fposte
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Re: Met with School 403(b) Adviser: Need Clarification

Post by fposte » Tue Mar 13, 2018 11:40 am

buccimane wrote:
Tue Mar 13, 2018 11:21 am

1. The adviser (NOT fiduciary) told us that since we contribute to a pension plan, we are not able to contribute to a Traditional IRA on our own.
Wow, no, that's not right. And that's a pretty big thing to be wrong about.
The Adviser assured that there are no other funds besides the 0.310% service fund on his end. I assume I can trust him with that
I wouldn't. I'd confirm it by contacting whatever contact information is provided. Since Transamerica is an insurance company, I'd specifically ask if my investments would be in variable annuities and if there were any M&E fees. What expense ratios do they have for the Vanguard funds stated?

livesoft
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Re: Met with School 403(b) Adviser: Need Clarification

Post by livesoft » Tue Mar 13, 2018 11:56 am

You would probably want contribute to a Roth IRA anyways. Did the salesrep say anything about Roth IRAs?
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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 12:06 pm

livesoft wrote:
Tue Mar 13, 2018 11:56 am
You would probably want contribute to a Roth IRA anyways. Did the salesrep say anything about Roth IRAs?
No he didn't mention Roth IRA's, but I do plan on continuing my maximum contribution.
chevca wrote:
Tue Mar 13, 2018 11:30 am
Yes, you can contribute to a Traditional IRA. Having a workplace plan can factor into the IRA being deductible. That may be what they meant or said and there was misunderstanding. Or, they're hoping y'all don't know and just contribute to their plan.
Thank you, that's what I thought. I thought I might have misunderstood what he said, so I reiterated to him, "So we are not eligible to contribute to any Traditional IRA?" To which, he 'confirmed' that we cannot.
fposte wrote:
Tue Mar 13, 2018 11:40 am
I wouldn't. I'd confirm it by contacting whatever contact information is provided. Since Transamerica is an insurance company, I'd specifically ask if my investments would be in variable annuities and if there were any M&E fees. What expense ratios do they have for the Vanguard funds stated?
I did ask if it was a variable annuity, and he stated it was not- he only deals with mutual funds. The expense ratios for the Vanguard is 0.310% + Vanguard's fees.
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chevca
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Re: Met with School 403(b) Adviser: Need Clarification

Post by chevca » Tue Mar 13, 2018 12:07 pm

I would advise to avoid this adviser. :happy

Go it on your own.

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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 12:17 pm

chevca wrote:
Tue Mar 13, 2018 12:07 pm
I would advise to avoid this adviser. :happy

Go it on your own.
If that was an option, I would :(

Need to go through someone to enroll in the School's 403(b)
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fposte
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Re: Met with School 403(b) Adviser: Need Clarification

Post by fposte » Tue Mar 13, 2018 12:27 pm

buccimane wrote:
Tue Mar 13, 2018 12:06 pm

I did ask if it was a variable annuity, and he stated it was not- he only deals with mutual funds. The expense ratios for the Vanguard is 0.310% + Vanguard's fees.
I would still confirm it with somebody else. And when you say "Vanguard's fees," what is Transamerica listing as Vanguard's fees for those funds?

This may be still okay, but it's worth checking out. In addition, what other options for the 403b do you have aside from Transamerica?

Edit: I've found at least one Transamerica retirement flavor of Vanguard Total Stock Market that lists an ER of .79. That's why I'm asking what ER they give--they may fold their own fees into what's listed, so I'm trying to find out if you're getting the straight Vanguard .04 ER or not.
Last edited by fposte on Tue Mar 13, 2018 1:22 pm, edited 2 times in total.

livesoft
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Re: Met with School 403(b) Adviser: Need Clarification

Post by livesoft » Tue Mar 13, 2018 12:35 pm

buccimane wrote:
Tue Mar 13, 2018 12:06 pm
No he didn't mention Roth IRA's, but I do plan on continuing my maximum contribution.
So then the traditional IRA question was for other people in your company and not for you.
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KESP
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Re: Met with School 403(b) Adviser: Need Clarification

Post by KESP » Tue Mar 13, 2018 1:07 pm

Do you have an email for him? If so, I would shoot him an email and ask for confirmation of all fees you would pay if you signed with him. Tell him you are specifically interested in the Vanguard Total Stock Market Fund. Anyone who tells you that you can’t contribute to an IRA because you have a pension is either incompetent or trying to manipulate you. In either case, not good. IF the only fee is .31% plus the expense ratio of the Vanguard fund, that’s not awful for a 403b. Also, is it Vanguard Investor shares or Vanguard Admiral shares? In my 403b with Aspire I was able to choose Admiral shares without the $10,000 minimum. The expense ratio is lower than Investor shares. BTW, good for you for taking your investing seriously and doing it while you are young. Your 60 year old self will thank you! :beer

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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 1:28 pm

livesoft wrote:
Tue Mar 13, 2018 12:35 pm
buccimane wrote:
Tue Mar 13, 2018 12:06 pm
No he didn't mention Roth IRA's, but I do plan on continuing my maximum contribution.
So then the traditional IRA question was for other people in your company and not for you.
Yes, that is correct. I am asking that question out of concern for them. If I wanted to though, I could contribute to both a Roth and traditional I thought?
KESP wrote:
Tue Mar 13, 2018 1:07 pm
Do you have an email for him? If so, I would shoot him an email and ask for confirmation of all fees you would pay if you signed with him. Tell him you are specifically interested in the Vanguard Total Stock Market Fund. Anyone who tells you that you can’t contribute to an IRA because you have a pension is either incompetent or trying to manipulate you. In either case, not good. IF the only fee is .31% plus the expense ratio of the Vanguard fund, that’s not awful for a 403b. Also, is it Vanguard Investor shares or Vanguard Admiral shares? I
The fund has 'Adm' after it, so I assumed that meant it was Admiral? I'll have to ask him this to confirm. And I do plan on getting the breakdown in writing before I sign up for anything.

Thank you!
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BashDash
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Re: Met with School 403(b) Adviser: Need Clarification

Post by BashDash » Tue Mar 13, 2018 1:32 pm

Are you sure Transamerica is your only provider? For years, I thought I only had one provider only to find out there were actually 18 different providers! Do you have a third party administrator of the plans? They would have this info.

Do you have access to a 457 plan?

What state are you in?

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Re: Met with School 403(b) Adviser: Need Clarification

Post by Clever_Username » Tue Mar 13, 2018 1:35 pm

Yikes that's scary. I hope it's just incompetence on his part for saying you can't do a traditional IRA, or being slightly more generous, an assumption that you make more than you do.

There's a frequent contributor to this board that has written some very good information about retirement planning for teachers; I hope that person sees this thread and can help you out.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

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Re: Met with School 403(b) Adviser: Need Clarification

Post by livesoft » Tue Mar 13, 2018 1:52 pm

buccimane wrote:
Tue Mar 13, 2018 1:28 pm
livesoft wrote:
Tue Mar 13, 2018 12:35 pm
So then the traditional IRA question was for other people in your company and not for you.
Yes, that is correct. I am asking that question out of concern for them. If I wanted to though, I could contribute to both a Roth and traditional I thought?
Yes and no. The total contribution limit is $5500 combined (if under 50) , so if you max out Roth, then no contribution to tIRA allowed. Also, no point in making a non-deductible contribution to a tIRA if one can make a Roth IRA contribution. I suppose the Q&A session could have gotten into the non-deductibility question and backdoor Roth technique, since some colleagues are probably married and are over some income limits.
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krow36
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Re: Met with School 403(b) Adviser: Need Clarification

Post by krow36 » Tue Mar 13, 2018 1:58 pm

Bash Dash makes very good points. If your school is a public school, it's likely there is a list of possible providers. Look for it on the district website. The Third Party Administrator would also have this information. Your first chore should be to look over this list for a low-cost index mutual fund provider. It looks like you've found a fairly low-cost vendor, but there may be lower cost vendors on the list. Most districts also have a 457 plan list of vendors and you should check that out.

Many states have a 457 plan that is available to all school districts and has very low fees. It can be a better choice than the 403b plans offered. And of course teachers can contribute up to 18.5k to both a 403b and a 457 plan.

fposte
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Re: Met with School 403(b) Adviser: Need Clarification

Post by fposte » Tue Mar 13, 2018 2:11 pm

buccimane, I'm looking at your 403b thread from last year, and it looked like there might be a good plan for you through Lincoln. Did that not pan out or are you still considering that one too?

While if all things are equal a governmental 457 is probably preferable to a 403b, all things are almost never equal :-). Which is preferable will depend on the plans and policies in place with your district for each.

krow36
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Re: Met with School 403(b) Adviser: Need Clarification

Post by krow36 » Tue Mar 13, 2018 2:35 pm

buccimane's 403b thread from last year.
viewtopic.php?f=1&t=216207&p=3322334#p3322334

A current thread on the Lincoln Investment low-cost plan for NJ teachers:
http://board.403bwise.com/topic/6780-li ... nt-direct/

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Re: Met with School 403(b) Adviser: Need Clarification

Post by JoeRetire » Tue Mar 13, 2018 2:39 pm

buccimane wrote:
Tue Mar 13, 2018 11:21 am
The Adviser assured that there are no other funds besides the 0.310% service fund on his end. I assume I can trust him with that, and the only other cost incurred will be the Vanguard fee.
Read and understand the Plan Documents before you sign.
It doesn't matter what the "adviser" says - it only matters what the documents say.

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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 2:56 pm

fposte wrote:
Tue Mar 13, 2018 2:11 pm
buccimane, I'm looking at your 403b thread from last year, and it looked like there might be a good plan for you through Lincoln. Did that not pan out or are you still considering that one too?

While if all things are equal a governmental 457 is probably preferable to a 403b, all things are almost never equal :-). Which is preferable will depend on the plans and policies in place with your district for each.
Yes- I did look into it. It seemed to be a little over my head, and our district does not have a contact to help implement a plan on your own. We are an Urban district, and it seems none of our resources, website/otherwise, have been updated in the past 10 or so years. Given the low (in comparison) fee (0.310% + Vanguards %), I think it may be easier to select from a list of plans and have the implementation done by a professional.

I did mention to the adviser that I would prefer a 457(b) to avoid the potential 10% federal penalty of an early withdraw, and he said no one he has met with has chosen a 457 b over a 403b. To quote him, "the only reason to use a 457b is to invest more if you have met the 403b maximum". I plan on scheduling another meeting with him to see if the same plans are offered on the 457b side, and then go from there.
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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 3:07 pm

BashDash wrote:
Tue Mar 13, 2018 1:32 pm
Are you sure Transamerica is your only provider? For years, I thought I only had one provider only to find out there were actually 18 different providers! Do you have a third party administrator of the plans? They would have this info.

Do you have access to a 457 plan?

What state are you in?
Transamerica is not our only provider. We have about 8, and only 2 have responded to my request for a meeting/phonecall. As far as I know, there is no third party administrator. Everyone I have talked to has enrolled when a company representative has shown up to our office to enroll people on site. When I ask why they chose Company X, the answer is always, "because that is the representative that showed up".

I do have access to a 457(b) plan, and NJ.
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fposte
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Re: Met with School 403(b) Adviser: Need Clarification

Post by fposte » Tue Mar 13, 2018 3:14 pm

buccimane wrote:
Tue Mar 13, 2018 2:56 pm
fposte wrote:
Tue Mar 13, 2018 2:11 pm
buccimane, I'm looking at your 403b thread from last year, and it looked like there might be a good plan for you through Lincoln. Did that not pan out or are you still considering that one too?
Yes- I did look into it. It seemed to be a little over my head, and our district does not have a contact to help implement a plan on your own. We are an Urban district, and it seems none of our resources, website/otherwise, have been updated in the past 10 or so years. Given the low (in comparison) fee (0.310% + Vanguards %), I think it may be easier to select from a list of plans and have the implementation done by a professional.
As long as the ERs on the funds are low, that's not an unreasonable decision, IMHO. Have you confirmed in the plan documentation that the ERs are the same as directly from Vanguard? Because they aren't always.
I did mention to the adviser that I would prefer a 457(b) to avoid the potential 10% federal penalty of an early withdraw, and he said no one he has met with has chosen a 457 b over a 403b. To quote him, "the only reason to use a 457b is to invest more if you have met the 403b maximum". I plan on scheduling another meeting with him to see if the same plans are offered on the 457b side, and then go from there.
I really wouldn't be counting on his advice on financial planning generally, especially since he's proven to happily spread some significant misinformation. Stick to what he knows about Transamerica--and always confirm it with plan documents.

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buccimane
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Tue Mar 13, 2018 3:21 pm

fposte wrote:
Tue Mar 13, 2018 3:14 pm
As long as the ERs on the funds are low, that's not an unreasonable decision, IMHO. Have you confirmed in the plan documentation that the ERs are the same as directly from Vanguard? Because they aren't always.
I need to wait for the second meeting to see the full plan documentation. He does the contracts on a 1 on 1 basis for privacy. This is absolutely something I will look out for now- hadn't considered it before because he stated the ER is the same as any Vanguard offering, but who knows with him at this point.
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krow36
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Re: Met with School 403(b) Adviser: Need Clarification

Post by krow36 » Tue Mar 13, 2018 4:28 pm

buccimane wrote:
Tue Mar 13, 2018 2:56 pm
Yes- I did look into it. It seemed to be a little over my head, and our district does not have a contact to help implement a plan on your own. We are an Urban district, and it seems none of our resources, website/otherwise, have been updated in the past 10 or so years. Given the low (in comparison) fee (0.310% + Vanguards %), I think it may be easier to select from a list of plans and have the implementation done by a professional.
You must have noticed that this forum frequently suggests a simple 3 fund portfolio of total stock market, total international stock market and total bond market. Have you read the wiki on the 3 fund portfolio? Because it is so simple, it doesn't take "a professional" to help you implement it, and experienced help is available here on the forum.

Also frequently recommended is a single target retirement fund--a fund that is made up of 4 or more individual funds. Again, no professional needed. If the professional help was without cost, then it would be reasonable to make use of it. But if the face to face professional help costs you 0.31%, and there's another provider where no percentage fee is added to Vanguard's expense ratio fee, I think it's a serious mistake to pay that extra 0.31%.

Because you are a NJ teacher, you have the Lincoln Investing DIY plan available for both a 403b and a 457. A single $60 fee covers both of the plans—only $30 each. There are a lot of teachers in the US who would love to have these plans with the long list of Vanguard funds, many of which are Admiral class. Just saying. . .

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Re: Met with School 403(b) Adviser: Need Clarification

Post by texasdiver » Tue Mar 13, 2018 5:19 pm

I don't know about NJ but here in WA the state 457 plan for teacher is FAR superior than any of the for-profit 403(b) providers that we have available.

For example, I can invest in a S&P 500 index fund through my 457 plan for a fee of 3 basis points (0.0030%) which is getting into the same ballpark as the Federal Thrift Savings Plan.

http://www.drs.wa.gov/dcp/investments.htm

Every privately run 403(b) plan I have available has fees that are 150-times or more higher than that.

I would RUN as fast as you can from any "advisor" who is telling you to avoid the 457 plan if it is anything like what we have available in WA.

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Re: Met with School 403(b) Adviser: Need Clarification

Post by honduranhurricane » Tue Mar 13, 2018 5:58 pm

I agree that you may want to look at the 457 option. Back when we were married, I looked into my wife's (also a teacher) options and found the 457 MUCH better than the 403 option. There have been some recent changes to the 403, but I have not looked back (or regretted) on that decision.

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Re: Met with School 403(b) Adviser: Need Clarification

Post by krow36 » Tue Mar 13, 2018 7:06 pm

texasdiver wrote:
Tue Mar 13, 2018 5:19 pm
I don't know about NJ but here in WA the state 457 plan for teacher is FAR superior than any of the for-profit 403(b) providers that we have available.

For example, I can invest in a S&P 500 index fund through my 457 plan for a fee of 3 basis points (0.0030%) which is getting into the same ballpark as the Federal Thrift Savings Plan.

http://www.drs.wa.gov/dcp/investments.htm

Every privately run 403(b) plan I have available has fees that are 150-times or more higher than that.

I would RUN as fast as you can from any "advisor" who is telling you to avoid the 457 plan if it is anything like what we have available in WA.
NJ does have a state run 457 plan for state employees, state universities, etc., but not for K-12 employees. NJ school districts are down there with county, township etc. employees and are not eligible to use the state 457 plan. You shouldn’t torture NJ teachers with how good the WA state 457 is. :wink:
Besides, they have access to the Lincoln Investment DIY 457 which is very low cost and good enough. :D
http://www.state.nj.us/treasury/pensions/njsedcp.shtml
ELIGIBILITY FOR ENROLLMENT
To enroll in the NJSEDCP, you must be employed by the State of New Jersey or an eligible agency, authority, commission, or instrumentality of state government.
If you are employed through a county, township, or municipality and not paid directly by the State of New Jersey or one of its agencies, you are NOT eligible for the NJSEDCP.

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Re: Met with School 403(b) Adviser: Need Clarification

Post by facepalm » Tue Mar 13, 2018 10:49 pm

Since this was never answered directly (that I can tell), I'll just mention that the adviser was correct in one regard: as a public school employee, you cannot contribute to a 401(K). 403, yes.

I would contact human resources and find out who else offers 403 plans to your district, and look at the fee structure and offerings for each. Then compare them. There is no rush here, so don't let the adviser pressure you into signing anything. That would be the only reason they would schedule a follow up, BTW. If you just needed info they could e-mail it to you.

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Re: Met with School 403(b) Adviser: Need Clarification

Post by gusan » Tue Mar 13, 2018 11:38 pm

Wish I was half as smart and diligent at 24 as you!!

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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Wed Mar 14, 2018 7:46 am

facepalm wrote:
Tue Mar 13, 2018 10:49 pm
Since this was never answered directly (that I can tell), I'll just mention that the adviser was correct in one regard: as a public school employee, you cannot contribute to a 401(K). 403, yes.

I would contact human resources and find out who else offers 403 plans to your district, and look at the fee structure and offerings for each. Then compare them. There is no rush here, so don't let the adviser pressure you into signing anything. That would be the only reason they would schedule a follow up, BTW. If you just needed info they could e-mail it to you.
Funny thing, we ARE human resources :oops: .. In such a large district, each function of HR is departmentalized. Unfortunately, as stated above there is no designated 403(b) plan representative. We do have a list of providers, and Transamerica seems to be the best option.
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Wed Mar 14, 2018 7:54 am

krow36 wrote:
Tue Mar 13, 2018 4:28 pm
Have you read the wiki on the 3 fund portfolio? Because it is so simple, it doesn't take "a professional" to help you implement it, and experienced help is available here on the forum.
Deciding on funds is not the professional help I am referring to. Implementing deductions and coordinating with payroll is the main issue, for the reasons previously stated.
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Re: Met with School 403(b) Adviser: Need Clarification

Post by CyclingDuo » Wed Mar 14, 2018 9:23 am

buccimane wrote:
Tue Mar 13, 2018 3:07 pm
BashDash wrote:
Tue Mar 13, 2018 1:32 pm
Are you sure Transamerica is your only provider? For years, I thought I only had one provider only to find out there were actually 18 different providers! Do you have a third party administrator of the plans? They would have this info.

Do you have access to a 457 plan?

What state are you in?
Transamerica is not our only provider. We have about 8, and only 2 have responded to my request for a meeting/phonecall. As far as I know, there is no third party administrator. Everyone I have talked to has enrolled when a company representative has shown up to our office to enroll people on site. When I ask why they chose Company X, the answer is always, "because that is the representative that showed up".

I do have access to a 457(b) plan, and NJ.
The .31% wrap/administrative fee is a bit on the high end, but not a total deal breaker (depending on the underlying funds' ER fees). We pay a .18% wrap/administrative fee to VALIC for our 403b and 457b (voluntary plans over and beyond the mandatory pension).

Do your homework and look into all 8 plans, as well as the 457b plan. Make a list of the total costs (fund ER fees + administrative wrap fees) to see where the best "deal" for you is. It might be one of the 403b plans, or it might be the 457b plan.

Our state does a nice job of providing a chart for us to compare plans. If you cannot find a similar comparative chart, then make your own spreadsheet using the lowest cost index funds to see what the administrative wrap fee + the underlying fund fees would be so you can compare all 8 plans and the 457b. (We use both 403b and 457b plans).

Image

We also have additional options for a self-directed brokerage account through Schwab and TDAmeritrade, and at least 4 other 403b plans than the chart lists above. You may have to dig deep for all of the options available to you, but HR should be able to point you in all of the right directions for your research. Our guess is there are at least 2 or 3 that would be very similar in cost. Make sure to check out their websites as well for additional information.

Best of fortune to you and getting it all figured out. You might want to post up links and the data you collect in this thread if you need any of us to chime in and offer advice/support/suggestions.

Typical way to go about it is you sign up on the providers website for your 403b (or the 457b), choose whether or not it is a Roth or Traditional 403b or 457b, select the funds and percentages. That process, after you sign up, happens pretty quick (a few days) to get it all set up and ready. Then you get the form online or from your employer for the salary deduction. They are usually able to get it going with the next payroll, but they will tell you if it will take longer (I can't imagine it taking longer than 2 weeks, but who knows...). You will just have to decide how much you can afford to contribute and still meet all of your expenses/needs. Since you are only age 24, the power of time & compounding will work wonders for you - so no need to go into too deep.

Could you afford to contribute $300 - $500 a month? Your overall plan should consider how much of your salary goes to the pension, how much you are saving in the Roth IRA, and how much you contribute to the 403b/457b. You don't want to overdo it and not have enough to pay rent/food/transportation/discretionary, but at least save enough to get you well underway to accumulating.

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mhadden1
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Re: Met with School 403(b) Adviser: Need Clarification

Post by mhadden1 » Wed Mar 14, 2018 9:47 am

buccimane wrote:
Tue Mar 13, 2018 11:21 am
1. The adviser (NOT fiduciary) told us that since we contribute to a pension plan, we are not able to contribute to a Traditional IRA on our own.
Some other posts have hammered this adviser a bit. I am quite sure he meant that the employer plan prevented tax-deductible contributions to a traditional (non-Roth) IRA, which is true. This would make a Roth the superior non-deductible alternative for nearly all these teachers, which he apparently failed to mention. I know it's possible that some could have income limits and such to deny Roth access, but I bet that percentage is imperceptibly small.

I agree that advisers should speak very accurately, and with a few more words this adviser could have described more of the whole range of tIRA and Roth possibilities.

Full discosure: Coming to the defense of one of these advisers is uncharted territory for me. :happy
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Re: Met with School 403(b) Adviser: Need Clarification

Post by buccimane » Wed Mar 14, 2018 10:23 am

CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
Could you afford to contribute $300 - $500 a month? Your overall plan should consider how much of your salary goes to the pension, how much you are saving in the Roth IRA, and how much you contribute to the 403b/457b. You don't want to overdo it and not have enough to pay rent/food/transportation/discretionary, but at least save enough to get you well underway to accumulating.

I was thinking $75 a paycheck, so $150 a month to begin with.
CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
choose whether or not it is a Roth or Traditional 403b or 457b
This would have to be a traditional 403b I am assuming, because I already contribute the Maximum $5,500 to my separate Roth.

So that is $150 pre-tax (403(b) contribution) + $458 (Roth IRA) = $608 monthly. I also pay ~7% (~$100) per paycheck into the State Pension fund.

Right now I am fortunate enough to still be covered under my parents' health insurance. This will discontinue in 2 years, at which point I will most likely have to cut down my contributions.
CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
but HR should be able to point you in all of the right directions for your research.
Believe it or not, we are HR :shock: . There is no person dedicated to handling the plans for us. Most have little or no information.
mhadden1 wrote:
Wed Mar 14, 2018 9:47 am
I am quite sure he meant that the employer plan prevented tax-deductible contributions to a traditional (non-Roth) IRA, which is true.
I asked him two times to clarify, because I assumed he was incorrect. Both times, he explicitly stated that you CANNOT contribute to a separate IRA if you are contributing to a pension plan per IRS. When he reiterated this, my co-worker glanced at me because we have discussed contributions to a tIRA previously.

But that is in the past now that I am armed with the correct information...
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Re: Met with School 403(b) Adviser: Need Clarification

Post by mhadden1 » Wed Mar 14, 2018 1:00 pm

buccimane wrote:
Wed Mar 14, 2018 10:23 am
mhadden1 wrote:
Wed Mar 14, 2018 9:47 am
I am quite sure he meant that the employer plan prevented tax-deductible contributions to a traditional (non-Roth) IRA, which is true.
I asked him two times to clarify, because I assumed he was incorrect. Both times, he explicitly stated that you CANNOT contribute to a separate IRA if you are contributing to a pension plan per IRS. When he reiterated this, my co-worker glanced at me because we have discussed contributions to a tIRA previously.
Boy was that defense ever misguided. Wow, just wow. I just re-learned a lesson about financial salespeople.
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Re: Met with School 403(b) Adviser: Need Clarification

Post by CyclingDuo » Wed Mar 14, 2018 3:58 pm

buccimane wrote:
Wed Mar 14, 2018 10:23 am
CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
Could you afford to contribute $300 - $500 a month? Your overall plan should consider how much of your salary goes to the pension, how much you are saving in the Roth IRA, and how much you contribute to the 403b/457b. You don't want to overdo it and not have enough to pay rent/food/transportation/discretionary, but at least save enough to get you well underway to accumulating.

I was thinking $75 a paycheck, so $150 a month to begin with.

That's a good start to couple with your pension. :sharebeer


CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
choose whether or not it is a Roth or Traditional 403b or 457b
This would have to be a traditional 403b I am assuming, because I already contribute the Maximum $5,500 to my separate Roth.

Not true. You can max out a Roth 403b and a Roth IRA as long as you have earned income and meet the IRS guidelines for not making "too much" money.

So that is $150 pre-tax (403(b) contribution) + $458 (Roth IRA) = $608 monthly. I also pay ~7% (~$100) per paycheck into the State Pension fund.

You are doing great! That's 14.5% of your gross which is good. Add on the employer match and you should be well over 15% of gross which is really good for your age.


Right now I am fortunate enough to still be covered under my parents' health insurance. This will discontinue in 2 years, at which point I will most likely have to cut down my contributions.
CyclingDuo wrote:
Wed Mar 14, 2018 9:23 am
but HR should be able to point you in all of the right directions for your research.
Believe it or not, we are HR :shock: . There is no person dedicated to handling the plans for us. Most have little or no information.
That's too bad. Maybe you should assemble a document, or folder with all of the information so it is one place for employees.
buccimane wrote:
Wed Mar 14, 2018 10:23 am
mhadden1 wrote:
Wed Mar 14, 2018 9:47 am
I am quite sure he meant that the employer plan prevented tax-deductible contributions to a traditional (non-Roth) IRA, which is true.
I asked him two times to clarify, because I assumed he was incorrect. Both times, he explicitly stated that you CANNOT contribute to a separate IRA if you are contributing to a pension plan per IRS. When he reiterated this, my co-worker glanced at me because we have discussed contributions to a tIRA previously.

But that is in the past now that I am armed with the correct information...
That's not true - as long as you are within the IRS income limits to be able to contribute to a Roth IRA. My wife has a 401a pension (mandatory state pension), maxes out her 403b, maxes out her 457b, and her Roth IRA. It's all legal, but that means a few meals out less per year. :mrgreen:
Last edited by CyclingDuo on Wed Mar 14, 2018 4:22 pm, edited 1 time in total.
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Re: Met with School 403(b) Adviser: Need Clarification

Post by mickeyd » Wed Mar 14, 2018 4:21 pm

When I ask why they chose Company X, the answer is always, "because that is the representative that showed up''
As an ex-salesman, this gets me to chuckling.
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