Help with 403b allocations

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cjb
Posts: 9
Joined: Wed Apr 04, 2018 8:48 am

Help with 403b allocations

Post by cjb » Fri Aug 03, 2018 12:44 pm

Please help with deciding which allocation and funds are best in my 403b choices. Shown below are the funds in order of least to highest.

FUND ASSET CLASS COST
Voya Intermediate Bond Portfolio - Class I Bonds 0.54
Voya Index Plus MidCap Portfolio - Class I Small/Mid/Specialty 0.54
Voya Index Plus SmallCap Portfolio - Class I Small/Mid/Specialty 0.55
Voya International Index Portfolio - Class I Global / International 0.55
Fidelity VIP Equity-Income Portfolio - Initial Class Large Cap Value 0.59
Fidelity VIP Growth Portfolio - Initial Class Large Cap Growth 0.64
American Funds Fundamental Investors® - Class R-4 Large Cap Value 0.65
VY® Invesco Equity and Income Portfolio - Initial Class Balanced 0.68
Voya Large Cap Value Portfolio - Institutional Class Large Cap Value 0.75
VY® Oppenheimer Global Portfolio - Initial Class Global / International 0.75
Voya MidCap Opportunities Portfolio - Class I Small/Mid/Specialty 0.78
American Funds EuroPacific Growth Fund - Class R-4 Global / International 0.85
Voya SmallCap Opportunities Portfolio - Class I Small/Mid/Specialty 0.88
Franklin Small Cap Value VIP Fund - Class 2 Small/Mid/Specialty 0.92
VY® Templeton Foreign Equity Portfolio - Initial Class Global / International 0.96
Wanger Select - 820 Small/Mid/Specialty 0.97

Notes:

Emergency funds: Three months of expenses
Debt: mortgage only
Age: Early 40's
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 40% of stocks ( not sure what percent is best, some help with this would be good)
I max out by Roth IRA with a 75% / 25% split of VTSAX / VTIAX

PFInterest
Posts: 2518
Joined: Sun Jan 08, 2017 12:25 pm

Re: Help with 403b allocations

Post by PFInterest » Fri Aug 03, 2018 1:33 pm

kind of gross.
i guess you are doing 20% voya bond, then fill out the rest with mid cap/small cap. i only see large cap value/growth which im not too thrilled about.
then you can make the IRA s&p to complement, and total intl.

ExitStageLeft
Posts: 971
Joined: Sat Jan 20, 2018 4:02 pm

Re: Help with 403b allocations

Post by ExitStageLeft » Fri Aug 03, 2018 1:48 pm

The Voya Index funds look to be your best option. The absence of a total market fund or even an S&P 500 fund makes it a bit of a challenge. I would start with 100% Voya Intermediate Bond until you get up to your desired bond allocation.

Once you reach that point I would shift contributions to a mix of bonds and Voya International Index. Adjust your IRA balance to where you have VTSAX and a bit of Vanguard Emerging Markets (VEIEX). VEIEX percentage should be about 1/3 of the Voya International percentage.

Once you have all of your international in the 401k its time to start building US stocks. I think I would focus on small cap in the 401k and shift the Roth IRA from VTSAX to VFIAX.

Assuming an 80/20 AA, eventually you would get to a portfolio that has

45% US equity S&P 500
15% US equity small cap
15% International developed markets
5% International emerging markets
20% Bonds

Here's a comparison of that with a Vanguard three-fund portfolio: https://www.portfoliovisualizer.com/bac ... tion9_2=10

Or here is one with a blend os the Voya mid-cap and small-cap: https://www.portfoliovisualizer.com/bac ... tion9_2=10

You'll have to keep up the IRA contributions. Eventually you'll have to do buy some large cap fund in the 401k. If the options don't change I would put it off as long as possible.

BashDash
Posts: 584
Joined: Mon Nov 28, 2016 12:31 pm

Re: Help with 403b allocations

Post by BashDash » Fri Aug 03, 2018 2:16 pm

Are you a teacher? Is Voya your only provider of the 403b? I thought they were my only option but they weren't.

cjb
Posts: 9
Joined: Wed Apr 04, 2018 8:48 am

Re: Help with 403b allocations

Post by cjb » Sat Aug 04, 2018 4:25 pm

Thanks for all the advise. Yes, I'm a teacher. I thought Voya was my only option but looking further I see VALIC and Empower. I'll research these further.

Doctor Rhythm
Posts: 166
Joined: Mon Jan 22, 2018 3:55 am

Re: Help with 403b allocations

Post by Doctor Rhythm » Sat Aug 04, 2018 6:42 pm

Not to derail the topic, but does anyone know why the retirement plan for not-very-well-paid public employees, most of whom having little recourse to sound financial advice, would offer such a terrible selection of high-cost funds? Who (besides the fund provider) benefits from structuring a retirement plan this way?

texasdiver
Posts: 2719
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Help with 403b allocations

Post by texasdiver » Sun Aug 05, 2018 1:40 am

Doctor Rhythm wrote:
Sat Aug 04, 2018 6:42 pm
Not to derail the topic, but does anyone know why the retirement plan for not-very-well-paid public employees, most of whom having little recourse to sound financial advice, would offer such a terrible selection of high-cost funds? Who (besides the fund provider) benefits from structuring a retirement plan this way?
This New York Times article answers your question better than I can: https://www.nytimes.com/2016/10/23/your ... chers.html

Bottom line? As a former teacher I suspect it is a combination of the following:

1. Most if not all teachers have mandatory traditional pension plans that are viewed as the primary retirement vehicle for teachers in most states, so the 403(b) plan is something of an after thought for most districts as not many teachers tend to use them compared to in the private sector where the 401(k) is often the main and only retirement plan and therefore gets much more attention.

2. The annuity sales companies are very sophisticated and have extensive sales teams in every state and region. The low paid and often poorly educated HR staff at most school districts essentially get rolled by their sophisticated presentations and argument that their hands-on approach (for a commission of course) is best for most teachers. In my experince it is often clerical staff who deal with these sorts of benefits issues and often they don't really know anything about retirement planning at all.

3. The financial services industry does a good job of lobbying most state legislatures where these decisions are made and no one is really there to argue the other side.

4. The unions have a vested conflict of interest in the status quo as they often get a commission cut from annuity sales through providers that they endorse.

Doctor Rhythm
Posts: 166
Joined: Mon Jan 22, 2018 3:55 am

Re: Help with 403b allocations

Post by Doctor Rhythm » Sun Aug 05, 2018 4:17 am

texasdiver wrote:
Sun Aug 05, 2018 1:40 am
Doctor Rhythm wrote:
Sat Aug 04, 2018 6:42 pm
Not to derail the topic, but does anyone know why the retirement plan for not-very-well-paid public employees, most of whom having little recourse to sound financial advice, would offer such a terrible selection of high-cost funds? Who (besides the fund provider) benefits from structuring a retirement plan this way?
This New York Times article answers your question better than I can: https://www.nytimes.com/2016/10/23/your ... chers.html
Thank you for the NYT link. I had a suspicion it was something like that - pretty nauseating, actually.

cjb
Posts: 9
Joined: Wed Apr 04, 2018 8:48 am

Re: Help with 403b allocations

Post by cjb » Sun Aug 05, 2018 10:46 pm

So luckily "Empower" which I hadn't heard of, seems to have some better options. Of the ones listed below I think I can get all I need from just 3 funds

Fidelity(R) Total Market Index Investor 0.09%
Vanguard FTSE All-Wld ex-US Idx Instl 0.10%
Vanguard Total Bond Market Index Adm 0.05%


Empower Funds Available

Broad International Equity

American Funds Europacific Growth R6 .50%
Vanguard FTSE All-Wld ex-US Idx Instl .10%

All-Cap US Equity

Fidelity(R) Total Market Index Investor .09%

Small-Mid Cap Value

CRM Small/Mid Cap Value Inst .94%

Small-Mid Cap Growth

Dreyfus/The Boston Co Sm/Md Cp Gr I .75%

Large Cap Value

MFS(R) Value R4 .59%

Large Cap Growth

American Funds Growth Fund of Amer R6 .33%

Inflation Protected Bonds

Vanguard Inflation-Protected Secs Adm .10%

Core Fixed Income

Vanguard Total Bond Market Index Adm .05%

Core Plus Fixed Income

PIMCO Total Return Instl .51%

Doctor Rhythm
Posts: 166
Joined: Mon Jan 22, 2018 3:55 am

Re: Help with 403b allocations

Post by Doctor Rhythm » Mon Aug 06, 2018 12:03 am

cjb wrote:
Sun Aug 05, 2018 10:46 pm
So luckily "Empower" which I hadn't heard of, seems to have some better options. Of the ones listed below I think I can get all I need from just 3 funds

Fidelity(R) Total Market Index Investor 0.09%
Vanguard FTSE All-Wld ex-US Idx Instl 0.10%
Vanguard Total Bond Market Index Adm 0.05%
Completely agree - three solid, broad, easy to understand, and low cost funds. In fact, the ER for the Fidelity total market fund just dropped to 0.015% this week.

PFInterest
Posts: 2518
Joined: Sun Jan 08, 2017 12:25 pm

Re: Help with 403b allocations

Post by PFInterest » Mon Aug 06, 2018 6:57 am

cjb wrote:
Sun Aug 05, 2018 10:46 pm
So luckily "Empower" which I hadn't heard of, seems to have some better options. Of the ones listed below I think I can get all I need from just 3 funds

Fidelity(R) Total Market Index Investor 0.09%
Vanguard FTSE All-Wld ex-US Idx Instl 0.10%
Vanguard Total Bond Market Index Adm 0.05%


Empower Funds Available

Broad International Equity

American Funds Europacific Growth R6 .50%
Vanguard FTSE All-Wld ex-US Idx Instl .10%

All-Cap US Equity

Fidelity(R) Total Market Index Investor .09%

Small-Mid Cap Value

CRM Small/Mid Cap Value Inst .94%

Small-Mid Cap Growth

Dreyfus/The Boston Co Sm/Md Cp Gr I .75%

Large Cap Value

MFS(R) Value R4 .59%

Large Cap Growth

American Funds Growth Fund of Amer R6 .33%

Inflation Protected Bonds

Vanguard Inflation-Protected Secs Adm .10%

Core Fixed Income

Vanguard Total Bond Market Index Adm .05%

Core Plus Fixed Income

PIMCO Total Return Instl .51%
well that fixed that problem. much better.
youll have to figure out your AA as you didnt give us the total value info.

ExitStageLeft
Posts: 971
Joined: Sat Jan 20, 2018 4:02 pm

Re: Help with 403b allocations

Post by ExitStageLeft » Mon Aug 06, 2018 11:46 am

That's good news. My wife's 457b is with Empower, they are a re-branding of Great West. Fund selection is great but her plan has a 0.2% admin fee. Ugh!

cjb
Posts: 9
Joined: Wed Apr 04, 2018 8:48 am

Re: Help with 403b allocations

Post by cjb » Mon Aug 06, 2018 9:55 pm

Thanks again all. I'll have to check that there aren't any hidden fees like admin or deposit fees with Empower.

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