VALIC 457 options - which to potentially choose?

[TeacherLearns2Invest]

Newbie logging on and posting for 1st time seeking input re: 457 options available through my school district administered by VALIC.

Listed my options based on document received---and open to getting input from collective wisdom here re: any of these that would be worth researching further?


I was getting interested in Schwab PCRA and then read some favorable comments in other postings.

Fund Name + Ticker (edited with expense ratios --- thanks for the clarification!)

Administrative fees waived: "Plan administrative fees have been waived for all district employees. Fund Annual Operating Expenses apply, depending on the mutual fund chosen and are described in the prospectus."

1. American Funds American Mutual Fund RMFCX (0.95%; annual operating expense per $1000 = $9.50)

2. American Funds EuroPacific Growth Fund RERCX (1.13%; $11.30)

3. BNY Mellon Insight Core Plus Fund DCPIX (1.98%; $4.50)

4. Dreyfus Mid Cap Index Fund PESPX (0.51%; $5.00)

5. Dreyfus S&P 500 Index Fund PEOPX (0.51%; $5.00)

6. Dreyfus Small Cap Stock Index Fund DISSX (0.51%; $5.00)

7. Dreyfus Intermediate Term Income Fund DITIX (0.61%; $5.50)

8. JP Morgan Government Bond HLGAX (0.70%; $4.80)

9. JP Morgan Small Cap Value Fund PSOAX (1.3%; $12.40)

10. JP Morgan Small Cap Growth Fund OGGFX (1.07%; $10.30)

11. MFS International Value Fund MGIAX (0.98%; $9.80)

12. Neuberger Berman Real Estate Fund NBRFX (1.42%; $14.20)

13. Schwab PCRA SPCRA (need to find this info)

14. T. Rowe Price Retirement 2055 Fund PAROX (0.97%; $9.70)

15. T. Rowe Price Retirement Balance Fund PARIX (0.77%; $7.70)

16. T. Rowe Price Retirement 2025 Fund PARHX (0.81%; $8.90)

17. Valic VC II Socially Responsible VCSRX (0.61%; $5.60)

18. Wells Fargo Growth Fund SGRKX (1.1%; $9.60)

19. Wells Fargo Stable Return Fund WFSRN (1.33%; $13.27)

I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

THANK YOU ALL FOR CHIMING IN. Looking forward to reading further and continuing this new learning journey for myself to get re-situated and re-centered with my finances.

Sincerely,
TeacherLearns2Invest

[Dug]

I work for a school district and worked with our 3rd party administrator to get a Fidelity 457b plan. It has a wide selection of low cost plans. Be careful with Valic as they will want to sign you up with an annuity plan and their ER are high.

[TeacherLearns2Invest]

I work for a school district and worked with our 3rd party administrator to get a Fidelity 457b plan. It has a wide selection of low cost plans. Be careful with Valic as they will want to sign you up with an annuity plan and their ER are high.

Thanks for your input.
I would definitely prefer Fidelity 457 but right now the VALIC partnership with district seems to be a newly established one. I had looked into VALIC a few months ago and let it go because of the annuities focus and fees. Sending it around here in case I am missing something given that 457s are generally well-liked and hoping there's something within what's available to me to look into further.

[terran]

If you could do the legwork of looking up and posting expense ratio's for the funds you'll get more and more helpful responses. Without that, anything with "index" or something like it ("IDX" for example) in the name is the first place I would look such as the BNY Mellon funds.

[ruralavalon]

Newbie logging on and posting for 1st time seeking input re: 457 options available through my school district administered by VALIC.

Listed my options based on document received---and open to getting input from collective wisdom here re: any of these that would be worth researching further?


I was getting interested in Schwab PCRA and then read some favorable comments in other postings.

Fund Name + Ticker
1. Amer Funds Amer Mut R3 RMFCX
2. Amer Funds Europac R3 RERCX
3. BNY Mellon Insight Core Plus I DCPIX
4. BNY Mellon Mid Cap Index Inves PESPX
5. BNY Mellon S&P 500 Index PEOPX
6. BNY Mellon SML Cap STK IDX INV DISSX
7. Dreyfus Interm Term Income I DITIX
8. JP Moran Government Bond I HLGAX
9. JP Morgan SM CAP VAL A PSOAX
10. JP Moran SM CP GR I OGGFX
11. MFS INTL VALUE A MGIAX
12. Neuberg Ber Real Estate Trust NBRFX
13. Schwab PCRA SPCRA
14. T. Rowe Price RTMT 2055 ADV PAROX
15. T. Rowe Price Ret Inc ADV PARIX
16. VC II Socially Response VCSRX
17. Wells Fargo Growth Admin SGRKX
18. Wells Fargo Stable VAL N WFSRN

I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

THANK YOU ALL FOR CHIMING IN. Looking forward to reading further and continuing this new learning journey for myself to get re-situated and re-centered with my finances.

Sincerely,
TeacherLearns2Invest

Please add the ticker symbols and expense ratios as charged in this 457 plan. Also are there any additional fees charged, like administrative or recordkeeping fees?

Please just use the edit button (the pencil icon near the upper right corner of your post) to add this information to your original post.

Expense ratios are a primary factor in fund selection. Low expense ratios are critical to long-term investing performance. Seemingly small annual fees have a large cumulative impact over time. Here is a calculator you could use to estimate the impact of investing expenses. Bankrate.com, "Mutual fund fees calculator".

Also, low expense ratios are the best predictor of future performance. Morningstar, 8/9/10 . “If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.” “Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.”

"The expense ratio is the most proven predictor of future fund returns." "There are many other things to consider, but investors should make expense ratios their first or second screen." Morningstar, 5/5/18.

[sometimesinvestor]

Surprised there is no stable income fund. Did you include all funds or just the funds you felt were worth while

[mhadden1]

I was getting interested in Schwab PCRA

I use a Schwab PCRA via my 401k for the majority of my retirement investing. Schwab offers very inexpensive index funds that are Bogleheads approved. The wiki page about the Three Fund Portfolio lists the Schwab funds to use - https://www.bogleheads.org/wiki/Three-f ... head-style

Good luck!

[TeacherLearns2Invest]

If you could do the legwork of looking up and posting expense ratio's for the funds you'll get more and more helpful responses. Without that, anything with "index" or something like it ("IDX" for example) in the name is the first place I would look such as the BNY Mellon funds.

Thanks Terran, just added the Expense Ratios with the Annual Operating Expense per $1000 from the Fund Fact Sheet link I was provided through VALIC.)

[TeacherLearns2Invest]

Newbie logging on and posting for 1st time seeking input re: 457 options available through my school district administered by VALIC.

Listed my options based on document received---and open to getting input from collective wisdom here re: any of these that would be worth researching further?


I was getting interested in Schwab PCRA and then read some favorable comments in other postings.

1. American Funds American Mutual Fund RMFCX (0.95%; annual operating expense per $1000 = $9.50)

2. American Funds EuroPacific Growth Fund RERCX (1.13%; $11.30)

3. BNY Mellon Insight Core Plus Fund DCPIX (1.98%; $4.50)

4. Dreyfus Mid Cap Index Fund PESPX (0.51%; $5.00)

5. Dreyfus S&P 500 Index Fund PEOPX (0.51%; $5.00)

6. Dreyfus Small Cap Stock Index Fund DISSX (0.51%; $5.00)

7. Dreyfus Intermediate Term Income Fund DITIX (0.61%; $5.50)

8. JP Morgan Government Bond HLGAX (0.70%; $4.80)

9. JP Morgan Small Cap Value Fund PSOAX (1.3%; $12.40)

10. JP Morgan Small Cap Growth Fund OGGFX (1.07%; $10.30)

11. MFS International Value Fund MGIAX (0.98%; $9.80)

12. Neuberger Berman Real Estate Fund NBRFX (1.42%; $14.20)

13. Schwab PCRA SPCRA (need to find this info)

14. T. Rowe Price Retirement 2055 Fund PAROX (0.97%; $9.70)

15. T. Rowe Price Retirement Balance Fund PARIX (0.77%; $7.70)

16. T. Rowe Price Retirement 2025 Fund PARHX (0.81%; $8.90)

17. Valic VC II Socially Responsible VCSRX (0.61%; $5.60)

18. Wells Fargo Growth Fund SGRKX (1.1%; $9.60)

19. Wells Fargo Stable Return Fund WFSRN (1.33%; $13.27)
I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

THANK YOU ALL FOR CHIMING IN. Looking forward to reading further and continuing this new learning journey for myself to get re-situated and re-centered with my finances.

Sincerely,
TeacherLearns2Invest

Please add the ticker symbols and expense ratios as charged in this 457 plan. Also are there any additional fees charged, like administrative or recordkeeping fees?

Please just use the edit button (the pencil icon near the upper right corner of your post) to add this information to your original post.

Expense ratios are a primary factor in fund selection. Low expense ratios are critical to long-term investing performance. Seemingly small annual fees have a large cumulative impact over time. Here is a calculator you could use to estimate the impact of investing expenses. Bankrate.com, "Mutual fund fees calculator".

Also, low expense ratios are the best predictor of future performance. Morningstar, 8/9/10 . “If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.” “Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.”

"The expense ratio is the most proven predictor of future fund returns." "There are many other things to consider, but investors should make expense ratios their first or second screen." Morningstar, 5/5/18.

Thanks RuralAvalon --- added Expense Ratios! The administrative fees, according to district document, are to be waived. Thanks for the additional links re: understanding expense ratios. Looks like the lowest expense ratio from the list of funds available is 0.50%.

[fposte]

Even with expenses waived, the fund expenses are higher than necessary in the VALIC funds. The Schwab PCRA seems by far the best option in there. I'm guessing there's no other provider available to you in the 457?

You also say you "have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings"--do you mean there's an actual date in which this new provider will be available? If not, I wouldn't necessarily hold out for that provider to be added--what other providers do you have available for your 403b right now?

[TeacherLearns2Invest]

Even with expenses waived, the fund expenses are higher than necessary in the VALIC funds. The Schwab PCRA seems by far the best option in there. I'm guessing there's no other provider available to you in the 457?

You also say you "have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings"--do you mean there's an actual date in which this new provider will be available? If not, I wouldn't necessarily hold out for that provider to be added--what other providers do you have available for your 403b right now?

Hi FPoste, the 457 funds listed are all the ones available to me through VALIC.

RE: new 403b
Based on recent district personnel update, the new 403b provider will hopefully be approved and available by the time summer ends...hopefully. Legal contracts and agreements are in the works.

I specifically requested the index funds available and here's the info provided:
Vanguard 500 Index VFIAX (0.04% fee as of 3/31/19 )
Vanguard Extended Market Index VEXAS (0.08%)
Vanguard Total Int'l Stock Index VTIAX (0.11%)
Vanguard Total Bond Market Index VBTLX (0.05%)
PIMCO Diversified Income PDIIX (0.77%)
Vanguard Inflation Protected VAIPX (0.10%)
Vanguard Federal Money Market Fund VMFXX (0.11%)

These expense ratios are definitely so much less than the funds from VALIC.
I am in the process of getting info about Schwab PCRA.

[ruralavalon]

Listed my options based on document received---and open to getting input from collective wisdom here re: any of these that would be worth researching further?

. . . . .

Administrative fees waived: "Plan administrative fees have been waived for all district employees. Fund Annual Operating Expenses apply, depending on the mutual fund chosen and are described in the prospectus."

In your 457 plan the only fund I would clearly be interested be interested in using is Dreyfus S&P 500 Index Fund (PEOPX) ER 0.51%, and perhaps Dreyfus Small Cap Stock Index Fund (DISSX) ER 0.51%. The expense ratios are classified as "low" by Morningstar, I would call them moderate.

The Schwab Personal Choice Retirement Account (PCRA) might be useful, depending on costs to use. What fees are charged to use the PCRA? There may be an annual fee, a per transaction fee, or both.

RE: new 403b
Based on recent district personnel update, the new 403b provider will hopefully be approved and available by the time summer ends...hopefully. Legal contracts and agreements are in the works.

In my opinion the funds to consider using in your new 403b plan include:
1) Vanguard 500 Index (VFIAX) ER 0.04%;
2) Vanguard Extended Market Index (VEXAS) ER 0.08% (optional);
3) Vanguard Total Int'l Stock Index (VTIAX) ER0.11%; and
4) Vanguard Total Bond Market Index (VBTL ER 0.05%.

I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

If the expected 403b changes come through, then I suggest prioritizing contributions to the 403b over contributions to the 457b. You can contribute to both, up to $19k/yr to each, for a total of $38k/yr.

About how much (in dollars) do you feel that you might be able to contribute annually (total, all accounts)?

Is your teachers pension in addition to Social Security?

Does the 403b plan, or 457b plan, or both permit Roth contributions?

What is the current balance in your 403b account?

About how many years until expected retirement?

What is your current tax bracket, both federal and state?

[fposte]

A 457 has some advantages, but if your new 403b provider has the funds you list at the ERs you list, I'd throw all my savings into the 403b unless the Schwab option turns out to be appropriately low cost. IMHO, it's not worth paying the inflated VALIC prices just to get the 457b flexibility.

[TeacherLearns2Invest]

RuralAvalon,
Appreciating the next level of questions after the clarifications about the 457 and 403b options. Feels clearer to me the next steps to investigate.

I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

If the expected 403b changes come through, then I suggest prioritizing contributions to the 403b over contributions to the 457b. You can contribute to both, up to $19k/yr to each, for a total of $38k/yr.

RE: additional questions posed---here's what I know:

About how much (in dollars) do you feel that you might be able to contribute annually (total, all accounts)?
*I'm planning at least $10k for this upcoming school year for 403b. I am relying on all the details coming together with district for that change to happen. I initially let the 457 option go with VALIC but after reading a bit more on this site about Schwab PCRA as an option and just joining this forum, thought to get second opinions to get a larger perspective. This has certainly been helpful to get additional perspectives as I continue to step in this direction with more knowledge.

Is your teachers pension in addition to Social Security?
*Social security option for teachers in California has this Windfall Elimination Provision condition. Right now, I have 21 quarters out of 40 total. Don't yet have a concrete plan for getting remaining quarters to be eligible.

Does the 403b plan, or 457b plan, or both permit Roth contributions?
*Yes, 403b has Roth option. 457 not sure at this point.

About how many years until expected retirement?
*From speaking with state teacher retirement system advisors, they recommend staying for another 20 years and retiring after 61.5 years.

[TeacherLearns2Invest]

SometimesInvestor,

Surprised there is no stable income fund. Did you include all funds or just the funds you felt were worth while

Yes, those are all the funds...the only ones I did not completely include were the T. Rowe Price target funds with multiple dates.

[TeacherLearns2Invest]

Fposte,

A 457 has some advantages, but if your new 403b provider has the funds you list at the ERs you list, I'd throw all my savings into the 403b unless the Schwab option turns out to be appropriately low cost. IMHO, it's not worth paying the inflated VALIC prices just to get the 457b flexibility.

I'm glad there were some potential options from the VALIC 457 though I agree, the fees associated were and still are my concern.
I'll be getting more info about the Schwab PCRA and hoping there will be more favorable options there and will check in again after getting a better sense what's there.

MHadden1 posted a link to PCRA options that are still aligned to Bogleheads method, so that's reassuring!

[ruralavalon]

RuralAvalon,
Appreciating the next level of questions after the clarifications about the 457 and 403b options. Feels clearer to me the next steps to investigate.

I contribute about 10% to the my state teacher retirement plan and have a 403b which I paused and will be restarting with another provider --- but still in the works to be added to my school districts offerings. I'm in my early 40s, mid-career and experiencing a strong urgency (panic!) to things re-aligned with a much clearer strategy.

If the expected 403b changes come through, then I suggest prioritizing contributions to the 403b over contributions to the 457b. You can contribute to both, up to $19k/yr to each, for a total of $38k/yr.

RE: additional questions posed---here's what I know:

About how much (in dollars) do you feel that you might be able to contribute annually (total, all accounts)?
*I'm planning at least $10k for this upcoming school year for 403b. I am relying on all the details coming together with district for that change to happen. I initially let the 457 option go with VALIC but after reading a bit more on this site about Schwab PCRA as an option and just joining this forum, thought to get second opinions to get a larger perspective. This has certainly been helpful to get additional perspectives as I continue to step in this direction with more knowledge.

Is your teachers pension in addition to Social Security?
*Social security option for teachers in California has this Windfall Elimination Provision condition. Right now, I have 21 quarters out of 40 total. Don't yet have a concrete plan for getting remaining quarters to be eligible.

Does the 403b plan, or 457b plan, or both permit Roth contributions?
*Yes, 403b has Roth option. 457 not sure at this point.

About how many years until expected retirement?
*From speaking with state teacher retirement system advisors, they recommend staying for another 20 years and retiring after 61.5 years.

Since you do not plan early retirement where the 457 would be more useful, if the changes materialize in the 403b plan then I suggest that all of your $10,000 annual contributions go to the 403b plan.

I suggest that you increase your contributions to the 403b as much as practical, that is the best remedy for your "early 40s, mid-career and experiencing a strong urgency (panic)" condition.

Because you will not be eligible for Social Security in addition to the pension, I suggest traditional contributions rather than Roth contributions to your 403b. (Information on the current balance of your 403b account, and the size of the expected pension benefit, might change this.)