Schwab PCRA through Corebridge 457 - insights?

[TeacherLearns2Invest]

Hello friends,

I'm seeking your insights as I take next steps with signing up to activate my 457 account through Corebridge (formerly VALIC.)

When I've read about VALIC, feedback has been .
Naturally, feeling cautious despite new name, Corebridge.
My school district only offers 457 through Corebridge though.

Here's the 457 flyer from my district:
https://cdnsm5-ss18.sharpschool.com/Use ... b_2022.pdf

Given the funds available, I'm looking at SCHWAB PCRA option.
Hoping I'll have access to VTSAX or similar index funds through PCRA.

QUESTIONS
1) What questions should I ask Corebridge rep that will be my liaison for creating my 457 account?
What are some things to watch out for?

2) If you have time to look through the funds list
https://docs.google.com/document/d/1PfB ... sp=sharing
...any funds from this list that you might flag as possibilities to look into further?

As of now, I'm only looking at SCHWAB PCRA. I've seen favorable posts about it on this forum.

MUCH, MUCH APPRECIATED FOR TAKING A MOMENT TO SHARE YOUR INSIGHTS, RECOMMENDATIONS, FEEDBACK.
On a short fall break and taking some time to catch up on my "financial homework" with your help!
TeacherLearns2Invest

[Parkinglotracer]

I know nothing about Corebridge and obviously they charge something to administer your retirement plan so that would be the first question to answer … what do they charge and how can I keep that to a minimum? If it’s a lot I’d get my workmates to write a letters “educating” the committee that made the decision to hire them to change to a lower fee administrator.

Obviously schwab PCRA has fees too

https://www.schwab.com/resource/pcra-pricing-summary

Our wiki shows how to set up a three fund portfolio with Schwab which may minimize fees trying to set up a three fund portfolio of vanguard funds thru schwab.

https://www.bogleheads.org/wiki/Three-fund_portfolio


For years teachers have been ripped off by salesmen associated with their union or school that have led them to buy high fee annuities inside their tax deferred accounts. Don’t do it - the fees will milk you dry.


https://www.sec.gov/oiea/investor-alert ... r-bulletin

https://www.barrons.com/articles/the-an ... 1558743092

Hope this helps … teach on!

There is a website out there developed by a teacher to prevent the teacher 403B 457 rip offs … maybe someone can help find the right link.


You can google corebridge thru our BH forum and get previous corebridge discussion here

viewtopic.php?t=398812

[CyclingDuo]

Hello friends,

I'm seeking your insights as I take next steps with signing up to activate my 457 account through Corebridge (formerly VALIC.)

When I've read about VALIC, feedback has been .
Naturally, feeling cautious despite new name, Corebridge.
My school district only offers 457 through Corebridge though.

Here's the 457 flyer from my district:
https://cdnsm5-ss18.sharpschool.com/Use ... b_2022.pdf

Given the funds available, I'm looking at SCHWAB PCRA option.
Hoping I'll have access to VTSAX or similar index funds through PCRA.

QUESTIONS
1) What questions should I ask Corebridge rep that will be my liaison for creating my 457 account?
What are some things to watch out for?

2) If you have time to look through the funds list
https://docs.google.com/document/d/1PfB ... sp=sharing
...any funds from this list that you might flag as possibilities to look into further?

As of now, I'm only looking at SCHWAB PCRA. I've seen favorable posts about it on this forum.

Find out what Corebridge charges for maintenance fees for the Schwab PCRA. You'll want to add those fees to the underlying ER fees of the funds you buy within the PCRA to get your total annual cost. In other words, it may not be any less expensive than the index funds available within the Corebridge 457b.

Which Class of shares would you be able to invest in? Class I share pricing, or have to pay the Investor share pricing?

The fees are not too horrible for the BNY Mellon index funds, and you could easily build a three fund portfolio. I always prefer to approximate the Total US Stock Market using mid and small caps - or an extended market fund. You wouldn't have to do that as the S&P 500 and Total US track each other so closely. However, if interested, the instructions are here: https://www.bogleheads.org/wiki/Approxi ... ock_market

US Equity

The S&P 500 fund has total fees of 0.50%.
The Mid-Cap fund has total fees of 0.25% for Class I, 0.50% for Investor.
The Small-Cap fund has total fees of 0.25% for Class I, 0.50% for Investor.

International

The Total International fund has total fees of 0.35% for Class I, 0.60% for Investor.

Core Bonds

The JP Morgan Core Bond fund has total ER fees of 0.50% for Class I, 0.75% for Class A, and 1.35% for Class C. However, depending on which class you would be able to invest in, there could also be a load charge. Can you get your bonds in another account (403b, traditional IRA, etc.)?

Find out which class of shares you would be able to invest in. Find out what Corebridge charges in fees for you to use Schwab's PCRA. Compare what the fees + the underlying ER fees of funds you would buy within Schwab's PCRA + the trading fees Schwab charges to see if the total cost is less, more, or even to just using the BNY Mellon index funds already available to you in the 457b plan.

My wife's 457b plan went through the VALIC ----> AIG -----> Corebridge ownership changes as well over the years. Just to give you a comparison of fees, this is what her portfolio of index funds total costs are with ER fees + administrative wrap fees combined:

US Equity

Vanguard Institutional Index Fund (ER .18 - includes administrative fee)
Vanguard Mid Cap Index Institutional (ER .22 - includes administrative fee)
Vanguard Sm Cap Index Institutional (ER .22 - includes administrative fee)

International Equity

Vanguard Developed Markets Index Fund Institutional (ER .23 - includes administrative fee)

REITs

DFA Real Estate Securities Institutional (ER .36 - includes administrative fee)

Bonds

Vanguard Interim Term Bond Index Fund Admiral (ER .25 - includes administrative fee)

Do you also use a 403b plan? How about a Roth IRA? Your questions should all revolve around total costs. Although you could get less expensive funds within the PCRA, find out what total annual costs to use the brokerage account would be from Corebridge + the trading fees from Schwab within the PCRA. In other words, beware of the smoke and mirrors behind the "deal" of using a brokerage account within your 457b plan.

CyclingDuo

[TeacherLearns2Invest]

@CyclingDuo
Thank you for flagging the BNY fund and highlighting questions I need to ask Corebridge about maintenance fee plus fees from PCRA use and Class I vs. investor pricing.

Can you get your bonds in another account (403b, traditional IRA, etc.)?

Yes, I have access to a 403b (outside of Corebridge) and can access bonds through there.

Find out what Corebridge charges in fees for you to use Schwab's PCRA.

According to the 457b plan description, "plan administrative fees have been waived for district employees. Fund annual operating expenses apply depending on mutual funds chosen..."

So many levels of fees, so this "waived fee" is probably minimal savings in the larger scheme of things - just like you said, I need to see thru the "smoke and mirrors" and get information for total cost of fees.

Do you also use a 403b plan? How about a Roth IRA?

403b plan right now is with my state teacher union (California Teachers Association) administered by Aspire Financial.
"Record keeping fee of $95.00 and 0.05% for custodial services based on the assets in your account."

Haven't started a Roth IRA yet.

Thanks for sharing your wife's fees. That's very helpful as a reference point.

I have a clearer sense of what I need to ask moving forward to speak with Corebridge rep: their fees, Schwab PCRA fees. I'll look into the BNY index funds now too. Glad there's another option to compare PCRA with as I make my selection.

We got a raise last year and I'm intent on investing it. I have not activated my 457 so that's where my attention is right now and sorting through the "best" way forward given my options with Corebridge.

What fee ranges would you determine to be very good
or just okay
or too high do not proceed!

[Joe Public]

Some plans allow only a portion of the account balance to be invested in the brokerage window, and some plans require a minimum initial dollar amount to open the brokerage window account. I would want to know whether my account had any such rules in place.

[TeacherLearns2Invest]

@ParkingLotRacer

Thank you for all the resource links, especially the 3 fund strategy link using Vanguard. If PCRA is the better (of what's available) option, I'll definitely use that link to guide my allocations.

Having Corebridge as my sole choice for the 457b has my mind feeling restricted and hesitant moving forward --- like I have no other choice but to select from high(er)-fee funds if I want to start my 457 investing. I appreciate your "don't do it!" cautionary message...that's the heightened sense of I have with this 457, different than my 403b. Luckily, we got a raise last year and I'm intent on investing it. I haven't activated my 457 so that's been my focus --- if it is even worth it given my limited options.

I will definitely read thru the other Corebridge posts. I searched for other Schwab PCRA posts, didn't think to search for others who've shared about Corebridge.

[CyclingDuo]

@CyclingDuo
Thank you for flagging the BNY fund and highlighting questions I need to ask Corebridge about maintenance fee plus fees from PCRA use and Class I vs. investor pricing.

Can you get your bonds in another account (403b, traditional IRA, etc.)?

Yes, I have access to a 403b (outside of Corebridge) and can access bonds through there.

Find out what Corebridge charges in fees for you to use Schwab's PCRA.

According to the 457b plan description, "plan administrative fees have been waived for district employees. Fund annual operating expenses apply depending on mutual funds chosen..."

So many levels of fees, so this "waived fee" is probably minimal savings in the larger scheme of things - just like you said, I need to see thru the "smoke and mirrors" and get information for total cost of fees.

Do you also use a 403b plan? How about a Roth IRA?

403b plan right now is with my state teacher union (California Teachers Association) administered by Aspire Financial.
"Record keeping fee of $95.00 and 0.05% for custodial services based on the assets in your account."

Haven't started a Roth IRA yet.

Thanks for sharing your wife's fees. That's very helpful as a reference point.

I have a clearer sense of what I need to ask moving forward to speak with Corebridge rep: their fees, Schwab PCRA fees. I'll look into the BNY index funds now too. Glad there's another option to compare PCRA with as I make my selection.

We got a raise last year and I'm intent on investing it. I have not activated my 457 so that's where my attention is right now and sorting through the "best" way forward given my options with Corebridge.

What fee ranges would you determine to be very good
or just okay
or too high do not proceed!

If you are not already using it as a reference, I would highly recommend the 403bwise Facebook group. Their website is still out there, but most everything has been moved to the Facebook page.

How high is too high? If there is an employer match, I would pay a higher fee to get the match. If there is no employer match, keep it as low as possible within the plan. Total fees of 0.35% - 0.5% would be the highest I would go these days. Again, it all depends on what one's plan offers. There are still some awfully high fee plans out there in education, academia, and smaller companies.

This graphic explains visually what portion of the pie you get to keep based on the fee structure. The bottom two pies we can all live with, the top three would be too high in today's investment option environment. Many of us started out back in the 1980's when fees were much higher. Most of us did not have a choice and paid load fees, high ER fees + high administrative wrap fees that would have been in the upper left two pies and beyond.



We all want to keep as much of the pie as possible, even though we have to share a slice with the fund families and administrative fees for the plan to whichever company runs the plan. We aggregate our entire portfolio with all accounts (403b/457b/Roth IRAs/tIRAs/401k/taxable, etc...) and overall we have a 0.07% fee for everything.

How are the fees within the 403b plan administered by Aspire? What is your overall strategy for choosing to have both a 403b and a 457b plan? As an example, our original reason to add the 457b was due to us being a dual income household making enough income at the time that we could max out more than each of our 403b plans (not every year, but here and there we were able to do it if we really buckled down on our expenses). My wife received no match for her 457b or 403b plans, so it was just tucking money away in tax deferred space with the original goal of saving up enough to buy additional years of service at retirement time as well as to create a DIY COLA for her non COLA pension. Overriding that theme was our desire to play catch up after the kids were raised, out of the house, and the nest was empty.

I had asked about your 403b and if you had a Roth IRA to see what your overall strategy perhaps was. Retire early? Play catch up? Etc.? We assume you will receive the pension in California, so that is where your employer's contributions are going. If your 403b has better ER fees and you are not going to retire early, I would just put more into the 403b and skip the 457b unless you have enough income and low enough household expenses to max out one and put additional money in the other. However, I would probably make sure I was maxing out a Roth IRA first which you can get at a low cost brokerage firm such as Vanguard, Fidelity, or Schwab. If the amount you were going to direct at the 457b Schwab PCRA is equal to or less than a Roth IRA maximum contribution of $6500 in 2023/$7000 in 2024 + catch ups if you are 50 or older, then why not just do that rather than monkey around with a brokerage window within a 457b plan?

CyclingDuo

[TeacherLearns2Invest]

@CyclingDuo

Your response is prompting me to get more specific about my overall strategy and clarity.
Much, much appreciated. My bandwidth can barely take on this 457 "investigation."

You hit the target spot on: I do feel like I'm 'monkeying' around this 457 and whatever Corebridge has set-up...that I'll need to double and triple check.
I gotta go with them though since 403 is maxed out.

I haven't started my Roth IRA strategy and will add that to my goal before year's end and looking at the 403bwise group.

I am playing catch-up with getting 457 up and running and aiming for decrease in taxable income.

I don't know if I'll be able to retire early-early. but that's on the back of my mind for sure. Shaving off a few years or more would be great! Given the teacher pension set-up here in CA, the "formula" is geared towards those who stay until 62 to max out what's called the age factor. There's a big difference in pension amount if I retire at 56 (earlier retire, but less pension) than 62.

That graphic you posted on fees
0.07% for all your fees what a win!

[yolointopants]

Hello friends,

I'm seeking your insights as I take next steps with signing up to activate my 457 account through Corebridge (formerly VALIC.)

When I've read about VALIC, feedback has been .
Naturally, feeling cautious despite new name, Corebridge.
My school district only offers 457 through Corebridge though.

Here's the 457 flyer from my district:
https://cdnsm5-ss18.sharpschool.com/Use ... b_2022.pdf

Given the funds available, I'm looking at SCHWAB PCRA option.
Hoping I'll have access to VTSAX or similar index funds through PCRA.

QUESTIONS
1) What questions should I ask Corebridge rep that will be my liaison for creating my 457 account?
What are some things to watch out for?

2) If you have time to look through the funds list
https://docs.google.com/document/d/1PfB ... sp=sharing
...any funds from this list that you might flag as possibilities to look into further?

As of now, I'm only looking at SCHWAB PCRA. I've seen favorable posts about it on this forum.

MUCH, MUCH APPRECIATED FOR TAKING A MOMENT TO SHARE YOUR INSIGHTS, RECOMMENDATIONS, FEEDBACK.
On a short fall break and taking some time to catch up on my "financial homework" with your help!
TeacherLearns2Invest

We have a fairly decent 457 plan, but I use the PCRA to buy funds not offered in the 457, or are offered at higher prices. The PCRA charges me $50 / year. There is a minimum amount I must keep in the "core" account through the plan administrator, but all funds above this amount I move into the PCRA. That amount varies from $0 to $10,000+ depending on your specific plan. I use the lowest cost funds in my core account and expand on that in the PCRA. What I don't like about the PCRA is it takes a little more work than I would like. I would like to just move money into the 457 per paycheck, have that automatically swept into Schwab, and have Schwab automatically buy the funds for me. But what happens is I manually move money biweekly into the PCRA, then manually buy the funds in the Schwab account.

You will pay transaction fees when you buy Vanguard mutual funds on Schwab. However, you can buy the ETFs or use the no transaction fee funds. I use ETFs. What I dislike about Schwab is the lack of fractional shares. So I always have this little nugget of money just sitting there (albeit a low amount like $50, but it kind of irritates me).

I get charged a small fee (like .05%) on assets held in the core account. I do not get charged this fee on assets helds in the PCRA. So even though there's a fee for the PCRA, the $50 yearly I pay is actually less than if that same money was held in the core account. Plus I just like being able to do my own thing. And that alone is worth $50, and I gladly paid that even when I had basically nothing in the 457.

[TeacherLearns2Invest]

@YoloIntoPants
Thanks for sharing your experience with PCRA.
I'll have to inquire if my 457b has those requirements for "core" fund, etc.
Good to know no fees for assets except the $50 annual.

@JoePublic brought up a similar point about having a certain balance in the core/main account and only a portion going to the brokerage window. (I quickly get impatient with all these stipulations! )
I'll be asking those questions for sure to figure out how my plan works.

[CyclingDuo]

@CyclingDuo

Your response is prompting me to get more specific about my overall strategy and clarity.
Much, much appreciated. My bandwidth can barely take on this 457 "investigation."

You hit the target spot on: I do feel like I'm 'monkeying' around this 457 and whatever Corebridge has set-up...that I'll need to double and triple check.
I gotta go with them though since 403 is maxed out.

I haven't started my Roth IRA strategy and will add that to my goal before year's end and looking at the 403bwise group.

I am playing catch-up with getting 457 up and running and aiming for decrease in taxable income.

Got it regarding decreasing taxable income.

This leads back to finding out all of the fees to see if the SCHWAB PCRA is cheaper, more expensive, or the same as the Bank of NY Mellon index funds available within your 457b when making the decision. Let me share another graphic or two with you.

Teachers in other states that do have SS, a pension, and a 403b/457b/Roth IRA combination is what makes up the three legged stool to provide income streams from all three legs of that stool in retirement. In your case, your legs will be only two - the pension and your portfolio/personal savings as you don't have enough qualifying quarters for SS. Nothing wrong with that, just know what you are working with and how best to plan your other legs for retirement income. It also needs to jive with your household if it includes a spouse/partner/significant other.



In our opinion you will want the leg of your own portfolio known as personal savings (portfolio) to have a variety of divisions utilizing a taxable account, 403b/457b, Roth IRA, etc... to make that leg of your income stream as diverse as it can be from a taxable standpoint.

Here's the graphic to make the one leg known as personal savings to be a three legged stool in and of itself to pair with your pension...



In spite of the pension, and too few qualifying quarters to receive SS, I do believe the priority of investments from the Wiki still holds true in your case.

Here's that graphic...



Your employer contribution to your pension, rather than your 403b/457b plan means you should also have some focus on the HSA option, the Roth IRA option, and the taxable account option to diversify your retirement income stool beyond the 403b/457b plans.

I don't know if I'll be able to retire early-early. but that's on the back of my mind for sure. Shaving off a few years or more would be great! Given the teacher pension set-up here in CA, the "formula" is geared towards those who stay until 62 to max out what's called the age factor. There's a big difference in pension amount if I retire at 56 (earlier retire, but less pension) than 62.

That graphic you posted on fees
0.07% for all your fees what a win!

Fortunate to have such low fees for the overall portfolio. Trust me, it wasn't always that way back in the late 80's and early 90's when we started out.

CyclingDuo

[TeacherLearns2Invest]

@CyclingDuo
These graphics are just I what I need --- I'm a visual learner and Prioritizing Investments graphic / checklist gives me my to-do list.

Under the high priority section, luckily, no big credit card debt. I have my emergency fund. No employee matching with my retirement accounts though. Roth IRA on my to do list, though HSA at my district is called a flex spending account and whatever I put in each year must be spent or else I lose it. Haven't looked at it again since finding that out.

I just found out I might have access to VSMPX (Vanguard Total Stock Market Index) with my 403b (with expense ratio 0.020%).
Have you heard of this particular Vanguard fund? I've mostly heard of VTSAX.

Schwab PCRA is starting to look restrictive with the higher fees I discovered for trading into Vanguard or Fidelity funds.
I can access Schwab mutual funds with lower or no fees.

Thanks again for leaning in and generously sharing way beyond my initial question.
My fall break is wrapping up and though I don't have it all cleared up and wrapped up, I'm so many more steps further along given all the insights you've shared along with others.

[earflop]

I just found out I might have access to VSMPX (Vanguard Total Stock Market Index) with my 403b (with expense ratio 0.020%).
Have you heard of this particular Vanguard fund? I've mostly heard of VTSAX.

VSMPX is the Institutional share class of VTSAX. The funds are identical except that your version has an even lower expense ratio because it is only offered in large retirement plans. On its own this is an excellent fund.

[CyclingDuo]

@CyclingDuo
These graphics are just I what I need --- I'm a visual learner and Prioritizing Investments graphic / checklist gives me my to-do list.

Under the high priority section, luckily, no big credit card debt. I have my emergency fund. No employee matching with my retirement accounts though. Roth IRA on my to do list, though HSA at my district is called a flex spending account and whatever I put in each year must be spent or else I lose it. Haven't looked at it again since finding that out.

FSA is different than the HSA, so the priority list is speaking only about the HSA as you can rollover the unused portion year after year. If an HSA is not provided, move on down the priority list to the next item(s).

I just found out I might have access to VSMPX (Vanguard Total Stock Market Index) with my 403b (with expense ratio 0.020%).
Have you heard of this particular Vanguard fund? I've mostly heard of VTSAX.

Same fund, just lower expense ratios for large institutional retirement plans. Another term is CIT (collective investment trust) in workplace retirement plans that offer lower expense ratios than a retail investor could get in their taxable/IRA/Roth accounts. A lot of us invest in these via our workplace 403b/457b/401k plans. In our household's particular plans, it is the institutional share version of the S&P 500 Vanguard fund.

Schwab PCRA is starting to look restrictive with the higher fees I discovered for trading into Vanguard or Fidelity funds.
I can access Schwab mutual funds with lower or no fees.

Thanks again for leaning in and generously sharing way beyond my initial question. My fall break is wrapping up and though I don't have it all cleared up and wrapped up, I'm so many more steps further along given all the insights you've shared along with others.

All the best going forward!



CyclingDuo