403b Question

[lavjr]

Hi all,

This is my first post, I'm new to Investing and the forum.
I've been reading Bogleheads materials and I like to move my investment to the following funds:
VTSAX
VTIAX
VBTLX,

Currently I use Transamerica because of my job.
With them I have:

Short Bonds/Stable/MMkt
Vanguard Federal Money Market Inv

Interm/Long-Term Bonds
PIMCO Total Return Instl

Large-Cap Stocks
LSV Value Equity
Vanguard Institutional Index I
Neuberger Berman Sustainable Equity Instl
Wells Fargo Growth Inst

Small/Mid-Cap Stocks
JPMorgan Small Cap Value I
ClearBridge Small Cap Growth IS

International Stocks
Oppenheimer International Growth I

In order for me to invest at VTSAX, VTIAX and VBTLX, will need to use Schwab Personal Choice Retirement Account (PCRA) and they have an annual fee of $50.00.
My question is should I move to Schawb? If not the funds that I have are they ok for retirement purposes? I'm 53 and don't have too much saved, like to start putting more into retirement now.

Thanks in advance for your help.

lavjr

[Clever_Username]

Can you add pieces like ticket symbols and expense ratios to your post? Please see this for a guide: viewtopic.php?f=1&t=6212

[TropikThunder]

Can you add pieces like ticket symbols and expense ratios to your post? Please see this for a guide: viewtopic.php?f=1&t=6212

+1, especially expense ratios. Then, it’s a simple math question re: how big does your balance need to be to have the lower Vanguard ER’s offset the $50 annual brokerage fee. The Vanguard Institutional Index is a really cheap S&P500 fund which is good enough relative to VTSAX but I don’t know the others.

[ExitStageLeft]

Welcome to the forum!

I echo the suggestion to go with the Vanguard Institutional Index fund, assuming it has a low expense ratio. If you match that with some Vanguard Extended Market (VEXAX) in an IRA you can approximate VTSAX.

Without knowing costs it's hard to say. If you want a sizeable bond portion in your 403b then you might be better off going with Schwab. If you use the PCRA is there a fee each time you purchase a Vanguard fund?

[lavjr]

Thanks for helping me out, please take a look at the following information:

Neuberger Berman Sustainable Eq Instl - NBSLX - Gross and Net Expense Ratio 0.67%

Vanguard Institutional Index I - VINIX - Gross and Net Expense Ratio 0.04%

Wells Fargo Growth Inst - SGRNX - Gross Expense Ratio 0.85% - Net Expense Ratio 0.75%

JPMorgan Small Cap Value I - PSOPX - Gross Expense Ratio: 1.01% - Net Expense Ratio*: 0.99%

*The net expense ratio reflects the expense ratio of the fund after any applicable expense waivers or reimbursements. This waiver or reimbursement is contractual and is currently in effect through 11/30/2019

ClearBridge Small Cap Growth IS - LMOIX - Gross and Net Expense Ratio 0.79%

Oppenheimer International Growth I - OIGIX - Gross and Net Expense Ratio 0.69%

Matching contribution for a particular year, the contribution will be 50% of pre-tax contributions and Roth contributions, taking into account contributions up to a maximum of 4% of pay for the year, for a maximum matching contribution of 2% of pay.

They will match 50% of what you contribute into the plan up to 4% of your pay for the year. Meaning, they would match contributions up to 2% of pay. So once their Employer Contributions equal out to 2% of your annual pay they would stop

Thanks again in advance,

lavjr

[boglewill34]

VINIX looks very good here. I'd make sure to get at least the employer match with that fund, then depending on additional amounts that you'll put in and income levels, etc, you can contribute to an IRA outside of this plan to round out your asset allocation with low ER funds.

[lakpr]

+1 to the previous poster.

Given that you said you haven’t saved much for retirement, I would venture to say you should put the max of $24,500 (as you are over 50) into VINIX. The tax savings you get from this contribution can be added to Roth IRA and/or taxable accounts.

[ExitStageLeft]

+1 to the previous poster.

Given that you said you haven’t saved much for retirement, I would venture to say you should put the max of $24,500 (as you are over 50) into VINIX. The tax savings you get from this contribution can be added to Roth IRA and/or taxable accounts.

What he said! For 2019 it's gone up to $25,000 max elective contribution and catch-up for over 50.

https://www.irs.gov/newsroom/401k-contr ... es-to-6000

[lavjr]

Thank you, but should I put 100% of my investment into VINIX?
Will not be better to put some on International and Bonds?
And I still can’t do $25000, maybe next year.

Thanks for all your help with a beginner investor.

lavjr

[ExitStageLeft]

It's good to have a well-diversified three-fund portfolio. Not all retirement plans can allow you to do that affordably. So you may have to make a compromise, either sacrifice some diversification or pay more within the 401k for the portfolio you want.

If the PIMCO bond fund is reasonably priced (retail has 0.55% ER) then you could get a reasonably affordable allocation with 60% VINIX and 40% PTTRX, or whatever specific balance suits your risk profile.

For international I would open an IRA (probably Roth but your tax situation dictates best option) and purchase VTIAX or its equivalent.

[ruralavalon]

Welcome to the forum

You have some good funds offered in your 401k, you are fortunate.

I've been reading Bogleheads materials and I like to move my investment to the following funds:
VTSAX
VTIAX
VBTLX,
. . . . . .
In order for me to invest at VTSAX, VTIAX and VBTLX, will need to use Schwab Personal Choice Retirement Account (PCRA) and they have an annual fee of $50.00.
My question is should I move to Schawb? If not the funds that I have are they ok for retirement purposes? I'm 53 and don't have too much saved, like to start putting more into retirement now.

In your 401k I suggest using:
1) Vanguard Institutional Index Fund (a S&P 500 index fund, 82% of the U.S. stock market) (VINIX) ER 0.04%
2) Oppenheimer International Growth I (value oriented, largely developed markets) (OAGIX) ER 0.69%; and
3) PIMCO Total Return Institutional (intermediate-term bond fund) (PTTRX) ER 0.46%.

It important to be broadly diversified, so don't limit yourself to using only the S&P 500 stock index fund. The expense ratios on the Oppenheimer and PIMCO funds are higher than we prefer, but not so high that you should to skip using them. They are good actively managed funds.

When your 401k balance gets much larger it may be worth the $50 annual fee (and the extra complication) to use the Schwab Personal Choice Retirement Account (PCRA).

If practical for you, make the maximum annual employee contribution ($25k) to your 401k. The most important thing you can do at this point ("I'm 53 and don't have too much saved") is set your contribution rate as high as you can comfortably sustain.

. . . . .

Some additional information may be helpful.

How much (in dollars) is the maximum annual employer match?

Are you eligible to deduct contributions to a traditional IRA? Are you eligible to contribute to a Roth IRA?

What is your tax bracket, both federal and state? What is your tax filing status?

Do you have any debt? If so what types, amounts and interest rates?

How much is currently in your 401k? Do you have any other retirement/investing accounts?

Do you have a desired asset allocation (stock/bond mix, and domestic/international stock mix) that you want to aim for?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.