403b and 457b Choices through TIAA-CREF

[Bri Bri Burgs]

Hello everyone,

Its been a while since I've been on this website, but I could really use your sound advice. I'm 29 years old and I work with Fulton Schools in Georgia and I want to open up a 457b and 403b because I want to diversify my funds. I already have a Traditional IRA with Vanguard (I had a 401k that I rolled over), and I'm considering opening a ROTH IRA with Fidelity (I know their 2045 Freedom Index is pretty good) because I don't have to have a minimum of $1000 to open up an account with them.

In terms of the 457b and 403b, I decided to go with TIAA-CREF because based on reviews from relatives, they are the best option of vendors my district offers. However, I don't know what to choose.

I don't want to take serious risks; I just want to live comfortable upon retirement. I plan on retiring in 28-30 years, and I don't want to even think about working upon retirement. Please help! if I'm missing any information, please let me know.

Thanks in advance!

 

[nun]

Hello everyone,

Its been a while since I've been on this website, but I could really use your sound advice. I'm 29 years old and I work with Fulton Schools in Georgia and I want to open up a 457b and 403b because I want to diversify my funds. I already have a Traditional IRA with Vanguard (I had a 401k that I rolled over), and I'm considering opening a ROTH IRA with Fidelity (I know their 2045 Freedom Index is pretty good) because I don't have to have a minimum of $1000 to open up an account with them.

In terms of the 457b and 403b, I decided to go with TIAA-CREF because based on reviews from relatives, they are the best option of vendors my district offers. However, I don't know what to choose.

I don't want to take serious risks; I just want to live comfortable upon retirement. I plan on retiring in 28-30 years, and I don't want to even think about working upon retirement. Please help! if I'm missing any information, please let me know.

Thanks in advance!

What are your provider options?

I've been with TIAA-CREF for a while and they have good offerings with reasonable expenses. They are not as cheap as Vanguard because the retirement funds are structured as variable annuities, but they act just like mutual funds and the expenses are around 0.4% on the index funds. If you are super conservative they have a deferred income annuity called TIAA-Traditional, but it has very strict rules about withdrawals. At your age I would just invest in their index funds, US equity Index, International and maybe a bond index.

Do you have a pension with the school in addition to the 457b and 403b? If so I'd contribute to the 457b before the 403b, because you can access money in a 457b without penalty as soon as you stop working for the school district making early retirement convenient.

As far as the ROTH goes I'd just wait until you have enough to open one with Vanguard so you have the IRA and the ROTH in the same place. As far as investments go I'd stick it all in Vanguard's Wellington fund.

 

[Bri Bri Burgs]

Provider Options

These are my options for the 403b and 457b
https://iwc.tiaa-cref.org/private/p...nsion_enrollment_page&_eventId=goToInvestment

 

[Bri Bri Burgs]

In response to your question, every teacher that works in a school district in Georgia pay in TRS (Teacher Retirement System). I pay into that, but I don't pay into Social Security.

Thank you so very much for your advice regarding the roth. My original plan was to open a roth with Vanguard, but then I thought maybe I should go for Fidelity instead to avoid saving up the 1000 dollars.

 

[Bri Bri Burgs]

I posted all of the options that I have, but it seems like it didn't go through...

 

[nun]

In response to your question, every teacher that works in a school district in Georgia pay in TRS (Teacher Retirement System). I pay into that, but I don't pay into Social Security.

Thank you so very much for your advice regarding the roth. My original plan was to open a roth with Vanguard, but then I thought maybe I should go for Fidelity instead to avoid saving up the 1000 dollars.

Yes , that's a similar set up that I had. You have an amazing opportunity to reduce your taxable income and save for retirement. I imagine the TRS is mandatory and then you can save more in the 457b and the 403b. So first max out the 457b and then start contributing to the 403b. If you can max out both eventually you will be doing really well.....that's what I did and it set me up well.

The only reason I suggested Vanguard for the ROTH was convenience and that they have very low fees. Fidelity also has low fees and are a good company, but you can end up with money all over the place and having TIAA-CREF and Vanguard is pretty good.

 

[Lakewood90712]

What are your provider options?

I've been with TIAA-CREF for a while and they have good offerings with reasonable expenses. They are not as cheap as Vanguard because the retirement funds are structured as variable annuities, but they act just like mutual funds and the expenses are around 0.4% on the index funds. If you are super conservative they have a deferred income annuity called TIAA-Traditional, but it has very strict rules about withdrawals. At your age I would just invest in their index funds, US equity Index, International and maybe a bond index.

Do you have a pension with the school in addition to the 457b and 403b? If so I'd contribute to the 457b before the 403b, because you can access money in a 457b without penalty as soon as you stop working for the school district making early retirement convenient.

As far as the ROTH goes I'd just wait until you have enough to open one with Vanguard so you have the IRA and the ROTH in the same place. As far as investments go I'd stick it all in Vanguard's Wellington fund.

You might want to check the 457 plan document. The 457 plan I have allows post employment access w/o penalty only if you are 55 or older at date of employment termination , if you want to access the money , not rolling into another plan or ira.

 

[Bri Bri Burgs]

Plans

I actually met with an advisor, and he told me with the 457b plan, if I leave the company, I can take whatever I put in there with no penalty. I just can't touch the interest

 

[Htown Harry]

You might want to check the 457 plan document. The 457 plan I have allows post employment access w/o penalty only if you are 55 or older at date of employment termination , if you want to access the money , not rolling into another plan or ira.

Lakewood, is your 457 plan with a non-profit?

My understanding is that 457 withdrawal without penalty after separation is part of the statute for plans set up by states and their political subdivisions, but not for non-profits.

26 U.S. Code § 457 - Deferred compensation plans of State and local governments and tax-exempt organizations | LII / Legal Information Institute

 

[Bri Bri Burgs]

Okay. I finally got the complete list of my options. This is for both 457b and 403b. The website suggested T.Rowe Price Income Adv Retirement 2050, but I would like to know what you all think.

Guaranteed
TIAA CREF Annuity Accounts
TIAA Traditional
Equities
TIAA CREF Annuity Accounts
CREF Stock
CREF Global Equities
CREF Growth
CREF Equity Index
Mutual Funds and Other Investment Options
TIAA-CREFF Mid-Cap Value Fund- Retirement Class
TIAA-CREFF S&P Index Fund- Retirement Class
Prudential Jennison Growth Fund A
Eaton Vance Large Cap Value A
Lord Abbett Developing Growth Fund Class A
American Funds Growth Fund of America- R3
Thornburg International Value Fund- Class R4
Invesco Small Cap Growth Fund A
Invesco Developing Markets Fund A
Invesco International Small Company Fund A
Columbia Acorn International A
Voya MidCap Opportunities Fund Class A
Perkins Mid Cap Value Fund S
Victory Munder Mid-Cap Core Growth A
T. Rowe Price Equity Income R
Perkins Small Cap Value Fund S
American Funds New World Fund R3
Federated Clover Small Value Fund Class A
Real Estate
TIAA Real Estate
Fixed Income
TIAA CREF Annuity Accounts
TIAA-CREF High Yield Fund- Retirement Class
MainStay High Yield Corporate Bond A
PIMCO Total Return Fund
Templeton Global Bond Class A
BlackRock Inflation Protected Bond A
Lord Abbett Short Duration Income A
PIMCO Real Return A
Wells Fargo Advantage Core Bond Fund A
Voya Global Bond Fund Class A
PIMCO Low Duration Fund Class A
Money Market
TIAA CREF Annuity Accounts
CREF Money Market
Mutual Funds and other Investment Options
TIAA-CREF Money Market Fund- Retirement Class
Multi-Asset
TIAA CREF Annuity Accounts
CREF Social Choice
Mutual Funds and Other Investment Options
T.Rowe Price Retirement Income Adv (5 year incremental options)

 

[Bri Bri Burgs]

I was also looking at this website because I currently have the target date retirement fund for my Traditional IRA, and I think the target date retirement funds will work for me. What do any of you think about the rankings? Should I ever consider the website below?


http://www.investmentnews.com/artic...e-best-and-worst-performing-target-date-funds

 

[target2019]

Many of the selections in your lineup can be researched. You should take the time to read some of the research. For example, TIAA-CREF S&P 500 Index Fund (Retirement) TRSPX:

https://www1.tiaa-cref.org/public/tcfpi/investment/profile?symbol=306105

That page tells me important details, such as the fund expenses and ticker. I can compare the results to lower-cost funds like Vanguard.

Also, be aware that your plan may charge other fees. I would find the broadest indexes and start with a few.

 

[target2019]

I was also looking at this website because I currently have the target date retirement fund for my Traditional IRA, and I think the target date retirement funds will work for me. What do any of you think about the rankings? Should I ever consider the website below?


http://www.investmentnews.com/artic...e-best-and-worst-performing-target-date-funds

I can't login to that link, and I'm not interested in creating an account to do so. If something interests you, try to find the ticker symbol and post that. Or find links that don't require a login.
Good luck.

 

[target2019]

These are my options for the 403b and 457b
https://iwc.tiaa-cref.org/private/p...nsion_enrollment_page&_eventId=goToInvestment

Only someone with a TIAA-CREF account can get to that link. Sorry!

 

[nun]

I was also looking at this website because I currently have the target date retirement fund for my Traditional IRA, and I think the target date retirement funds will work for me. What do any of you think about the rankings? Should I ever consider the website below?


http://www.investmentnews.com/artic...e-best-and-worst-performing-target-date-funds

As far as the 457b goes, I worked for a state run university system and at termination got immediate penalty free access to all my 457b money.....I obviously have to pay tax on any withdrawals. Ask your HR retirement and benefits person about the terms of the 4576b rather than a financial advisor.

You have a lot of funds available in TIAA-CREF. Too many IMHO. I would go for inexpensive index funds and start with 4 max. A US equity, an international equity, a bond fund and maybe a real estate fund.

 

[Bri Bri Burgs]

I'm sorry target2019. I didn't realize the link for investment news required a login. I googled it and the website came up for me. I copied the link and thought it would automatically open up. Sorry about the tiaa-cref link as well, but that's why I decided to type out all of the options.


I'm going to read the research, as I just read the one you provided link for, but to be honest, I really don't understand what any of this stuff means...

 

[nun]

Many of the selections in your lineup can be researched. You should take the time to read some of the research. For example, TIAA-CREF S&P 500 Index Fund (Retirement) TRSPX:

https://www1.tiaa-cref.org/public/tcfpi/investment/profile?symbol=306105

That page tells me important details, such as the fund expenses and ticker. I can compare the results to lower-cost funds like Vanguard.

Also, be aware that your plan may charge other fees. I would find the broadest indexes and start with a few.

These schools/teacher/university/state plans usually have an administrative fee around 0.25% on top of any fund expenses. TIAA-CREF retirement index fund fees tend to be from 0.3% to 0.5%.

 

[nun]

I'm sorry target2019. I didn't realize the link for investment news required a login. I googled it and the website came up for me. I copied the link and thought it would automatically open up. Sorry about the tiaa-cref link as well, but that's why I decided to type out all of the options.


I'm going to read the research, as I just read the one you provided link for, but to be honest, I really don't understand what any of this stuff means...

Concentrate on funds that are broad indexes....they usually have "index" in the name. Don't get bogged down in too much research and reading very quickly you won't "see the wood for the trees". Because these funds just track an index like the S&P500 they all have very similar performance so all you have to do is choose one with low fees....that's the expense ratio.

 

[target2019]

Here's a link to all the TIAA-CREF funds:
https://www1.tiaa-cref.org/public/tcfpi/investresearch

That should help the discussion.

You mentioned a target date fund, and it looks like a pretty hefty expense ratio on those. You can do much better by setting your allocation and picking from the lowest cost index funds available.

 

[Bri Bri Burgs]

Thank you nun. Thank you all for your help. I'm going to take all of your advice.

 

[Bri Bri Burgs]

Ok target2019, thank you so much. If I'm understanding everyone correctly, stay away from the target date funds and focus on low cost index funds...correct?

 

[nun]

Here's a link to all the TIAA-CREF funds:
https://www1.tiaa-cref.org/public/tcfpi/investresearch

That should help the discussion.

You mentioned a target date fund, and it looks like a pretty hefty expense ratio on those. You can do much better by setting your allocation and picking from the lowest cost index funds available.

Unfortunately we can't see the expenses of the non-TIAA-CREF funds available.

Yeah avoid the "lifecycle" funds they are expensive.

I'd probably use TIAA-CREF S&P500 Index as a core fund.

For the conservatively minded there is TIAA-Traditional Group Annuity which is probably paying close to 4% right now, but that varies according to plan. This is a low cost deferred income annuity and many people use it as their fixed income. In times of higher interest rates the declared rate goes up and I've see it at 8%. But don't use it until you understand exactly what you are buying and the restrictions it has.

 

[target2019]

Ok target2019, thank you so much. If I'm understanding everyone correctly, stay away from the target date funds and focus on low cost index funds...correct?

I think nun has a similar idea. This should give you a 10-year graph of three index funds.

https://www1.tiaa-cref.org/public/t...ent=300269&investment=306105&investment=31464

You would allocate your contributions to those three funds, for example. If you look at your other account where you have a target fund, or look at a specific target date fund anywhere, you'll see exactly how that fund allocates things. Take a look at the 2060 fund, and click on the portfolio tab. That shows something like 90% allocated to stock mutual funds, and 10% to bond index fund. Read up on allocations, and see what level of risk fits you.

You can always change your choices...

 

[pjm-7]

Look at the Real Estate offering, but only if you have no other investment property. It holds actual real estate.