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Old 04-18-2013, 12:26 PM   #21
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Not to get into an argument, or go back and forth
I agree, so I won't.

The Frontline special looks to be very interestng and I'll be watching
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Old 04-18-2013, 10:50 PM   #22
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Thanks for the heads-up. I used to record every Frontline, but they're pretty depressing, over all, so I took it off the regular recordings list. But I'll put this one-time recording on.

Talking about the 401(k) fees... I got this book called "Stop the 401(k) Rip-off!" in the mail, unsolicited. I read it and checked my company's 401(k) and it didn't look like it was one of the bad actors in this book. But, to this day, I don't know who sent this book to me or why. Weird. It was probably 5 years ago, but the book has two business reply cards in it for a free copy of the book. I kind of doubt they would work to get a free book any more, but PM me if you want me to put your address on one of the cards and drop it in the mailbox.
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Old 04-18-2013, 11:52 PM   #23
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Back in my working days, I was always very concerned about expense ratios of the funds offered in my 401(k) because I knew I would be in those funds for the long haul (mostly, I did make a few fund switches as my company changed 401(k) administrators a few times and that caused some funds I was in to disappear). So 1% more in the expense ratio would, over 22 years (how long I was in the 401(k)) compound to nearly 25%. My company had a special Stable Value fund in which they picked up all or nearly all of the expenses, resulting in an expense ratio of close to zero.

This philosphy resulted in my elimination of consideration for many of the funds in my company's 401(k). I saw expense ratios well north of 1%, even north of 2% (this was in the booming 1990s when everything rose, however). All of those "managed" life cycle" funds had big expense ratios, perhaps justifiably. But why should I pay someone else to rebalance when I can do it myself?

In my rollover IRA I have the same philosophy, as my time horizon is still pretty long (at least 10 more years). I have stayed with stock index funds and have found investment-grade corporate bond funds with expense ratios well under 1%.

My ladyfriend's 403b plan has an awful set of fund choices. I struggled to find a few with low expense ratios, as nearly all of them were well north of 1% without showing any better past results. I can't figure out why anyone would ivest in them. Thankfully, they had that popular PIMCO Total Return Fund which had a low expense ratio (I was in it a few ago before I ERed after one of those 401(k) administrator changes). Most of her other holdings are stock funds or individual stocks so this proved to be a good counterweight.
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Old 04-19-2013, 08:49 AM   #24
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My ladyfriend's 403b plan has an awful set of fund choices. I struggled to find a few with low expense ratios, as nearly all of them were well north of 1% without showing any better past results. I can't figure out why anyone would ivest in them. Thankfully, they had that popular PIMCO Total Return Fund which had a low expense ratio (I was in it a few ago before I ERed after one of those 401(k) administrator changes). Most of her other holdings are stock funds or individual stocks so this proved to be a good counterweight.
My wife had a similar problem with her 403b plan. It seems that most of the offers were really poor options with all but one of them being insurance company annuities (no new news there).

The only options she had was with Merrill Lynch who tried to convince her to invest in funds that were full of loads and high annual fees. After asking a lot of questions for a year trying to figure a better plan I was able to (at that time) have the money put into their MM fund and at intervals transfer the money to TRP no load mutual funds. ML didn't like this at all and constantly screwed transfers up but we kept paper trails, dates/times/names of phone calls, etc. and were able to make this work. I don't know if this method is still available but it would be worth looking into.

Cheers!
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Old 04-20-2013, 07:18 PM   #25
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Our TiVo(s) pick up all FrontLine shows; I checked, and the TiVo S4 has it scheduled to be recorded. But I probably would not have been aware until I saw that the TiVo had picked it up; thanks.
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Old 04-21-2013, 07:43 AM   #26
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Thanks for the heads up on this. Going to set the TIVO to record this. Although most if not everyone on this forum understands the importance of fees, it's always nice to hear it again or get another take on what's going on. I love the Bill Bernstein quote "the finance industry services clients the way Bonnie and Clyde serviced banks". As someone who has a combination of IRAs, 403bs, and a 401k, keeping fees low has required effort. About six months or so ago, I met with our 401k administrator/fiduciary and grilled him on expenses; he was none too happy about this, but I found out what fees we were paying in our small business 401k. And the importance becomes readily apparent in the Firecalc box for expense ratio...change this and see what a difference it makes. Appreciate the good dialogue on this topic.
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Old 04-21-2013, 08:43 AM   #27
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My wife had a similar problem with her 403b plan. It seems that most of the offers were really poor options with all but one of them being insurance company annuities (no new news there).

The only options she had was with Merrill Lynch who tried to convince her to invest in funds that were full of loads and high annual fees. After asking a lot of questions for a year trying to figure a better plan I was able to (at that time) have the money put into their MM fund and at intervals transfer the money to TRP no load mutual funds. ML didn't like this at all and constantly screwed transfers up but we kept paper trails, dates/times/names of phone calls, etc. and were able to make this work. I don't know if this method is still available but it would be worth looking into.

Cheers!
My wife's options in her 403-b plan were also terrible. Almost all insurance companies. Luckily, they did offer American Century Funds and while not the best fund family it is pretty good overall and looked like a gold nugget sitting atop a heap of slugs compared to her other choices.

The school system she works for really needs to offer their employees a better range of options.
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Old 04-21-2013, 09:30 AM   #28
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I have 3 retirement funds a 401a, 403b and 457

401a is with TIAA-CREF, I put in 11% of salary and my employer puts in 5%, but charges around 0.5% for "operating costs". The investment choices with TIAA-CREF are their CREF deferred annuities and lifecycle funds with ERs around 0.5%. Not great, but I've seen worse.

403b is with Vanguard and I have access to all Vanguard funds at the usual low ERs.....so this is great.

457 is with Great West Financial, but it offers a range of low cost funds from State Street, PIMCO, Fidelity some lifecycle funds. ERs range from under 0.06% for the index funds to 0.6% for some actively managed things. The lifecycle funds have 0.16% ERs.
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Old 04-21-2013, 03:27 PM   #29
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My point was that with a DB plan linked to salary the saving was automatic. Most Americans don't live large and have seen costs for things like college and health care increase while wages stagnate and they also get the costs of retirement shifted form being part of an employment contract to coming out of their wages with out receiving wage increases to pay for it......the employers and retirement firms are living large at our expense. That's why this forum is so fringe and populated mostly by those with pensions, the ridiculously frugal, or highly paid. The average American can't even envisage retiring at 65 anymore and most are sensible regular people with children that they want to succeed, that shows that the current 401k type system just isn't working for the majority of people. I'm ok with it because I'm highly paid and single with no kids, but like most of us on here I'm an outlier in the workforce.
+1 We are the fringe, perhaps extreme fringe. I can't believe I might actually be in the position to retire early in a few years, although I think the market will play a Lucy with me. Although we weren't frugal, just had two earners for the last 30 years, with only a 3 month interruption of employment, as well as upper middle-class employment with benefits and 401k/403b. That's very fringe.
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Old 04-21-2013, 03:59 PM   #30
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Reading the above posts, a few things come to mind:

- Why does an employer owe one anything? Seems you're free to work under his terms or not. If you do choose to, why complain vs. going elsewhere?
- How does one know what a defined benefit was costing a company/organization to achieve that benefit vs. what a 401/403 plan costs & achieves for you? Where's the parallel experiement? The company invested better than the 401k plans do? How does one know that?
- "reinforces why WE are DIYers". Who is "WE"? Does everyone here think the same?

Thanks.
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Old 04-21-2013, 04:03 PM   #31
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Reading the above posts, a few things come to mind:

- Why does an employer owe one anything? Seems you're free to work under his terms or not. If you do choose to, why complain vs. going elsewhere?
- How does one know what a defined benefit was costing a company/organization to achieve that benefit vs. what a 401/403 plan costs & achieves for you? Where's the parallel experiement? The company invested better than the 401k plans do? How does one know that?
- "reinforces why WE are DIYers". Who is "WE"? Does everyone here think the same?

Thanks.

I think the answers to these questions (well, question two; the rest are existential)are probably on the Employee Benefits Research Institute site, although I've focused more on the employee side and what's relevant to my investments.
Have at it big boy and report back the fruits of your research:
Employee Benefit Research Institute | EBRI
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Old 04-21-2013, 05:39 PM   #32
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My wife's options in her 403-b plan were also terrible. Almost all insurance companies. Luckily, they did offer American Century Funds and while not the best fund family it is pretty good overall and looked like a gold nugget sitting atop a heap of slugs compared to her other choices.

The school system she works for really needs to offer their employees a better range of options.
It seems to be a common problem among school systems that they offer awful choices for 403(b). I want to see all government employee move to the Federal system, where is is a modest pension, and 401(K)/TSP with match, plus social security.

It seems me that easiest way of giving teachers a raise is to give them better for 403(b) choices, but for some reason this doesn't seem to happening.
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Old 04-21-2013, 05:44 PM   #33
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Yup. I have no interest in a DB plan.

Just give me a match on my 401k and leave it to me.

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After reading the book "Retirement Heist" I am convinced that the only safe retirement plan for future generations is to get the money up front and invest it oneself.

You can do everything right and end up losing a pension through bankruptcy, merger or corporate maneuvering.

Public employees can see their DB pension lost when legislators choose to pay current bills by not adequately funding the public pension.
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Old 04-21-2013, 05:51 PM   #34
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Well, at the end of the day, the fees are going affect the ultimate payout. Either upfront, by impacting what the benefits are defined at initially, or on the back end, when the benefits can't actually get paid.

Ultimately, there is nothing magical about a DB plan. It's pretty much invested the same way as a person would individually, so those fees are going to reduce the available payout on the returns on what the company and employee contribute to the plan.

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One point I will make... who cares what the fees are in a DB plan... the fees are paid for by the company as the benefits are, by definition, defined... the finance firm can charge $1 per person or $1 mill per person... it does not change the benefit to the employee...
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Old 04-21-2013, 06:07 PM   #35
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Reading the above posts, a few things come to mind:

- Why does an employer owe one anything? Seems you're free to work under his terms or not. If you do choose to, why complain vs. going elsewhere?
- How does one know what a defined benefit was costing a company/organization to achieve that benefit vs. what a 401/403 plan costs & achieves for you? Where's the parallel experiement? The company invested better than the 401k plans do? How does one know that?
- "reinforces why WE are DIYers". Who is "WE"? Does everyone here think the same?

Thanks.
The phase out of non-contributory DB plans in favour of 401k plans would have been a good deal for the employee if the employer had received an increase in salary to cover the employees 401k contributions and a lot more financial education. The way it was put in place resulted in a cut in employee compensation. That's my main problem with the benefits changes of the past 30 years.

Obviously we all think things have been fine as we've ended up in a situation where we have enough to ER, but there are many people for whom the existing system as been a complete failure for reasons including lack of financial knowledge, bad luck in investment choices, high fees (those probably existed in DB plans too), low wages or stupidity limiting the amount they contributed, borrowing from the accounts......
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Old 04-21-2013, 06:40 PM   #36
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Interesting... with mutual funds I look much more at how they are doing (past and present) and longevity of management, than at the expenses built in. I don't mean commissions. If a fund is yielding 6% in dividends it doesn't matter to me what the "hidden" costs were. But that's just me, talk about an outlier...
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Old 04-21-2013, 07:29 PM   #37
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Maybe so (hope so).

But even though I already know that Rick puts Ilsa on that plane, I still watch "Casablanca".

You didn't even caution us with SPOILER ALERT!. Dang. I suppose next you will tell me the Dorothy got home safe to Kansas too.
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Old 04-21-2013, 07:36 PM   #38
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Mine is a DB @ around 52-53% of my pre-retirement gross. Plus there is SS (disability) @ about another 1/3 of my pre-retirement gorss. On top of that I have just over 1/2 a mil in former 457/401(k) monies that moved to a rollover IRA @ VG. House is paid off, NO debt. We are doing just fine.
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Old 04-21-2013, 07:56 PM   #39
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One point I will make... who cares what the fees are in a DB plan... the fees are paid for by the company as the benefits are, by definition, defined... the finance firm can charge $1 per person or $1 mill per person... it does not change the benefit to the employee...
Until the costs of the DB plan gets so large as to threaten the existence of the plan, or perhaps the employer- whether gov't or private. Back when interest rates were higher an extra 1-2+% in annual plan overhead could be absorbed, but it's quite different when that overhead approaches the returns earned on FI portion of that plan's AA. From NY to CA and from DB to DC, poorly run pension plans are not in anyone's best interest (pardon the pun).

Unfunded pension costs factor in bankruptcies | syracuse.com
http://www.businessweek.com/news/201...-benefits.html
Pension costs push Stockton, Calif. to bankruptcy | kgw.com Portland
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Old 04-21-2013, 08:41 PM   #40
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You didn't even caution us with SPOILER ALERT!. Dang. I suppose next you will tell me the Dorothy got home safe to Kansas too.
Oops.

No, I won't say that, but I think I saw her this afternoon at a balloon stop here in Illinois.

... and as long as I'm replying here, I might mention BIO is showing "Citizen Hearst" just before the FRONTLINE thing. Should be interesting, even if you've never been to Hearst Castle. That guy didn't just retire in style, I think he dropped acid and built one huuuuge cabin.
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