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Old 05-16-2013, 05:03 PM   #21
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Yeah, it says that in their little summary but that wasn't what the participants experienced, at least from what they told me. They got back the money they put in but not the gains they had gotten over the years. The bit they tell you about as accrued interest (in the article) I think was a small part of the gains from over the years. They felt ripped off. This info was received from people crying in the bathroom, swearing in the hallways or banging their head on their desk. I was not in it so I'm relaying hearsay.

Edit: It also took a long time for the whole thing to settle out and for many people they didn't know if they would get anything back during that time, nor could they transfer anything out of the fund as it was all frozen. Lots of lost opportunity cost and sleepless nights for those near retirement that had most or all their 401K in there.

2nd Edit: To give you an idea of the timeline:
The Trust Advisors Stable Value Plus Fund (the "Fund"), filed a voluntary bankruptcy petition on September 30, 2005.
The Fund emerged from bankruptcy on August 14, 2006. Between 2006-2009, distributions were made to plan and trust investors (equity holders) [2.29MB] that are on the list filed with the Court on January 12, 2006.
Understood. From what I have seen in the industry today, stable value plans are today run in a far more conservative manner than this fund was run, and I believe that the vast majority of funds were run more conservatively than Trust Advisors back in 2006.
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Old 05-16-2013, 05:21 PM   #22
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Understood. From what I have seen in the industry today, stable value plans are today run in a far more conservative manner than this fund was run, and I believe that the vast majority of funds were run more conservatively than Trust Advisors back in 2006.
I'm sure they are but this and several other things that have happened to me over the years remind me not to have too much in any one place. These include:
  • Account at Scott Trade where balance of IRA went to zero over night. Took 3 weeks (and many phone calls by me) for them to track it down and restore my account. Never told me what happened. I noticed it, not them. Glad I was paying attention.
  • Account at bank where $4K was transferred out to unknown account. Was fixed over night. No apology, no explanation. Also caught by me. Glad I was paying attention.
  • 401k offered company stock was in mystery units (not publicly traded units). Mystery stock was exchanged for new spun out companies. New mystery spun out companies was later exchanged back into mystery units of company stock. Account value plummeted. I was too young to know I should have questioned it and figured there was govt oversight of these things and accounting oversight so things must be on the up and up. But now I know there really isn't any oversight and I should have tried to figure out what shenanigans were being done. Had multiple $100K reductions in value...
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Old 05-16-2013, 05:23 PM   #23
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Thank you for the discussion on this thread. I am invested in a stable value fund through my Mega Corp 401k. I always viewed it a a sleepy little corp bond fund. Now that I am getting close to ER , I am taking a closer look at it. The annuity comparison is interesting. I have read everything the company has supplied about the fund, but nowhere have I read where the principle is "insured" against loss. Is this an understood definition of a SVF?

Thanks again. I am so glad I found this forum when I did!
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Old 05-16-2013, 05:23 PM   #24
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I'm sure they are but this and several other things that have happened to me over the years remind me not to have too much in any one place. These include:
  • Account at Scott Trade where balance of IRA went to zero over night. Took 3 weeks (and many phone calls by me) for them to track it down and restore my account. Never told me what happened. I noticed it, not them. Glad I was paying attention.
  • Account at bank where $4K was transferred out to unknown account. Was fixed over night. No apology, no explanation. Also caught by me. Glad I was paying attention.
  • 401k offered company stock was in mystery units (not publicly traded units). Mystery stock was exchanged for new spun out companies. New mystery spun out companies was later exchanged back into mystery units of company stock. Account value plummeted. I was too young to know I should have questioned it and figured there was govt oversight of these things and accounting oversight so things must be on the up and up. But now I know there really isn't any oversight and I should have tried to figure out what shenanigans were being done. Had multiple $100K reductions in value...
And after all this you are buying variable annuities?
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Old 05-16-2013, 05:40 PM   #25
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And after all this you are buying variable annuities?
Again, not sure what your intending by your question. My only objective in contributing to this thread was to remind people not to have everything all in one place even if it is a stable value fund in a 401K. You don't want to be the one with a frozen account, not knowing if your getting any of it back. Things happen and 2005 wasn't so long ago that it was another generation or anything. One of my friends had rolled all their past 401Ks into this 401K and all of it into the stable value fund as they were close to retirement. That was the one banging the head on the desk. Another friend didn't want to be in the market and had all of their 401K in the stable value fund. That was the tears in the bathroom one.
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Old 05-16-2013, 06:30 PM   #26
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I've worked for the same employer (sort of) for almost 2 decades... but they keep selling/buying/spinning us off... so I've had a few 401k plans as part of each corporate takeover. The employer (up until the latest sell off) has always been a bigger company - so our 401ks were always top of the line. Vanguard, then Northern Trust... and now the new (smaller) corporate overlord's plan has the Hartford as the servicer...

Up until now I've never been offered a stable value fund. Now, with this smaller, podunk, plan, we have one. And it was one of only 2 decent options in the plan. (They have ONE vanguard index fund - the other funds are all high expense ratio, underperforming crap... and this stable value fund.)

I look at it like a money market - but paying better interest. I try for an overall 60/30/10 ratio - so I have a chunk in this SV as part of 10% cash.
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Old 05-16-2013, 06:36 PM   #27
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Originally Posted by Sittingduck View Post
Thank you for the discussion on this thread. I am invested in a stable value fund through my Mega Corp 401k. I always viewed it a a sleepy little corp bond fund. Now that I am getting close to ER , I am taking a closer look at it. The annuity comparison is interesting. I have read everything the company has supplied about the fund, but nowhere have I read where the principle is "insured" against loss. Is this an understood definition of a SVF?

Thanks again. I am so glad I found this forum when I did!
Stable value funds are basically bonds backed by some insurance to guarantee principal and some interest rate that will reset every so often. When I look at the rate for the SV plan in my 457 it's been trending down over the last 3 years and is now 2.66%. Still that's what you'd get in a annuity. There is more risk in a SV fund than an annuity and you don't get the advantage of the pool of investors if you live longer than expected, but the insured principal and access to principal are pretty attractive as a way to fund part of retirement.

Stable value fund - Wikipedia, the free encyclopedia
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Old 05-16-2013, 06:52 PM   #28
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Wouldn't it have to return at least the rate of inflation to qualify as a stable value fund? Seems like that last fund is steadily declining in real value.

I've been in a Stable Value fund for a long time, the one we have seems to follow mortgage interest rates in a delayed fashion. It's always a few years behind. Makes sense as that's what it is, insured packages of mortgages. It's currently paying 2.04%, I remember it being up over 7%.

I suppose one could deposit a large enough sum into one to cover your expected life span and use the interest as a sort of inflation protection, shouldn't be too far off. Of course you'd have to keep adjusting the payout downward it as you live longer and your life expectancy grows without the mortality credits of an annuity. In the end any leftovers could be viewed as inheritance or some such.
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Old 05-16-2013, 07:12 PM   #29
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Wouldn't it have to return at least the rate of inflation to qualify as a stable value fund? Seems like that last fund is steadily declining in real value.
bUU,

The prospectus doesn't say anything about inflation. I agree 1.6 percent sucks. It was half a percent higher when it was first introduced to the 401K. I immediately put most of my money into it, since the other options weren't so hot. After about a month of tracking my Stab fund, I noticed the daily bump-up of principal was a bit less than usual, and went back into the stats, and lo and behold, the c***s*****s had dropped the interest rate by a half percent, and the fund had a new name, "Stable Value N". When I called to ask about it all they would say was they had initially set up the wrong fund, but had corrected it by replacing it with the lower interest fund.....
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Old 05-16-2013, 07:28 PM   #30
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Originally Posted by Sittingduck View Post
Thank you for the discussion on this thread. I am invested in a stable value fund through my Mega Corp 401k. I always viewed it a a sleepy little corp bond fund. Now that I am getting close to ER , I am taking a closer look at it. The annuity comparison is interesting. I have read everything the company has supplied about the fund, but nowhere have I read where the principle is "insured" against loss. Is this an understood definition of a SVF?

Thanks again. I am so glad I found this forum when I did!

Insured, yes, but if the insurance company defaults, the stable value fund could lose principal. The prospectus does mention something like "loss of principal is very unlikely, but possible" given x, y, z circumstances.
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Old 05-16-2013, 07:37 PM   #31
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Insured, yes, but if the insurance company defaults, the stable value fund could lose principal. The prospectus does mention something like "loss of principal is very unlikely, but possible" given x, y, z circumstances.
If the insurer goes belly up you've just lost the insurance, you still have the underlying bonds. So now you've just got a short term bond fund.
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Old 05-16-2013, 07:43 PM   #32
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I think there may be multiple insurers.
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Old 05-16-2013, 08:06 PM   #33
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I think there may be multiple insurers.
Yes multiple insurers and multiple bonds from multiple providers.
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