Vanguard Retirement Savings Trust III

[ownyourfuture]

This is in my 401(k). Even though I retired at age 53, in 2015 (now 61) I haven't taken any distributions. Because of that, I rarely check the account. Before yesterday, the last time I checked was May 2019. At that time, the 30 day yield was 2.52%. Yesterday it was 2.13%

With the Fed rate hikes over the last year or so, I was expecting it to be higher.
What am I missing?

Thanks in advance.

[marinauser]

Retirement Savings Trust III is a stable value fund. For most of 2019, the federal funds rate was above 2%. In 2022 the federal funds rate was 0-2% for the first half of the year. That fund is showing an increase in its return rate during the last half of 2022 as interest rates rose and should show a higher rate for 2023 depending on the insurance contracts that it holds.

[ownyourfuture]

Quote:

Originally Posted by marinauser Retirement Savings Trust III is a stable value fund. For most of 2019, the federal funds rate was above 2%. In 2022 the federal funds rate was 0-2% for the first half of the year. That fund is showing an increase in its return rate during the last half of 2022 as interest rates rose and should show a higher rate for 2023 depending on the insurance contracts that it holds.

Thank You.

[ownyourfuture]

Checked the account again today & have a couple follow-up comments.

As of today, the 30 day SEC yield is 2.40%
Something I failed to mention in the original post, is that you have to subtract the expense ratio of 0.29% & the benefit responsive contract cost of 0.14% from the aforementioned 2.40% leaving the actual yield at a meager 1.97%






There’s only one other ’short term/cash’ option available in my plan.
Vanguard Cash Reserves Federal Money Market Fund Admiral Shares (VMRXX)
This one offers a 7 day SEC compound yield of 5.16%, less 0.10% expense ratio.




I forgot to take a screenshot, but on the page showing investments available to me, VMRXX is marked ‘closed’

Seems like this would be something that was available inside a 401(k) ?
If it wasn't Saturday, I’d call Vanguard directly, but tech-support is only available Monday - Friday.

I'll call them Monday to see if the fund in question is indeed closed to 401(k) holders.
If that's the case, & the most I can get on my cash is under 2.00%, I'll seriously consider transferring the account to Fidelity.
I have an IRA & HSA there, & cash is earning 4.73%

Anyone else familiar with this ?
Thanks in advance.

[HI Bill]

VMRXX is open to 401(k) and IRA owners, unless there's a workplace restriction (my dad has it in his IRA). It has a $3K investment minimum. VMFXX is paying about the same as VMRXX after fees, and is the standard settlement fund included in brokerage accounts. IMHO, for short-term reserves, both are fine, with a slight edge to VMRXX. If VMRXX is indeed closed to you in your 401(k), I'd consider rolling it into an IRA with no such restrictions, as you can't access the funds with the Rule of 55 with your ER age of 53.

[DrRoy]

A stable value fund generally has investments/deposits in various places with a range of maturities. The return will regularly lag the market. It should rise slowly over time, and then also lag at higher levels as rates decline at some point in the future.

[ownyourfuture]

Thanks for the replies.

Just got off the phone with Vanguard.
Apparently there is a 'workplace restriction' in my 401(k), because VMRXX is not available to me. My only guess as to why, is that my employer also offers/offered a very generous defined benefit pension plan, which I've been enjoying since July 2015.

As someone already mentioned, I could roll it into an IRA & at that point (according to the reps I talked to) VMRXX would be available to me.

I'm now considering transferring it to Fidelity.
I have a couple questions regarding that type of transaction, but no time right now. Possibly later tonight.

Regards

[audreyh1]

FWIW the SEC yield of a fund is net of any expense ratio. You don’t have to subtract it.

[ownyourfuture]

Quote:

Originally Posted by audreyh1 FWIW the SEC yield of a fund is net of any expense ratio. You don’t have to subtract it.

Good to know.
Thanks