403(b) help?

[brewer12345]

My sister is eligible to enroll in a 403b at work, but I had to stop myself from gagging when she read me the list of providers: AXA, ING, VALIC, etc. Anyone know about 403(b) 7 plans? I know you can technically transfer money away from an existing 403b account, but could you just set up a 403b7 account with Fido, Vanguard, etc. and contribute monthly that way? She is at a public school district if it matters.

 

[cute fuzzy bunny]

Now you know why I quit putting my wifes money into her 403b and decided to stem withdrawals from our taxable portfolio and just take the income. The choices were lousy, inefficient, and not particularly cheap.

I havent looked into transfer options, but I theeenk you cant do it while she's still working there. Would like very much to be wrong about that, but I havent read up on it on the wifes plan yet. I do remember seeing something about a huge fee they charge you to take the money out.

Also dont think you can create a separate plan with another institution, but would just as much like to be wrong about that.

 

[ronin]

What state is this?

 

[yakers]

Go to:
http://www.403bwise.com/

A good site. I
met Steve Schullo at a Vanguard Diehards local meeting. He knows more about 403bs than anyone I have ever met although he was unable to get LAUSD (Los Angeles Unified School District) to listen to 403b improvements. My wife will be retiring next year and I will get her 403b account away from the insurance company/thieves that have it and into a Vanguard IRA fund the minute I can. Now the 403b had some benefit for her, deferred income and it lowered our taxes so we could have a Roth IRA but nothing like as good a program as it could be. And the amazing thing is that nobody knows or cares about it.

 

[sailor]

My sister is eligible to enroll in a 403b at work, but I had to stop myself from gagging when she read me the list of providers: AXA, ING, VALIC, etc. Anyone know about 403(b) 7 plans? I know you can technically transfer money away from an existing 403b account, but could you just set up a 403b7 account with Fido, Vanguard, etc. and contribute monthly that way? She is at a public school district if it matters.

I don't think you can setup "your own" 403b account elsewhere.
But some providers (Fido and Schwab for example) for additional money ($25 per quarter typically) offer "Brokerage Link" option within 403b or 401k if you don't like the choices in the plan.

 

[Bookm]

Why employers don't just use TIAA/CREF or Vanguard instead of these insurance companies that kill worker's returns with high fees all around is beyond me. DW has a 403b plan with VALIC (which is part of the AIG lie machine), and the only reason we use it is because she receives a generous match from her employer. But as far as I've read, Notth is unfortunately correct with his answers. While employed, they won't let you move money from a retirement account, AFAIK.

Bookm

 

[wildcat]

I could be wrong but I think the Roth 401k applies to 403b as well. After tax though, no match and it could expire in 2010. Starts in January. You control where the money goes. Didn't know if you would be interested.

 

[brewer12345]

This is in Massachusetts. My read of 403bwise says that you can transfer money away from a plan while you are still in it, but it is the sort of thing that requires lump sum transfers every so often. Two of her choices are Oppenheimer and Scudder, so not all of them are insurance companies. My hope is that I can pick a fund or two at one of these guys that isn't a complete dog. Otherwise, I am tempted to just tell her to save after-tax money.

The reason places use insurance companies is that small pland are expensive to administer and VG/TIAA are not set up to deal with them. The insurers are, but the pass the high costs of administration on to the participants.

 

[grumpy]

My wife's school system had the same type of lousy annuity choices under their 403(b) plan. I started a lobbying effort in concert with the teacher's union to have T.R. Price and Vanguard added to their list of 403(b) providers. After three years they finally agreed. Then I had to educate the school system's payroll office about the IRS limits (they had a lower limit hard coded into their payroll system). My wife contributed the IRS maximum including the over age 50 catchup amount every year until she retired. We then rolled the 403(b) account over to a T.R. Price IRA.

My understanding is that you cannot roll those funds over into an IRA while you are still employed by the school system.

There is a woeful lack of understanding about 403(b)'s by school system personnel. You will have to fight to get good investment choices included in the system.

Grumpy

 

[rmark]

It is possible to move funds within a 403b. Insurance companies essentially take over the administrative problems from the school districts, so the districts don't have much incentive to change. Some day there may be some huge lawsuits over fiduciary duty. Me and my wife are fortunate have Tiaa-Cref in our 403b (we use Real Estate and Equity Index) and use Vanguard for accounts outside of the plan.

 

[ronin]

Since you live in Mass. this is not going to apply.  But in CA you can check with the state teacher's retirement sytem and find a list of approved financial service providers for your particular school district.  I was suprised to see the list for my district is quite long.  Also available is a plan through the retirement system which has some pretty good selections as well as a mutual fund "window" through which you can access just about any fund you'd like.  Perhaps your state has something similar, I don't know.