Supersaver but Investing Newbie

[pb4uski]

WADR, @CautaServans, I strongly differ with @Semi-Retyrd on the value of that thread to you. It is long and complex. At your stage of investing knowledge the best that can come of it is you will get confused and, worse, come to believe that "complex" is a necessary investing style. It's not. In my 50+ years of investing experience, I have come to understand that complex is usually a road to failure. Don't let it be you.

+1. While I like the subject thread and have invested in QLENX myself, the OPs needs are much more elementary. Once the OPs is done with training wheels then they can consider alternatives.

 

[pb4uski]

In TIAA, there is a category called "Traditional" that guarantees 3% and offers additional, depending on how the funds go. They never give returns like the 16% I got last year, but they don't drop. I have about 30% of my 403b and 457b in those funds. The rest are in equities.

These are participating annuities, or at least function like participating annuities. There is a baseline guarantee but you usually get more the the underlying assets do well.

 

[CautaServans]

It depends on what you move it to, which is why you need to be very careful.

To avoid a transfer being taxable you want to do a rollover to a traditional IRA which is also a tax-deferred account. Typically, the plan will send you a check made out to your broker followed by "FBO (your name)". FBO stands for "For the Benefit Of". You then deposit the check into your traditional IRA account with your broker. At tax time, your plan will send you a 1099-R for the withdrawal from the plan but with coding that it was a rollover. So it will be reported on your tax return but not included in income since it is a rollover.

I do not have an IRA. Do you recommend that I set up one now or can I do that when it comes time to start withdrawing funds?

 

[pb4uski]

I do not have an IRA. Do you recommend that I set up one now or can I do that when it comes time to start withdrawing funds?

I would suggest setting one up now. I see from a prior post that you are with Schwab. I would suggest setting up a traditional IRA and a Roth IRA with them.

The traditional IRA would be the account that a post retirement rollover from your 403b of 457b can be made to without creating a taxable event.

The Roth IRA has a 5-year clock from the date that it is established, so setting it up now will start the 5 year clock. You may also want to set up a Roth IRA for your DH to start the five year clock.

 

[CautaServans]

I would suggest setting one up now. I see from a prior post that you are with Schwab. I would suggest setting up a traditional IRA and a Roth IRA with them.

The traditional IRA would be the account that a post retirement rollover from your 403b of 457b can be made to without creating a taxable event.

The Roth IRA has a 5-year clock from the date that it is established, so setting it up now will start the 5 year clock. You may also want to set up a Roth IRA for your DH to start the five year clock.

Great advice!

That's something I can do immediately with a CD that recently expired. I appreciate your insights and help!