On Tue, 19 Dec 2006 18:51:23 -0600, joetaxpayer
<joetaxpayer[at]nospam.com> wrote:


- quote -

Amen to that. Play like we have two similar choices, one with a 1%
annual expense ratio and the other with .5%. Also assume that we
invest $100,000 earning 8% before expenses annually for 25 years using
similar investment allocations.

Ignoring commissions if any, at the end of 25 years that .5%
difference is approximately $67,500. And if we assume a 10% return
(closer to historical average of stock market), the difference is over
$100,000.

Welcome to compounding. (This also explains why, long-term, it's
awfully difficult to beat the SP500 Index with its ultra-low expense
ratio.)

-HW "Skip" Weldon
Columbia, SC

Joe, Thanks.

JulesButler wrote:

- quote -

I would would certainly roll the account to an IRA, but it's your
decision whether to use the Rep, I don't understand your relationship
with him now. He reps the 403(b) but would also service your IRA?

As you say, you can go self-directed at Vanguard for what in comparison,
is no cost. US indexes range 0.10-0.20%, and foreign indexes a bit
higher, but over time, 2% is quite the load to bear.

JOE

The 103,00 is NEA Valuebuilder divided this way:
American Century International Growth 10%
Security Global 9%
Wells Fargo Advantage Small Cap Value 9%
Calamos Growth 9%
Security Mid Cap Value 9%
Dreyfus Appreciation Fund 10%
American Century Select 10%
Van Kampen Comstock 9%
Fixed Account 25%

My Representative tells me that the cost is about 2% annually and
recommends to go to an IRA with him at a 1% cost approximately or to go
self directed with Vanguard at almost no cost at all.

JulesButler wrote:

- quote -

1) What is the annual expense ratio (the fees)?
2) What is it invested in?
3) When you say 7-8% annually, it sounds as if it's in a fixed product.

Most recent stock market returns (S&P)

2000 -9.0%
2001 -11.9%
2002 -22%
2003 28.4%
2004 10.7%
2005 5.0%
2006 ~14% (squiggle means approx., not negative)

7-8% over this period is excellent. From 2003 to today, only, you'd be
lagging the market. Know the mix of funds in that account would help.
JOE

The 403 (b) with over $100,000 is earning 7-8 % annually. The fixed one is
earning a flat 4%. My main concern is earning power until age 59 1/2 or
after. My pension has a COLA so I will continue to have annual increases
of 3% but it will be reduced when the Social Security kicks in at age 66
or so I believe.

Maybe I should roll over the 4% fixed one and leave the larger one alone.
I really do not need to start early withdrawal because my present job
allows extra income and medical. Please advise based on this additional
information. Thanks.

po.ning[at]gmail.com wrote:

- quote -

Keep in mind a couple things;

The laws allow for similar 'stretch' on 401(k) (I'm not as familiar with
403B rules) accounts, but not all custodians follow this.

Starting in 07, 401(k) of non-spouse beneficiaries may roll to an
inherited IRA same as if the deceased had an IRA. (Important to note; an
inherited IRA for a non-spouse gets a title noting that it's been
inherited, it doesn't just change owner.

JOE

bo peep wrote:
- quote -

This is the first item I come across on a search:

http://www.complianceheadquarters.co...retch_ira.html

You can do your own search on stretch IRA.


- quote -

po.ning[at]gmail.com wrote:

- quote -

Uh, po, your point was relevant, as I hope is my next observation.
OP's first account, $110,000 is in NEA Valuebuilder, through which one
can buy mutual funds, I can't find the expenses, but since they talk
about A, B, C shares, my gut says there are some hefty fees. I hope OP
will look and advise the total fees he is paying in that account. Even
John might agree that another year in this account may be worth avoiding
if the annual expense is 2%+.

Second account is earning 4% fixed. Huh? CDs are now well above that.
Seems to me an evaluation of current situation is in order. And it's not
all or none. Maybe moving one of the 2 to the IRA is the way to go.
Best thing for heirs is to move some to the IRA, then start to convert
to a Roth a bit at a time.
JOE

po.ning[at]gmail.com wrote:
- quote -

That sounds interesting - some details please.

John Cowart

bo peep wrote:
- quote -

What is irrelevant is your contention that people of her age are more
likely to become unemployed and needs to access their 403B funds. OP
is already retired, although she still works in post-retirement. If
she becomes unemployed, she has a pension to fall back on.

Moving the funds to an IRA would be advantage to her heirs over a 403B,
if she were to leave them the funds from the IRA.

- quote -

po.ning[at]gmail.com wrote:
- quote -

That's totally irrelevant - the fact that she is collecting a pension
would not, by itself, allow her to withdraw funds from an IRA without
paying a penalty at age 53. If she leaves the funds in the 403(b) she
can get to them penalty-free 4.5 years earlier than if they were in an
IRA. That is the primary advantage that 403(b) and 401k plans have for
people who are less than 59.5 years old. Moving the funds to an IRA has
no advantage for her, unless she is unhappy with the investment choices
available in the 403(b).

John Cowart

bo peep wrote:
- quote -

John, please re-read the original message. The OP is retired and is
collecting a pension.

po.ning[at]gmail.com wrote:
- quote -

The point was: she's age 53, coming up on the age 55-59.5 window where
a 403(b) has the advantage of penalty-free access, which the IRA lacks.
When a person is in their 50s, the chances of becoming unemployed
increase quite a bit, so it's good to have some readily available
funds.

John Cowart

po.ning[at]gmail.com wrote:
- quote -

The point was: she's age 53, coming up on the age 55-59.5 window where
a 403(b) has the advantage of penalty-free access, which the IRA lacks.
When a person is in their 50s, the chances of becoming unemployed
increase quite a bit, so it's good to have some readily available
funds.

John Cowart

bo peep wrote:
- quote -

She wants to roll them into an IRA, not access the funds.


- quote -

JulesButler wrote:
- quote -

"When can 403(b) money be accessed without penalty?
Generally, penalty-free distribution from a 403(b) cannot occur until
the participant:
Reaches age 59 1/2
Separates from service in the year turning 55 (and must be retired)
Retire before age 55 - eligible for Substantially Equal Periodic
Payments (SEPP). Participants who have retired early (before age 55),
but want access to their 403(b) without penalty can do so using SEPP.
This provision requires that you take a series of substantially equal
periodic payments. The key is that once you start these payments they
must continue for five years or until you reach 59 1/2, whichever takes
longer. If you start at age 58 you must continue until you are 63
(minimum 5 years).
Becomes disabled (as defined in section 72(m)(7) of the Internal
Revenue Code)
Through a loan (some investment companies allow this, some do not)
Dies
Consulting a tax professional before accessing 403(b) money is highly
recommended."

John Cowart

I have retired from teaching (2003)and collect a pension from RI which has
a 3% COLA, but have two 403(b) accounts to which I no longer contribute.
One with NEA Valuebuilder in the amount of 103,000 (mutual funds)and one
with Greater American for 32000(fixed account earning 4% annually). I
have been working at Brown University for the past two years where I have
a TIAA-Cref taking 20% of my hourly wage. There is 11000 in that account.

I am 53 and wonder if I should just allow these 403(b) accounts to
continue to grow on their own or roll one or both into a self-directed
IRA.