joel

IS THIS NOT WHAT AN IRA ROLLOVER ACCOUNT WAS DESIGNED TO DO?

Are you saying that it is not possible for this fact pattern to have been with TIAA-CREF or are you saying that it might have been depending upon the school system's contract and the particular sales person/sales agreement? ================================================== TIAA-CREF is never a party to such a contract. Some of the most egregious practices in the distribution of financial products can be found in the 403(b) arena. It is a shame that the high level of due dilligence practiced by the higher education community is not mirrorred by the k-12 crowd. It is pathetic that a state teachers union endorses, for a fee, a commissioned based VA for its dues paying members.

GBurns, The reason why the giants of the industry pay less of a commission than the other less recognized companies is because they advertise in a big way. The claims paying ability of the insurer is the only thing that matters with immediate annuitization. Why pay any commission at all for immediate annuitization or for that matter a single premium deferred annuity? Go directly to the no-load annuity providers. You will find that the no-load providers are AAA. Joel

And, joel, I checked out their prospectuses and they are consistent with your comments. The situation that I experienced may have related to an older or different type of contract, but there was a surrender charge of some 20% of the stated contract value for a lump sum withdrawal but no such charge for an annuity conversion. Perhaps things have changed. ===================================================== Re: Tiaa-Cref Andy: In its 86 years of operation TIAA-CREF has always been a pure no-load company. You may want to check your files; in as much as the 20 percent surrender charge you refer to does not, I assure you, apply to TIAA-CREF. You are referring to another company. Joel

AndyH: I do not understand your post. Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF) is the pure no-load annuity and mutual funds company I recommend for someone who is desirous of an immediate payout annuity. What company did you think I was referring to? Joel

Jusducki: Besides a lump-sum settlement option what other options does your Plan offer your engineer?

Remember, in return for a guaranteed lifetime income you are transferring the title to your money to the insurer. If one determines that lifetime annuitization is best for themselves and their families please use the no-load outfit known as TIAA-CREF.

As far as the death benefit goes, it cannot go below 55K. Many annuities guarantee your initial premium payment.. He took out 45K so he is left with 55K in death benefit regardless of the account value... =================================================== It seems that you are saying that if he still had the VA and died with an account value of $50K the return of premium death benefit would be 100k for a total dispersement of $150K. Please clarify.

What was the VA expense ratio---about 3 percent? Was he subject to a Contingent Deferred Sales Charge in order to get out? Did he buy a no-load mutual fund with the 45k or one that subjects him to another schedule of Contingent Deferred Sales Charges? Is the 45K managed any differently than when it was 100K? The guaranteed death benefit will be the difference (if any) between the $55,000 (adjusted cost of the annuity) and the value of the Roth annuity at the time of your client's death.

Promises, promises!

NYC Board of Education offers two salary reduction 403(b) programs. One is operated in-house by the TRS and the other is farmed out to a no-load mutual funds family. If you belong to the TRS you must use their 403(b) program and if you do not belong to the TRS you must use the no-load mutual funds family. Are such restrictions permitted?

Hardship withdrawals from 403(b) arrangements may not include earnings just contributions. Is it the same with 401(k)?

bluefish Posted on Jul 31 2004, 02:12 PM I am fully retired from local gov. civil service, and have full access to my 457(b) plan. Will the IRS allow me to "directly rollover" all or part of my 457 funds for the purchase of a life insurance annuity without the exchange being treated as a taxable event ? Isn't an annuity purchase/ exchange via 457 funds considered a lateral transfer to a qualified retirement plan? I would appreciate any help here. Thanks. =================================================== Yes, you may rollover your 457 funds to another eligible retirement plan. But why are you thinking of rolling it over to an annuity? Do you intend to annuitize immediately which means you voluntarily transfer the title to your 457(b) funds to the insurance company in return for a guaranteed lifetime income?

"Self Directed" usually applies to DC plans with the ee responsible for making investment decsions. Are you referring to DC Plans that are PERS? Please clarify.

Hardship withdrawals under a 403(b) arrangement may not include earnings. I do not know if the same rule applies to 457(b) plans.

If a 403(b) plan which is not subject to ERISA has a hardship provision, can a person who terminates service take a hardship distribution? ===================================================== Section 403(b) does not require the establishment of a plan. The employer has no say in its administration because it is a contract between the ee and the investment provider with the er's responsibility being limited to remitting the monthly salary reduction to the provider for investment under directions of the ee. There is no Plan, Plan Document, Summary Plan Description, Trust or Plan Administrator. The assets are owned by the ee. The high priced variable annuity is prevalent in the 403(b) community because it is an individual arrangement and lacks the legal governance required of qualified plans.

Hardship is an in-service triggering event used to make a taxable withdrawal. See: sections 403(b)7 and (b)11. The funds are not eligible for rollover treatment. Termination is a triggering event that allows for a full or partial withdrawal. The tax deferred status of the funds may be preserved by effectuating a rollover.

Does this bill include local government employers?

Is is permissible to invest in separate accounts and exchange traded funds?

Other than for financial hardship, 457 does not allow for inservice distributions even after attaining age 59 1/2. Your right to distributions start with your severance from employment.

Ditto!!!

403bwise has recently published an article I wrote concerning high cost 403b arrangements. You can view the article at: http://www.403bwise.com/features/nysut_jlf.html. Your reactions are welcome. Peace, Joel L. Frank

mbozek: You are totally unresponsive to my points. Again, do you consider the financial agreement between the union and NYSUT to be that of a "pay to play" arrangement? I will respond to your comments in CAPS. Joel L. Frank ------------------------------------------------------------------------------------------------ I dont think that you have provided proof that 457 plans are low cost when compared to 403(b) plans. I DID NOT KNOW I WAS IN A COURT OF LAW OR NEEDED TO PROVE THAT THE EARTH IS ROUND. THE 457 PLAN OF THE CITY OF NY CHARGES 0.34 PERCENT WHILE THE NYSUT SPONSORED 403b PLAN CHARGES ABOUT 2 PERCENT. THESE EXPENSE RATIOS COME FROM THEIR RESPECTIVE WEBSITES AND PROSPECTUSES. THE FEDERAL THRIFT SAVINGS PLAN CHARGES 0.03 PERCENT AND THE INVESTMENT PLAN OF THE STATE OF FLORIDA CHARGES ABOUT 0.20 PERCENT. All retirement plans permitting salary deferral have cost structures which are passed on to participants. THANKS FOR STATING THE OBVIOUS...THE ISSUE IS WHICH EXPENSES SHOULD BE ELIMINATED BECAUSE THEY DO NOT ASSIST THE PARTICIPANT ONE BIT IN GROWING HIS/HER RETIREMENT INVESTMENT. Govt 457 plans have additonal costs including trustee or custodial fees, record keeping requirements and 12b-1 fees. I CHALLENGE YOU TO GIVE US THE NAME OF A STATEWIDE 457 PLAN THAT CHARGES A 12b-1 FEE. Also 403(b) plans allow employees with 15 years of service to defer an additional 3k a year for up to 5 years above the maximum permitted under a 457 plan. C'MON NOW LET'S BE PROFESSIONALLY HONEST. YOU KNOW OR SHOULD KNOW THAT SECTION 457 HAS A MORE GENEROUS CATCH UP PROVISON THAN 403(b). THE "DEFERRAL ACCELERATION FOR RETIREMENT" PROVISION ALLOWS FOR TWICE THE APPLICABLE REGULAR CONTRIBUTION LIMIT FOR EACH OF THE 3 YEARS PRIOR TO REACHING NORMAL RETIREMENT AGE. School boards should focus their limited resources on more important matters such as the quality of the education provided and the cost to taxpayers instead of providing more perks to teachers since where I live 75-80% of the district budget goes for wages and benefits. Adding another benefit program only increases the administrative burden on school staffs and accounting personnel without providing any benefit to the students or taxpayers who foot the bill for the school districts. Finally employees who do not like their choices in a 403(b) plan can make IRA/Roth contributions of 3k (increasing to 5k) to a low cost provider. PLEASE TELL US WHAT IS THE BENEFIT TO YOU AS A TAXPAYER TO TELL YOUR CHILD'S TEACHER THAT IT IS OK FOR YOU TO PAY 2 PERCENT FOR A 403b ARRANGEMENT WHEN THE MARKET PLACE OFFERS NO-LOAD FUNDS. THE COST TO YOU AS A PARENT/TAXPAYER IS THE SAME WHETHER YOUR SCHOOL DISTRICT OFFERS THE HIGH COST ING 403b PLAN OR A NO-LOAD 403b PLAN VIA TIAA-CREF OR VANGUARD. YOU ARE SKIRTING THE ISSUE WHEN YOU TELL A TEACHER WHO DOES NOT LIKE TO PAY HIGH FEES..TUFF!...GO BUY YOURSELF A NO LOAD IRA. WHERE DOES YOUR ILL WILL AND ARROGANCE GENERATE FROM? OR DO YOU MAKE A LIVING SERVING HIGH COST PROVIDERS?

Hi mbozek, Please note that the 403(b) is the primary salary reduction arrangement for public schools not because 401(k)s are not permitted (unless they were grandfathered)but because they had a near two decade headstart on the 457(b). It is only recently that teachers have clamored for the 457 because the offset rule has been repealed. Many statewide 457 plans are offered to local employers including school districts. You would be hard pressed to find a high cost 457(b) Plan administered by a state government. Are not these victims of high cost 403b products entitled to the alternative 457(b)? Of course they are! The question is how to make it a reality when the school board is out to lunch and the union is negotiating a "pay for play" deal with ING. Peace, Joel L. Frank

Re: NYSUT/ING Isn't the financial agreement between the Union and ING better described as a "pay for play" agreement?