joel

May a non-spouse beneficiary of a 403b, roll the distribution over to another 403b and or an IRA? Or is rollover treatment not permitted.

I welcome investment risk. This means I am being empowered. Just look at the the alternative plan to SS operated by the The County Government of Galveston, Texas to see what I mean by individual empowerment. Imagine what the account balances would be today if over the past 17-18 years an employee of the County invested in a balanced portfolio comprised of Stocks and Bonds instead of GUARANTEED RATES with an insurance company. AN INDIVIDUAL NEED ONLY FOLLOW THE SPONSORS OF LARGE DEFINED BENEFIT PLANS. THEY HAVE FOLLOWED A BALANCED APPROACH FOR MANY MANY YEARS.

Please log onto www.ncpa.org/pi/congress/socsec/6-98fcong.html These findings should be known by everyone.

As a teacher for the NYC Board of Education I contribute to the TSA Program offered by the Teachers' Retirement System of the City of New York. The TRS IS THE SOLE 403(b)CARRIER FOR THE CITY'S TEACHERS. The Union wants it this way because it controls 3 of the 7 votes on the TEACHERS' RETIREMENT BOARD.The investment choices are: I. An 8.25% guaranteed return. II. A Variable A Fund for investment in a broad range of common stock. and III. A Variable B Fund for investment in stocks and bonds. Investment elections are allowed only once per year. Exchanges can only be made in 1/12 installments over a year. Will a lawsuit that asks for more investment choices and improvement in the exchange policy succeed? [This message has been edited by joel (edited 12-10-98).]

It takes about $600,000 to provide a lifetime pension of $50,000 to a 55yr old. In a contributory plan the retiree's account balance may approximate $100,000 or 1/6 of the cost. (Most DB Plans in the public sector require the employee to contribute at a rate of about 5% of pay while the Plan guarantees interest of about 5-6% per yr.) At first glance one would say "what a generous sponsor"!!. After, however, adding onto the individual's account balance the true investment earnings that were never credited to the account the retiree has in reality contributed about half the cost of his or her pension not one sixth as the Plan Administrator and the Union leaders would have the participant and the taxpayer believe. Such "recordkeeping" substantially reduces one's death benefit prior to retirement as well as the amount eligible for rollover should one leave employment without a vested benefit. [This message has been edited by joel (edited 12-14-98).]

New York is one of the most miserly states when it comes to granting COLAS to public pensioners. It simply refuses to share, in a fair way, the tens of billions of dollars its Public Employee Pension Systems have earned, over the last 15 years, in excess of the 7% return guaranteed to the pensioner. A 1985 retiree has received two ad hoc pension supplements totalling about 7-8%. Could it be that the SS SYSTEM with its automatic COLA Program has taken the Public Employer off the hook? I also believe that the public employee unions favor the ad hoc approach. This method keeps the pensioner in a constant state of need of the Union. Afterall, who does the retiree turn to to plead his case with the State Legislature? And, who will get the credit, every 5 Years or so, when an ad hoc pension supplement(a bone)is passed by the Legislature? [This message has been edited by joel (edited 12-09-98).] [This message has been edited by joel (edited 12-11-98).] [This message has been edited by joel (edited 12-11-98).]

Dear Franklin, I have a hard copy of the TIAA-CREF MEMORANDUM. Should I mail it to you? JOEL

The DB/DC debate will never be complete without the input of the TIAA-CREF organization. They published a MEMORANDUM more than 25 years ago on the advantages and disadvantages of each approach. This report is as valuable today as it was then. Maybe our moderator can contact TIAA-CREF and get their approval to publish it on this Board. It was published in 1971 or '72.

I venture to say that until Congress requires full earnings participation for DB plans, DC plans will be the plan of choice among employees. If this should happen watch and see how many DB plans fold in favor of DC plans. Why should an employer continue its DB plan when it can no longer eat off the retirees plate? [This message has been edited by joel (edited 11-25-98).]

My DB plan compels me to annuitize. Yet if I should die after reaching eligibility to retire my beneficiary has the option to receive my reserve funds in a lump sum. In the absence of full investment return participation the "guaranteed pension" that you cannot outlive is GUARANTEED to be erroded by INFLATION. This erosion is simply a very cruel "retirement tax" levied on DB pensioners. Excess earnings should not be used as a cash cow for the plan sponsor. Excess earnings belong to the pensioners. It is part of their deferred income.

Dear Ralph and Carol; Let's assume a $500,000 Initial Reserve to guarantee a single life option of $40,000 annually to a 55 year old. This is a fixed dollar pension for life. The only increases come from ad hoc cost of living supplements. Are there DB plans that upon retirement give the retiree the option to make distributions from the Initial Reserve under essentially the same rules as an IRA owner? [This message has been edited by joel (edited 11-19-98).]

Thank you for your quick reply. Assume a 20 year payout. Is there full earnings participation? Or is there a guaranteed rate that is factored into each payment,ie 7%?

Does anyone know of any DB plan that offers payout options for periods other than for one's lifetime? Are such options allowed under the IRC? I am referring to the BASIC BENEFIT; not the DROP option. [This message has been edited by joel (edited 11-18-98).]

Does the IRC permit a Board of Education to offer two 403(b)plans? One for those that must join the Public Retirement System and the other for those employees that do not. For those employees that must join the PRS, the PRS itself is the sole 403(B) carrier. No other carrier is allowed. For those employees that do not have to join the PRS a mutual fund family is the sole carrier. No other carrier is allowed. Both plans are salary reduction programs. [This message has been edited by joel (edited 11-17-98).]