joel

May a Traditional IRA be used for the stated purpose?

Can a Traditional IRA be used for the stated purpose?

Writing "estate" or leaving the line blank has no impact whatsoever. By leaving the line blank she specifically designated the estate as beneficiary. This is a valid way of assuring that certain people do not share in the proceeds of the IRA distribution. This is the very reason the decedent named the estate in lieu of named beneficiaries. Contrary to your assertion she did "care". That said, the custodian has the legal right to change the default beneficiary when named beneficiaries are not named. But when such a change MAY negatively impact the choice made by some account owners, it seems to me that such a change must be communicated, in such a way, that the recipient knows something important, deserving of their attention and possible action, is in the envelope. I wish I had a nickel for each pound of junk mail, labeled "important", I have received over the years. I venture to say that only a small percentage of account owners leave the line blank or write in "estate". That said, how much time, effort and cost would it require to mail the Certified letter to only those account owners? or to email them? or to telephone them? To say that an increase to the expense ratio is more fundamental to the investor than telling the investor that his/her estate is no longer a valid beneficiary and has been changed to spouse, if alive, or to children is to trivialize the clear intent of the decedent.

This is why one should roll the Roth feature balance to a Roth IRA as soon as the PD allows for it. Roth IRA are not subject to RMD.

When a named beneficiary is not named the account goes to the decedent's estate. Fine. After the account is opened a first class mailing goes out to the decedent telling her that her estate is no longer her beneficiary and if she does not have named beneficiaries on file the account will go to her spouse and if their is no spouse to her children. Such a fundamental change to the Designation of Beneficiary Form should have been communicated by Certified Mail RRR.

May a traditional IRA be used for the stated purpose?

What percent of those that have Medicare also have voluntary supplemental coverage?

Because the sole investment choice is set by statute, is the Board of Trustees free of liability for failure to offer a diversified investment menu?

The investment choice(s) is set by statute.

This is a 401(a) defined contribution plan which is funded solely by the voluntary contributions of the public-sector workers in New Jersey. It started in 1963 with a single investment choice---a common stock portfolio. It has never expanded its investment menu. Are the Trustees in breach of their fiduciary duty?

A QJSA is also offered and may be rejected by the participant and his/her spouse. Upon analysis, if the entire account balance is depleted in less than 10 years each monthly payment is an eligible rollover distribution. Those with larger account balances where it will take more than 10 years to deplete are at a disadvantage because the monthly periodic payments are not eligible rollover distributions. Can this case be successfully challenged in Court?

This ERISA Money Purchase Pension Plan is funded solely by the participating employer and has for decades invested solely in treasuries. Is this investment policy a breach of the Fiduciary Standard/Prudent Man Rule? Upon retirement the participant may not take a lump-sum settlement but is limited to a maximum monthly withdrawal of $2,500 until the account is depleted. There are no other options. Can this be successfully challenged in Court?

Recognizing that she is exempt from the 10 percent penalty tax does she still have the option to establish a SEPP which mandates that she takes no more but no less than the calculated amount per year until she reaches age 59-1/2? I believe this strict payout plan will "encourage" her to get a job, lest she depletes the IRA prematurely.

Patience is, indeed, a virtue. The stock indexes are all up since the partial shutdown started.

Widow, age 51, is rolling over her deceased husband's (age 53) lump sum settlement from his Qualified Plan to an IRA. Will her IRA distributions prior to age 59 1/2 be exempt from the 10 percent penalty tax? How should the IRA be titled?

Your accusatory assertion is without foundation I did not offer to sell you anything. I gave you the unsolicited advice not to use your wife's commissioned based/high fee 403(b) as the rollover vehicle for her TRS refund. My advice to you was to have your wife use an IRA (no-load fund) for this purpose. Having said that, I encourage you and your wife to log onto www.403(b)wise to learn all about the abusive 403(b) products and practices; i.e. your wife's AXA account. Best, Joel

We left IL in our early 30s and I beleive she can collect full benefits around 65. I would have to look and see there might be an earlier age for full benefits. She is vested. As far as I can tell becoming vested in the IL TRS is rather easy. It might be from day one in fact. She was given an option to take a "refund" of her contributions and that money has been creditied with interest every year since she left. The refund amount goes up every year by an interest rate factor. But my understanding is if she did that she would be forgoing the DB annuity option. To me the question would be if you thought about taking such a refund is the refund more or less then the PV of the annuity. The refund is not the PV of the future annuity. The pension reserve established at age 65 is the PV of future annuity income payments. The refund left on deposit with the TRS simply helps the TRS fund the PV of the prospective annuity payments----that PV is the Pension Reserve. What are you blathering about? I never said the refund is the Present Value of the annuity. In fact I clearly said it wasn't the PV of the annuity. What I said was the only way to determine if you should take the refund or not is if the refund exceeded the PV of the annuity. Or put another way could I invest any refund in such a way that when my wife turned 65 I could buy a better annuity with a 3% COLA. That is what a PV calculation of an annuity to today would measure. Are you trying to sell me something? Because honestly I am not a DB expert but the more you talk the more I am convinced you know less then me. Otherwise I am at a lost as to why you keep trying to convince me to think taking a refund is the better idea when you are making no argument for it that makes any sense to me. You need to take a calming pill. I assure you I am not attempting to sell you or your wife anything. Even if I were, you have told us that she already vested her refund with the TRS so that money can never be invested by her. No? She simply must wait until 65 to collect her vested benefit. You said: "What I said was the only way to determine if you should take the refund or not is if the refund exceeded the PV of the annuity." A refund taken in the early 30s can never exceed the PV of an annuity which does not start until age 65. Again, the Present Value of the annuity is the TRS Pension Reserve established at age 65. That said, your wife would have been much better off if she took the refund and rolled it into an IRA with a no-load fund. Why? Because she had more than 30 years to see this IRA grow----and it would have grown to a larger sum of money than the TRS pension reserve that will be established when she turns age 65 and starts to collect her vested pension. Your wife, with her own contributions (refund) has more than financed her future TRS Pension Reserve (present value of future annuity payments) and thus her future lifetime pension. I would have advised her to effectuate a rollover of the refund to an IRA when she was in her early 30s. Best, Joel

OF COURSE!!!

We left IL in our early 30s and I beleive she can collect full benefits around 65. I would have to look and see there might be an earlier age for full benefits. She is vested. As far as I can tell becoming vested in the IL TRS is rather easy. It might be from day one in fact. She was given an option to take a "refund" of her contributions and that money has been creditied with interest every year since she left. The refund amount goes up every year by an interest rate factor. But my understanding is if she did that she would be forgoing the DB annuity option. To me the question would be if you thought about taking such a refund is the refund more or less then the PV of the annuity. The refund is not the PV of the future annuity. The pension reserve established at age 65 is the PV of future annuity income payments. The refund left on deposit with the TRS simply helps the TRS fund the PV of the prospective annuity payments----that PV is the Pension Reserve.

Do you like paying high fees/commissions? I guess you do otherwise you would not be fixated on the high fees/commission based 403(b) maintained by your wife at AXA. Have you digested my prior post? What other k-12 districts allow should not be an issue for you at this time----you must deal with your options and your options are either to pay tax on the distribution or roll it over to an IRA with Vanguard. For me this is a no-brainer!!! Joel

Sure it is quite easy to vest. The TRS has the use of your wife's money in perpetuity. That being said, she must wait at least 30 years to start collecting her pension. This makes taking the refund in her early 30s the far better choice. She could have invested this sum inside of an IRA and it would have grown to be more than the needed Pension Reserve established by the TRS at age 65 to guarantee her the lifetime pension. For this purpose I would have placed the refund/IRA in a no-load balanced mutual fund and forgot about it. Another way to have looked at this was to ask: What will be the purchasing power of my pension, payable when I turn 65, if the pension is based on the salary I earned 30+ years earlier? Your wife's own contributions with investment gains over 30+ years will be more than enough to fund her to-be lifetime pension.

The vested pension is in "cold storage" inasmuch as it does not grow from the date of vesting to the date of receiving the first pension check. The longer this waiting period is the more advantageous it is to the Plan and the shorter the waiting period the more advantageous it is to the participant. Assume one vests at age 35 after 10 years of contributing. His/her money continues to participate in the returns of the Plan's holdings. Assume the pension begins in 30 years at age 65. This individual's own money has grown, over 30 years, to at least the necessary Reserve required to guarantee the lifetime pension. Result: The vested participant has financed 100 percent of his/her pension by vesting at age 35. If, however, vesting takes place at age 55 after 10 years of contributing and age 65 as the date of payability the participant's own contributions with investment gains is insufficient to meet the Reserve requirements. Result the employer must contribute the shortfall. This is why I asked the questions? Joel

ESOP: Your wife vested. This means her money stays with the Illinois TRS and when she reaches full retirement age she starts to collect her pension. How old was she when she vested and at what age will she start to receive her pension? Joel

Inasmuch as your wife is no longer employed by the school district which sponsored the 403(b) I would suggest you cut all ties with AXA inasmuch as this is a high fee/commission based investment provider. I would urge her to roll this money over to the Vanguard Group of Mutual Funds as an IRA rollover account. She can then effectuate a rollover transaction of her refunds from her Teachers Retirement System to her IRA with Vanguard. Vanguard will charge her about 0.35 % for administrative and investment management services while AXA charges about 2.7 percent. Having said all that, what are the circumstances under which she is eligible to receive a refund from the TRS? Is she about to retire? Joel

I assume you meant to tell us it is the public k-12 system. Having said that, these employees, primarily, are covered by a DB plan which do not offer a lump-sum settlement option. Their voluntary DC plans are, primarily, IRC section 403(b) plans. These supplementary/voluntary plans do permit rollovers. The school administration has nothing to do with DB Plan Administration which is governed by State Law. This law is the Plan's governing document. This document requires a Board of Trustees to administer the terms of the Plan as enumerated in the law. State enabling legislation must be passed in order to permit a lump-sum settlement as a DB payment option.