joel

Are you referring to k-12 public or private school systems? Are you referring to higher education public or private institutions? Are you referring to the basic/mandatory retirement plan or the supplemental Defined Contribution plan?

Prior to distribution, should not the in-service 72 year old be told that the amount is not subject to RMD while she is employed by her employer/plan sponsor but if she rolls into an IRA while active she will be subjecting herself to RMD? I would bet she doesn't know the rule. It is the employer/plan sponsor's fiduciary duty to explain the rule to her.

Investor has a 457(b) governmental plan and plans to work until age 75. Can he/she defer the first RMD until the year of retirement from the governmental job? While working at the governmental job must RMD from a former employer's 403(b) plan start at age 70-1/2 or can the first RMD from the 403(b) be deferred until retirement from the governmental job?

Thank you David, I stand corrected.

A tax exempt entity is not a governmental entity. A tax exempt entity is i.e. a research foundation. A governmental entity is i.e. the State of New Jersey. I believe you are confusing the tax-exempt status of the DB trust with the tax status of the employer sponsor. Section 401(a) applies with equal vigor to governmental DB plans and to DB plans of tax-exempt organizations. The issue at hand applies to just governmental DB plans.

A government DB pension plan pays an in-service death benefit equal to 3 times annual salary. The beneficiary has been told that the amount is taxable. Is it, therefore, eligible to be rollover to an IRA?

What are the investment restrictions for a 457(b) government plan?

I believe this thread proves the point that the individual ownership rights the employee-investor has with section 403(b) arrangements is what is terribly wrong with the 403(b)---it is a simple nightmare! The Congress needs to wake-up and give these arrangements the funeral it deserves.

Why not rollover the cost basis to a Roth IRA and the earnings portion to a traditional IRA? Note: The current Pub. 575 makes no mention of this option.

Formal termination of the 403(b) plan is required. Termination is the distributable event that will allow the participant, regardless of age, to effectuate a Direct Rollover to the Statewide Plan. In the absence of a formal termination of the 403(b) plan an individual needs to satisfy one of the triggering events listed under 403(b)7 and or 403(b) 11. Joel

It appears that the State of Wisconsin adopted this type of DB plan decades ago.

Now, if the after-tax plan is a 401(k) it stands to reason that the after-tax portion of the distribution is eligible for rollover to a Roth IRA and the taxable portion of the distribution is eligible for rollover to a Traditional IRA. Do you agree? Thanks, Joel

This Lump-sum settlement is coming from an after-tax 401(k) plan which is subject to a $51,000 415© contribution limit for 2013. I guess this is the "old fashion after-tax plan" you mention.

If a lump-sum settlement of the account is taken, may the taxable portion (earnings) be rolled over to a Traditional IRA?

Benefits 101: If I begin another thread will you then be responsive?

I plan to give a "recommended list" to people or "funds to consider". Isn't this just another phrase for "menu"? For a non-ERISA plan there is no such thing as being exempt from state law fiduciary standards. These plans are not covered under ERISA because they are covered under state fiduciary laws. I am not aware of any non-ERISA 403(b) plan that comes close to offering one hundred funds let alone twenty six thousand. Are you saying these non-ERISA plans would be wise to increase their offering to twenty six thousand funds lest they invite a lawsuit in state court alleging breach of fiduciary duty for offering only 25 funds?

Let's not conflate individual freedom with the plan sponsor's fiduciary responsibility.

Yes. The plan sponsor didn't want me to limit the menu. My jaw has dropped to the floor. A menu of just 30-40 choices has been cited to reduce the rate of participation. Participants become overwhelmed and turn away. Having said that, in my opinion such a menu should not be allowed. If one is inclined to invest outside of the major asset classes let them do so outside of an employer sponsored plan.

Are you telling us that your core line-up is twenty six thousand mutual funds?

Not exactly. 403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%. Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants. You may be able to get some leads by going to 403bwise.com and asking your question there. Thank you! The 403bwise tip was great. I found exactly what I'm looking for... a flat $40 per year + 15 basis points isn't bad for a 403b plan.? What are the expense ratios for the funds in your line-up?

Not exactly. 403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%. Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants. You may be able to get some leads by going to 403bwise.com and asking your question there. Thank you! The 403bwise tip was great. I found exactly what I'm looking for... a flat $40 per year + 15 basis points isn't bad for a 403b plan.?

large plans ($1 billion +) charge their investors from about a low of 40 basis points for expense ratios and administrative costs i.e. NYC Deferred Compensation Plans to 200-300 basis points i.e. New Jersey State Employees Deferred Compensation Plan. This is a national scandal.

What are the expense ratios of the investment funds?

You must collect those unnecessary commission/fees from the uninformed participant.

Is the five year clock in effect regardlesss of age?