Resisting Sales Pressure Isn't Easy!

403(b) & 457 RETIREMENT PLANS – What You Need to Know Now!

Presented by: CTA Risk Management & Business Initiatives & Development Department
InSight Employee Benefit Communications
March 18, 2011

The following questions were submitted at and prior to the conference.

Please note that neither California Teachers Association, CTAinvest.org nor any of its affiliates and associates act as investment advisors or investment fiduciaries. We cannot recommend a specific investment, asset allocation or investment strategy for you. For advice specific to your personal situation, please consult a financial advisor. In addition, California Teachers Association, CTAinvest.org nor any of its affiliates and associates give tax advice. Consult a tax advisor or attorney about your situation.

• What if I don't like my district's vendor choices because they all charge high management fees or are heavily biased towards annuities when I'd like to invest in a mutual fund? Am I stuck with their approved vendors? I used to have Vanguard and American Fidelity - not Am Fidelity Assurance, but they were taken off the approved list, so I had to stop contributions.
• Does the school district's written plan document have to be different from the third party administrator's publications? I asked for the information and was just given the website for the Fringe Benefit Consortium (fbcretire.com). Can you include the sample replies of a predatory lender also on your website?
• Clarify: I am 50 years old and can put $22,000 into 403b and $22,000 into 457, totaling $44,000? This year, I was told I could not write off the $3,000 I put in an IRA because I had a "qualified retirement plan." The IRA was not through district. Is this true? Anything I can do now to get the tax benefit?
• Can the beneficiary be a family trust?
• What about Roth 403(b) and Roth IRAs?
• If I maximize a 403(b) and 457 ($16,500 each) can I participate in an IRA and get the tax deduction? I think the max for that is $6,000/year.
• I have an IRA and a 403(b); which should I put more money in? Which is better?
• 1) Can a portion of a Roth or 403(b) be rolled-over? 2) Is there a way to determine what your total investment has been over the life of the investment?
• Where does real estate investment fit into asset allocation and investing?
• Does the district have a financial interest in these vendors (i.e., does the district get some type of kickback or other benefit?)
• What is your opinion on investing in very small business ventures in Third World countries? Also "green" investments.
• How quickly after leaving a job can you roll over funds from a 403(b) or 457 plan? So if you are RIFfed but it is possible you might be hired back, can you roll it over in that lapsed time (after school year officially ends?)
• Education is my second career. I paid into Social Security for 25 years before becoming a teacher. Will I receive any Social Security benefits? My husband’s company offers matching funds. Should we take advantage and put in the maximum amount before I start investing into a 403(b)?
• I spent 15 years working/own my own business. How will my Social Security benefit offset 20 years of teaching?
• What is a DCP? Can you get your money out after 36 months?
• When looking for an investment advisor, what type of license/training is advisable? Do rollovers before end of contracted investment period result in surrender fees or penalties?
• How does one go about opening a Roth 457 or Roth 403(b)? Can you contribute $16,500 into a Roth 403(b)/457 and $5,500 into a traditional Roth IRA?
• If a 403(b) is rolled over to an IRA, is there a tax impact?
• Is an annuity a stock, bond or cash?
• When do you periodically rebalance your allocations? Yearly?
• You just said you would recommend 60% stocks and 40% bonds – do you recommend three months of cash in the bank?
• Do you have to max out contributions to your 403(b) before you contribute to a 457?
• Are all mutual fund companies equal? How do you determine if they are actively or passively managed? Which is better, active or passive?
• With a 401k an individual can become their own administrator. Can this be done with a 403b or 457?
• Are the fees that are charged within annuities tax-deductible? When Rick said we have gone from 40% debt to GDP to about 100% debt to GDP now, he also mentioned the ratio during the post WWII era. What was that figure?
• Alhambra Unified School District, profile was wrong
• Our district (Hacienda La Puente) has many choices. Which of these have direct investment providers?
• On slide 123 it says "request the district to provide 403b transparency and disclosures as part of its annual notice." Is an annual notice required? Does it come from District or Provider?
• How do you find out how much Social Security you can get when retiring if you worked in the private sector?
• Do the school districts get a kickback from the 403b companies that they are offering to employees?
• Does CTA offer support in building a union website?
• Are districts required to offer a Roth 403(b)/457? If not, can an individual teacher still invest in one on his/her own?
• 1) should I buy back service credit available to me when I was a substitute? 2) Last time I looked at 403bcompare it wasn't updated. 3) Does a company's ratings matter?
• It seems, from what I've understood so far, that a Roth would be better than a tax-deferred annuity because taxes are always going to go up. Wouldn't it be better to pay taxes now and let annuity grow?
• If you use your catch-up options plus max out your employee contribution limits to your 403(b), what does that do to the calculation of your STRS benefit? We use the three highest consecutive years of salary as our benefit calculations for STRS. Does our three highest consecutive years' salary determination go way down because we choose to max out our 403(b) contributions?
• Once a district approves a vendor are they locked on? Can a district drop them at any time? And do they stay on the approved list until dropped or is it only for the current school year?
• Where are we with Social security offset? Our pension can't be taken away? Didn't Gov. Ronald Reagan take money from our STRS fund? It hasn't been paid back from what I understand. I had a conversation during the president's conference and it was brought up that legislation is being formulated to place all California teachers under 1 wealth program: fact or fiction? Is CECHCRs (Checkers) still a viable health care option? How does, or who do I contact?