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403(b) Advisers Disappointed With TIAA, But Say Other Providers Are 'Way Worse'
An alternative to 403(b) investing might be found right under the noses of the (K-12) educator who contributes through payroll deductions to fund their very own state pension. State systems often have what are referred to as "voluntary accounts" for their teacher members.
The IRS identifies these accounts as 401(a) accounts (the public sector's equivalent to a private sector's 401(k)). They are contributed to with after tax contributions that have unique features such as being invested in the same manner as the state pension fund.
The one I had access to had no fees and a "10 year smoothing average" was applied to the account once a year based on the last 10 year's performance of the state pension fund. Subsequently the smoothing average method was replaced with year to year returns for the 401(a) voluntary accounts.
At retirement, the "growth" in this account was available to be rolled over to T. IRA and the after tax contributions qualified to be rolled over to an individual Roth IRA according the pre-tax "cost basis" of the account.
Comments
The IRS identifies these accounts as 401(a) accounts (the public sector's equivalent to a private sector's 401(k)). They are contributed to with after tax contributions that have unique features such as being invested in the same manner as the state pension fund.
The one I had access to had no fees and a "10 year smoothing average" was applied to the account once a year based on the last 10 year's performance of the state pension fund. Subsequently the smoothing average method was replaced with year to year returns for the 401(a) voluntary accounts.
At retirement, the "growth" in this account was available to be rolled over to T. IRA and the after tax contributions qualified to be rolled over to an individual Roth IRA according the pre-tax "cost basis" of the account.
Here's a link to the CTRB website describing the 401(a) option for CT members:
How do I initiate an Active Teacher Voluntary Account with CTRB?
Ask your teacher pension administrator if this 401(a) option exists and how you can contribute voluntarily.
Zacks has few articles on the 401(a):
Can-401a-403b-plans be rolled over?
How are 401a-different-401k?
Regards,
Ted
M* VALIC Family Of Fhttp://quicktake.morningstar.com/fundfamily/valic/0C00001VXP/snapshot.aspxunds Performance:
M* VALIC Family Of Funds:
http://quicktake.morningstar.com/fundfamily/valic/0C00001VXP/fund-list.aspx
Examples:
VCNIX
VSTIX
VCBCX
VCSTX
VCHSX
403bwise is a website dedicated to helping 403(b) investors:
403bwise.com/
Petition your school's plan administrator to include 403(b)(7) options similar to Vanguards:
403(b)(7) Employer Kit