Author Topic: 403(b)(7) Question with Vanguard  (Read 1625 times)

RabStache

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403(b)(7) Question with Vanguard
« on: December 05, 2014, 06:55:38 AM »
My wife has access to a 403(b)(7) through her school and I've convinced her to start contributing.  Initially we set it up with VTSMX, VGTSX, and VBMFX.

However, I just saw this:
"For 403(b)(7) plans:
We charge participants a $15 annual account service fee for each fund they hold in their Vanguard 403(b)(7) account. This fee doesn’t apply to members of Flagship, Voyager Select, and Voyager Services."


With this in mind, would it make more sense to just put all of her money into Vanguard LifeStrategy Growth Fund (VASGX) until she reaches $50,000?  $50,000 is the level you become a "Voyager" and I'm assuming that falls under the "Voyager Services".

slugsworth

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Re: 403(b)(7) Question with Vanguard
« Reply #1 on: December 05, 2014, 04:57:45 PM »
I was sort of curious about this. . . since I had over $50k in my 403b but got charged the fee. So, I gave vanguard a call. Their customer service is very good and easy to access.

To get the fee waived you need to be a voyager member, but to be a voyager member, you need to have $50k+ in non 403b/401k funds. So, if you have additional taxable accounts with them or IRA's that total $50k then you are a voyager and save the $15/yr.

Obviously what fund(s) you choose is your own call. I'm not any kind of guru, but I use just one target date fund in my 403b which provides enough diversification for me.

MDM

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Re: 403(b)(7) Question with Vanguard
« Reply #2 on: December 05, 2014, 07:08:22 PM »
My wife has access to a 403(b)(7) through her school and I've convinced her to start contributing.  Initially we set it up with VTSMX, VGTSX, and VBMFX.

However, I just saw this:
"For 403(b)(7) plans:
We charge participants a $15 annual account service fee for each fund they hold in their Vanguard 403(b)(7) account. This fee doesn’t apply to members of Flagship, Voyager Select, and Voyager Services."


With this in mind, would it make more sense to just put all of her money into Vanguard LifeStrategy Growth Fund (VASGX) until she reaches $50,000?  $50,000 is the level you become a "Voyager" and I'm assuming that falls under the "Voyager Services".

Yes, your proposal makes sense.  It's not going to be a huge amount of money in either case, but why not?

Expense ratios of the current funds:
  VTSMX 0.17%
  VGTSX 0.22%
  VBMFX 0.20%

Expense ratio of your proposed fund:
  VASGX 0.17%

E.g., if you have $7K in each of the current funds you are paying
$7K * (.17% + .22% + .20%) + $15 * 3 = $86.30

Putting $21K into one fund you will pay
$21K * .17% + $15 = $50.7

Note that the composition of VASGX may be different from what you have in the three current funds:
  VTSMX 56.6%
  VGTSX 23.8%
  VTBIX  15.6%
  VTABX   4.0%
...but a few percentage points one way or the other in your asset allocation is probably immaterial.