Author Topic: What to do with my money?  (Read 14843 times)

Catica

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Re: What to do with my money?
« Reply #100 on: March 26, 2018, 05:25:00 PM »
OK, I had my taxes done over the weekend.  I will get them by mail soon from my tax guy, so right now I can't see it what's on each line but putting max in an IRA account he said it lowered my taxes significantly.  So, I need to open an IRA.  What I gathered here is that I should go with Vanguard and invest in Total Stock Market Fund (VTSMX).  I would put $11000 ($5500 for 2017 and $5500 for 2018). Does this make sense?
VTSMX is investor class shares (minimum $3,000 initial investment, 0.15% ER). If you're investing $10,000 or more you want admiral class shares (VTSAX - 0.04% ER). If your taxes were filled out with the maximum IRA contribution, then you do need to open that IRA and fund at least the $5500 for 2017 (funding all or part of the $5500 for 2018 is optional - it won't affect your 2017 taxes). If you're comfortable with putting away $11,000 for retirement right now, I'd go ahead and max 2017 and 2018 IRA right away.
Yes, I'm going to max out my IRA for 2017 and 2018 right away and invest in VTSAX as you suggested.  I do wonder what to do going forward.  Do I continue having my employer contribute to TIAA or should the future contributions go to Vanguard?  Maybe that depends what investing options I would have at Vanguard through my employer?  If I can't afford to max out my 403b, do I put as much as can into it or do I max out my IRA first and then depending if I have any money left put into my 403b?  Or perhaps I live off the $30000 I have in the bank but max out both of my accounts for the year (403b and IRA)?  And do I keep my money in 403b at TIAA or do I rollover to my new Vanguard IRA?
« Last Edit: March 26, 2018, 05:31:39 PM by Catica »

Rob_bob

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Re: What to do with my money?
« Reply #101 on: March 26, 2018, 05:34:20 PM »
Having both makes sense when you have contributed the max amount to all of your tax deductible accounts. 

Also when you reach age 70.5 the Government will make you withdraw a certain % from your tax deductible accounts even if you don't need or want to take it out.  It will be taxable income and could push you into a higher tax bracket.  If you take a bunch out to buy a car etc. it will increase your income and you will pay more taxes.  It may also cause your medicare premium to increase.

There are no requirements to take money out of a Roth at any age.  The money you take out does not add to your taxable income and you are not taxed on it. I like that.


Catica

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Re: What to do with my money?
« Reply #102 on: March 26, 2018, 05:53:25 PM »
Having both makes sense when you have contributed the max amount to all of your tax deductible accounts. 

Also when you reach age 70.5 the Government will make you withdraw a certain % from your tax deductible accounts even if you don't need or want to take it out.  It will be taxable income and could push you into a higher tax bracket.  If you take a bunch out to buy a car etc. it will increase your income and you will pay more taxes.  It may also cause your medicare premium to increase.

There are no requirements to take money out of a Roth at any age.  The money you take out does not add to your taxable income and you are not taxed on it. I like that.
I see, so Roth not really for me since I'm not maxing out my tax deductible accounts.

MDM

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Re: What to do with my money?
« Reply #103 on: March 26, 2018, 06:37:53 PM »
Yes, I'm thinking of opening traditional IRA.  My tax guy already figured that in so I need to do it.   So I will contribute $11000 right away.  I still have about $20000 to invest in something.  I understand the difference between traditional and Roth but still don't know which one is better for me.  Does having both ever make sense?
See Traditional versus Roth - Bogleheads for what may be the most accurate treatment.  Not necessarily the easiest read, but give it a shot....

Catica

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Re: What to do with my money?
« Reply #104 on: March 27, 2018, 05:04:09 AM »
Yes, I'm thinking of opening traditional IRA.  My tax guy already figured that in so I need to do it.   So I will contribute $11000 right away.  I still have about $20000 to invest in something.  I understand the difference between traditional and Roth but still don't know which one is better for me.  Does having both ever make sense?
See Traditional versus Roth - Bogleheads for what may be the most accurate treatment.  Not necessarily the easiest read, but give it a shot....
Thanks, I just read this.  What I understand from this is that if my marginal tax rate is lower now than what it will be when I retire then Roth makes more sense than traditional IRA.  What I don't understand is what if my tax rate changes each year?  Sometimes I make more one year sometimes less and my marginal rate changes from year to year.  I don't know if my logic is right, but wouldn't I want both traditional and Roth, so the year my rate let's say is 15% I contribute to Roth and the year it is more than 15% I contribute to traditional?  Is this wrong way of doing it?

robartsd

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Re: What to do with my money?
« Reply #105 on: March 27, 2018, 08:37:44 AM »
If your tax return included an IRA contribution to save on taxes, that probably means it was a traditional IRA. You'll need to open a traditional IRA and fully fund 2017 to match your tax documents. You can choose to add a Roth IRA later if you feel it makes sense for your financial situation. Having some Roth savings is nice for withdraw flexibility, but most often the numbers work out such that a Roth is not the most tax efficient vehicle.

Catica

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Re: What to do with my money?
« Reply #106 on: March 27, 2018, 09:26:51 AM »
If your tax return included an IRA contribution to save on taxes, that probably means it was a traditional IRA. You'll need to open a traditional IRA and fully fund 2017 to match your tax documents. You can choose to add a Roth IRA later if you feel it makes sense for your financial situation. Having some Roth savings is nice for withdraw flexibility, but most often the numbers work out such that a Roth is not the most tax efficient vehicle.
Yes, I know it was traditional IRA, because that's what I told my tax guy and that's the only way I would have been able to deduct it from my taxes, but I think I would have qualified for a lower tax rate without that IRA contribution (I had a lot of deductions) and that's why I'm deliberating whether Roth IRA would have been a better option. 

MDM

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Re: What to do with my money?
« Reply #107 on: March 27, 2018, 09:55:30 AM »
Thanks, I just read this.  What I understand from this is that if my marginal tax rate is lower now than what it will be when I retire then Roth makes more sense than traditional IRA.  What I don't understand is what if my tax rate changes each year?  Sometimes I make more one year sometimes less and my marginal rate changes from year to year.  I don't know if my logic is right, but wouldn't I want both traditional and Roth, so the year my rate let's say is 15% I contribute to Roth and the year it is more than 15% I contribute to traditional?  Is this wrong way of doing it?
You have that exactly right.  The strategy of "some years Roth will be preferable, while other years traditional will be preferable" is excellent, but seemingly overlooked by many.

You absolutely may have money in both Roth and traditional accounts, so go ahead and choose each year which seems better.

Of course, there is still the guesswork of "what will the marginal rate be when in retirement?"  One should take one's best guess and act accordingly. 

It's entirely possible that some years you may guess wrong, and be suboptimal by a few percent.  In most of those cases, either traditional or Roth will still be better than if you had invested in a taxable account - and definitely better than if you had not invested at all!

Catica

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Re: What to do with my money?
« Reply #108 on: March 27, 2018, 01:37:19 PM »
Thanks, I just read this.  What I understand from this is that if my marginal tax rate is lower now than what it will be when I retire then Roth makes more sense than traditional IRA.  What I don't understand is what if my tax rate changes each year?  Sometimes I make more one year sometimes less and my marginal rate changes from year to year.  I don't know if my logic is right, but wouldn't I want both traditional and Roth, so the year my rate let's say is 15% I contribute to Roth and the year it is more than 15% I contribute to traditional?  Is this wrong way of doing it?
You have that exactly right.  The strategy of "some years Roth will be preferable, while other years traditional will be preferable" is excellent, but seemingly overlooked by many.

You absolutely may have money in both Roth and traditional accounts, so go ahead and choose each year which seems better.

Of course, there is still the guesswork of "what will the marginal rate be when in retirement?"  One should take one's best guess and act accordingly. 

It's entirely possible that some years you may guess wrong, and be suboptimal by a few percent.  In most of those cases, either traditional or Roth will still be better than if you had invested in a taxable account - and definitely better than if you had not invested at all!
OK, so the only thing I'm regretting (perhaps there is not reason to regret, I'm not sure) is that if the tIRA reduction had no impact on my margin tax rate this year perhaps I should have put that money in Roth rather than in traditional.  But it did lower how much in taxes I owe so maybe I should not be regretting it?

MDM

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Re: What to do with my money?
« Reply #109 on: March 27, 2018, 01:51:21 PM »
OK, so the only thing I'm regretting (perhaps there is not reason to regret, I'm not sure) is that if the tIRA reduction had no impact on my margin tax rate this year perhaps I should have put that money in Roth rather than in traditional.  But it did lower how much in taxes I owe so maybe I should not be regretting it?
Having no impact on the marginal rate itself is no problem.  In simplified terms, the only time a tIRA contribution will change the marginal rate is when it moves you from one tax bracket to another. 

It's the value of the marginal rate now, vs. the value of the marginal rate when you withdraw later, that decides whether traditional or Roth is better.

Catica

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Re: What to do with my money?
« Reply #110 on: March 27, 2018, 02:02:23 PM »
OK, so the only thing I'm regretting (perhaps there is not reason to regret, I'm not sure) is that if the tIRA reduction had no impact on my margin tax rate this year perhaps I should have put that money in Roth rather than in traditional.  But it did lower how much in taxes I owe so maybe I should not be regretting it?
Having no impact on the marginal rate itself is no problem.  In simplified terms, the only time a tIRA contribution will change the marginal rate is when it moves you from one tax bracket to another. 

It's the value of the marginal rate now, vs. the value of the marginal rate when you withdraw later, that decides whether traditional or Roth is better.
I understand that.  My regret is that I would be in 15% marginal rate regardless of my $5500 tIRA contribution so I should have put that $5500 in Roth instead. 

MDM

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Re: What to do with my money?
« Reply #111 on: March 27, 2018, 02:09:19 PM »
I understand that.  My regret is that I would be in 15% marginal rate regardless of my $5500 tIRA contribution so I should have put that $5500 in Roth instead.
Maybe, maybe not.

Because you don't have a pension, see the table in cells Calculations!T2:U11 of the case study spreadsheet.  Using today's tax rates, you will need >$1.2 million in your traditional accounts before a 4% withdrawal rate in retirement alone would cause you to pay more than 15%.

Is there a concern that you will have too much in the traditional accounts?

robartsd

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Re: What to do with my money?
« Reply #112 on: March 27, 2018, 02:33:35 PM »
OK, so the only thing I'm regretting (perhaps there is not reason to regret, I'm not sure) is that if the tIRA reduction had no impact on my margin tax rate this year perhaps I should have put that money in Roth rather than in traditional.  But it did lower how much in taxes I owe so maybe I should not be regretting it?
I don't think you quite understand how marginal tax rates work. Your marginal tax rate is the tax rate you pay on your "last dollar earned" for the year. Tax deductible IRA contributions lower the amount of earnings you pay taxes on, so they only affect your marginal tax rate when they move you over a tax bracket threshold. Most of the time IRA contributions will just save you taxes based on your marginal tax rate. $5500 saves you $825 in the 15% bracket or $1375 in the 25% bracket. If your earnings just barely put you over the threshold for a tax bracket then an IRA contribution can change your marginal tax rate. Say you earn enough that before IRA contributions you are $1000 over the 25% threshold. Contributing $1000 would save you $250 on taxes. Contributing $1000 more would only save you $150 more on taxes because your marginal tax rate for that $1000 would be 15%. If your contributions did change your marginal tax rate, there might be reason to regret not splitting between traditional and Roth because the last dollar you contributed didn't save you as much on taxes as the first dollar contributed did. Not changing your marginal tax rate is not a reason to regret deciding to make traditional IRA contributions (the marginal tax rate being low might be).

It's the value of the marginal rate now, vs. the value of the marginal rate when you withdraw later, that decides whether traditional or Roth is better.
Remember, until RMDs hit you are in control of the marginal rate when you withdraw (by choosing when to withdraw and how much). If there is a 15% marginal rate when you withdraw and you withdraw enough to get to the very top of that bracket you win - because some of that money was withdrawn in lower brackets. You can even win if a small amount of the money is taxed at a higher marginal rate because some of it would be taxed at a lower rate keeping the effective tax rate on the withdraw below the marginal tax rate of the contribution (you could do slightly better in this case by splitting the contribution between Roth and traditional).

MDM

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Re: What to do with my money?
« Reply #113 on: March 27, 2018, 02:49:21 PM »
...keeping the effective tax rate on the withdraw below the marginal tax rate of the contribution....
Every new contribution gets withdrawn at the marginal rate on top of withdrawals based on previous contributions.  The use of effective withdrawal rate for comparison is not correct.

This comparison does pop up from time to time, unfortunately, but it is not a correct one for the purpose of making annual choices.

E.g., see the main reason to prefer one type of account over the other is the comparison of marginal tax rates.

Rob_bob

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Re: What to do with my money?
« Reply #114 on: March 27, 2018, 03:13:17 PM »
Also remember if you do open a Roth your total contribution to all of your IRA's for the year is $5500.  You can't put $5500 into a tIRA and $5500 into the Roth.  You can divide that $5500 any way you like between the two types of accounts.

Catica

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Re: What to do with my money?
« Reply #115 on: March 28, 2018, 04:58:44 AM »
I understand that.  My regret is that I would be in 15% marginal rate regardless of my $5500 tIRA contribution so I should have put that $5500 in Roth instead.
Maybe, maybe not.

Because you don't have a pension, see the table in cells Calculations!T2:U11 of the case study spreadsheet.  Using today's tax rates, you will need >$1.2 million in your traditional accounts before a 4% withdrawal rate in retirement alone would cause you to pay more than 15%.

Is there a concern that you will have too much in the traditional accounts?
Thanks for clarifying.  I will not have that much money in my traditional account.

Catica

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Re: What to do with my money?
« Reply #116 on: March 28, 2018, 05:00:22 AM »
OK, so the only thing I'm regretting (perhaps there is not reason to regret, I'm not sure) is that if the tIRA reduction had no impact on my margin tax rate this year perhaps I should have put that money in Roth rather than in traditional.  But it did lower how much in taxes I owe so maybe I should not be regretting it?
I don't think you quite understand how marginal tax rates work. Your marginal tax rate is the tax rate you pay on your "last dollar earned" for the year. Tax deductible IRA contributions lower the amount of earnings you pay taxes on, so they only affect your marginal tax rate when they move you over a tax bracket threshold. Most of the time IRA contributions will just save you taxes based on your marginal tax rate. $5500 saves you $825 in the 15% bracket or $1375 in the 25% bracket. If your earnings just barely put you over the threshold for a tax bracket then an IRA contribution can change your marginal tax rate. Say you earn enough that before IRA contributions you are $1000 over the 25% threshold. Contributing $1000 would save you $250 on taxes. Contributing $1000 more would only save you $150 more on taxes because your marginal tax rate for that $1000 would be 15%. If your contributions did change your marginal tax rate, there might be reason to regret not splitting between traditional and Roth because the last dollar you contributed didn't save you as much on taxes as the first dollar contributed did. Not changing your marginal tax rate is not a reason to regret deciding to make traditional IRA contributions (the marginal tax rate being low might be).
Yes, I get it!  Thanks

Catica

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Re: What to do with my money?
« Reply #117 on: March 28, 2018, 05:03:09 AM »
Also remember if you do open a Roth your total contribution to all of your IRA's for the year is $5500.  You can't put $5500 into a tIRA and $5500 into the Roth.  You can divide that $5500 any way you like between the two types of accounts.
Yes, I understand that.  I didn't mean to open and contribute to both Roth and tIRA in the same year.

Catica

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Re: What to do with my money?
« Reply #118 on: March 28, 2018, 05:08:00 AM »
I just opened tIRA at Vanguard waiting for the money from the bank to transfer over in the next few days.  So I'm all set with that.
« Last Edit: March 28, 2018, 09:25:31 AM by Catica »

Catica

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Re: What to do with my money?
« Reply #119 on: March 28, 2018, 09:27:04 AM »
My next step is to contribute more to my 403b.  The question I have is whether I should stick with TIAA or have my future contributions go to Vanguard 403b, my employer offers that option.

MDM

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Re: What to do with my money?
« Reply #120 on: March 28, 2018, 09:36:56 AM »
My next step is to contribute more to my 403b.  The question I have is whether I should stick with TIAA or have my future contributions go to Vanguard 403b, my employer offers that option.
In general, it is likely that Vanguard's offerings will cost you less and perform at least as well as TIAA's.

But there is still the very real possibility that the fees charged within the 403b account are higher than one would pay in an IRA.  Really do need the specifics of the 403b plan.

Catica

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Re: What to do with my money?
« Reply #121 on: March 28, 2018, 09:48:58 AM »
My next step is to contribute more to my 403b.  The question I have is whether I should stick with TIAA or have my future contributions go to Vanguard 403b, my employer offers that option.
In general, it is likely that Vanguard's offerings will cost you less and perform at least as well as TIAA's.

But there is still the very real possibility that the fees charged within the 403b account are higher than one would pay in an IRA.  Really do need the specifics of the 403b plan.
Ok what specifically do you need and I will give it all to you?

robartsd

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Re: What to do with my money?
« Reply #122 on: March 28, 2018, 09:51:33 AM »
...keeping the effective tax rate on the withdraw below the marginal tax rate of the contribution....
Every new contribution gets withdrawn at the marginal rate on top of withdrawals based on previous contributions.  The use of effective withdrawal rate for comparison is not correct.

This comparison does pop up from time to time, unfortunately, but it is not a correct one for the purpose of making annual choices.

E.g., see the main reason to prefer one type of account over the other is the comparison of marginal tax rates.
Yes that's why I included my parenthetical comment:
(you could do slightly better in this case by splitting the contribution between Roth and traditional)

If you only ever do one type (traditional or Roth), comparing the marginal tax rate to the effective tax rate will determine which is the most tax efficient. If you split contributions between traditional and Roth the comparison is between marginal tax rate of each contribution and marginal tax rate of each withdraw.

MDM

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Re: What to do with my money?
« Reply #123 on: March 28, 2018, 10:08:47 AM »
My next step is to contribute more to my 403b.  The question I have is whether I should stick with TIAA or have my future contributions go to Vanguard 403b, my employer offers that option.
In general, it is likely that Vanguard's offerings will cost you less and perform at least as well as TIAA's.

But there is still the very real possibility that the fees charged within the 403b account are higher than one would pay in an IRA.  Really do need the specifics of the 403b plan.
Ok what specifically do you need and I will give it all to you?
Every investment option you have in the 403b: ticker symbol, description, and fee charged.  E.g., from Do I need to change anything? - Bogleheads.org:

Fund Name: CREF Money Market Account (R3), Ticker symbol: QCMMIX, Expense ratio: 0.23%
Fund name: CREF Stock Account (R3), Ticker symbol: QCSTIX, Expense ratio: 0.32%
Fund name: TIAA Real Estate Account, Ticker symbol: QREARX, Expense ratio: 0.85%
Fund name: TIAA-CREF International Equity Fund (Institutional), Ticker symbol: TIIEX, Expense ratio: 0.49%
Fund name: TIAA-CREF Lifecycle Index Retirement Income Fund (Institutional), Ticker symbol: TRILX, Expense ratio: 0.10%
Fund name: TIAA-CREF Mid-Cap Value Fund (Institutional), Ticker symbol: TIMVX, Expense ratio: 0.41%
Fund name: TIAA-CREF S&P 500 Index Fund (Institutional), Ticker symbol: TISPX, Expense ratio: 0.06%

If you have what is sometimes called a "brokerage option", cut&paste or scan the description of that.
« Last Edit: March 28, 2018, 10:13:16 AM by MDM »

MDM

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Re: What to do with my money?
« Reply #124 on: March 28, 2018, 10:12:43 AM »
If you only ever do one type (traditional or Roth), comparing the marginal tax rate to the effective tax rate will determine which is the most tax efficient. If you split contributions between traditional and Roth the comparison is between marginal tax rate of each contribution and marginal tax rate of each withdraw.
Agreed.

Fortunately, one doesn't have to make an irrevocable lifetime choice of traditional vs. Roth.  Given the ease with which one can change from year to year, any mention of effective rate is misleading at best.

Catica

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Re: What to do with my money?
« Reply #125 on: March 28, 2018, 01:31:32 PM »
My next step is to contribute more to my 403b.  The question I have is whether I should stick with TIAA or have my future contributions go to Vanguard 403b, my employer offers that option.
In general, it is likely that Vanguard's offerings will cost you less and perform at least as well as TIAA's.

But there is still the very real possibility that the fees charged within the 403b account are higher than one would pay in an IRA.  Really do need the specifics of the 403b plan.
Ok what specifically do you need and I will give it all to you?
Every investment option you have in the 403b: ticker symbol, description, and fee charged.  E.g., from Do I need to change anything? - Bogleheads.org:

Fund Name: CREF Money Market Account (R3), Ticker symbol: QCMMIX, Expense ratio: 0.23%
Fund name: CREF Stock Account (R3), Ticker symbol: QCSTIX, Expense ratio: 0.32%
Fund name: TIAA Real Estate Account, Ticker symbol: QREARX, Expense ratio: 0.85%
Fund name: TIAA-CREF International Equity Fund (Institutional), Ticker symbol: TIIEX, Expense ratio: 0.49%
Fund name: TIAA-CREF Lifecycle Index Retirement Income Fund (Institutional), Ticker symbol: TRILX, Expense ratio: 0.10%
Fund name: TIAA-CREF Mid-Cap Value Fund (Institutional), Ticker symbol: TIMVX, Expense ratio: 0.41%
Fund name: TIAA-CREF S&P 500 Index Fund (Institutional), Ticker symbol: TISPX, Expense ratio: 0.06%

If you have what is sometimes called a "brokerage option", cut&paste or scan the description of that.
How is this?
        INVESTMENT NAME
     
        TICKER
     
        EXPENSE RATIO
     
       CREF Money Market Account (R3)
     
        QCMMIX
     
        0.23%
     
        CREF Stock Account (R3)
     
        QCSTIX
     
        0.32%
     
        TIAA-CREF Bond Index Fund (Institutional)
     
        TBIIX
     
        0.12%
     
        TIAA-CREF Equity Index Fund (Institutional)
     
        TIEIX
     
        0.05%
     
        TIAA-CREF International Equity Index Fund (Institutional)
     
        TCIEX
     
        0.06%
     
        TIAA-CREF Lifecycle Index 2010 Fund (Institutional)
     
        TLTIX
     
        0.26%
     
        TIAA-CREF Lifecycle Index 2015 Fund (Institutional)
     
        TLFIX
     
        0.24%
     
        TIAA-CREF Lifecycle Index 2020 Fund (Institutional)
     
        TLWIX
     
        0.22%
     
        TIAA-CREF Lifecycle Index 2025 Fund (Institutional)
     
        TLQIX
     
        0.22%
     
        TIAA-CREF Lifecycle Index 2030 Fund (Institutional)
     
        TLHIX
     
        0.21%
     
        TIAA-CREF Lifecycle Index 2035 Fund (Institutional)
     
        TLYIX
     
        0.21%
     
        TIAA-CREF Lifecycle Index 2040 Fund (Institutional)
     
        TLZIX
     
        0.20%
     
        TIAA-CREF Lifecycle Index 2045 Fund (Institutional)
     
        TLXIX
     
        0.21%
     
        TIAA-CREF Lifecycle Index 2050 Fund (Institutional)
     
        TLLIX
     
        0.22%
     
        TIAA-CREF Lifecycle Index 2055 Fund (Institutional)
     
        TTIIX
     
        0.31%
     
        TIAA-CREF Lifecycle Index 2060 Fund (Institutional)
     
        TVIIX
     
        1.00%
     
        TIAA-CREF Lifecycle Index Retirement Income Fund (Institutional)
     
        TRILX
     
        0.37%
     
        TIAA-CREF Money Market Fund (Institutional)
     
        TCIXX
     
        0.14%
     

MDM

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Re: What to do with my money?
« Reply #126 on: March 28, 2018, 02:04:08 PM »
If you have what is sometimes called a "brokerage option", cut&paste or scan the description of that.
How is this?
<snip>
Excellent!

You could do a three-fund portfolio with your desired mix of
TIAA-CREF Bond Index Fund (Institutional) TBIIX 0.12%
TIAA-CREF Equity Index Fund (Institutional) TIEIX 0.05%
TIAA-CREF International Equity Index Fund (Institutional) TCIEX 0.06% 

Or, for slightly higher cost but "hands off" investing, one of the Lifecycle Index Funds (in particular, one in the 2030 - 2050 range).

No mention of Vanguard funds...?

Catica

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Re: What to do with my money?
« Reply #127 on: March 28, 2018, 02:06:34 PM »
If you have what is sometimes called a "brokerage option", cut&paste or scan the description of that.
How is this?
<snip>
Excellent!

You could do a three-fund portfolio with your desired mix of
TIAA-CREF Bond Index Fund (Institutional) TBIIX 0.12%
TIAA-CREF Equity Index Fund (Institutional) TIEIX 0.05%
TIAA-CREF International Equity Index Fund (Institutional) TCIEX 0.06% 

Or, for slightly higher cost but "hands off" investing, one of the Lifecycle Index Funds (in particular, one in the 2030 - 2050 range).

No mention of Vanguard funds...?
You want exactly the same for Vanguard?  If so I don't know if I can get that not having a 403b with them.  Let me see what I can find out

MDM

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Re: What to do with my money?
« Reply #128 on: March 28, 2018, 02:13:30 PM »
You want exactly the same for Vanguard?  If so I don't know if I can get that not having a 403b with them.  Let me see what I can find out
If you have access to the whole family of Vanguard funds, at the same prices one can find on the Vanguard web site, there is no need to reproduce that.  What would be interesting is the exact language your benefits department uses to tell you that you have that access.

Is it only the listed TIAA funds, and Vanguard, to which you have access?  Here also, the exact language your benefits department uses to describe your options would be useful.

It is possible that your 403b plan is much better than most - just asking for the specifics to confirm whether that is true.

Catica

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Re: What to do with my money?
« Reply #129 on: March 28, 2018, 02:29:48 PM »
OK, because I had Vanguard in the past and I rolled over to TIAA at some point, I can still see the 403b plan in Vanguard (which is $0 right now) and the funds that are available to me:

        INVESTMENT NAME
     
        TICKER
     
        EXPENSE RATIO
     
        Vanguard Federal Money Market Fund
     
        VMFXX
     
   
     
        Vanguard Institutional Target Retirement 2015 Fund

     
        VITVX
     
   
     
        Vanguard Institutional Target Retirement 2020 Fund
     
        VITWX
     

     
        Vanguard Institutional Target Retirement 2025 Fund
     
        VRIVX
     

     
        Vanguard Institutional Target Retirement 2030 Fund
     
        VTTWX
     

     
        Vanguard Institutional Target Retirement 2035 Fund
     
        VITFX
     

     
        Vanguard Institutional Target Retirement 2040 Fund
     
        VIRSX
     

     
        Vanguard Institutional Target Retirement 2045 Fund
     
        VITLX
     

     
        Vanguard Institutional Target Retirement 2050 Fund
     
        VTRLX
     
 
     
        Vanguard Institutional Target Retirement 2055 Fund
     
        VIVLX
     

     
        Vanguard Institutional Target Retirement 2060 Fund
     
        VILVX
     

     
        Vanguard Institutional Target Retirement 2065 Fund
     
        VSXFX
     

     
        Vanguard Institutional Target Retirement Income Fund
     
        VITRX
     

     
        Vanguard Total Bond Market Index Fund Institutional Shares
     
        VBTIX
     

     
        Vanguard Total International Stock Index Fund Institutional Shares
     
        VTSNX
     

     
        Vanguard Total Stock Market Index Fund Institutional Plus Shares
     
        VSMPX
     

     

In my retirement portal I see the following:

STAFF RETIREMENT PLAN
Choose the financial institution(s)* for this plan:
Fidelity  TIAA-CREF  Vanguard
Choose how you would like to allocate your contributions:
TIAA-CREF 100%

Total 100% (must equal 100%)

TDA Plan

Percentage elections will be applied to all your eligible pay each pay period. Flat dollar elections will be taken from the eligible pay on the paycheck associated with your Primary Job.
You are eligible to make voluntary (employee only, tax-deferred) contributions. The maximum amount you may contribute is $18,500 for this calendar year. This maximum amount may be reduced to comply with IRS limits.

Allocate my contributions like this:
Enter pre-tax amount and roth amount:

Pre-tax:
Roth:

Total $100.00(must equal $100.00)


Choose the financial institution(s)* for this plan:
Fidelity  TIAA-CREF  Vanguard
Choose how you would like to allocate your contributions:
TIAA-CREF 100%

Total 100% (must equal 100%)


« Last Edit: March 28, 2018, 02:32:34 PM by Catica »

MDM

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Re: What to do with my money?
« Reply #130 on: March 28, 2018, 02:41:06 PM »
OK, because I had Vanguard in the past and I rolled over to TIAA at some point, I can still see the 403b plan in Vanguard (which is $0 right now) and the funds that are available to me:<snip>
It appears you do have options better than most.

Do you have the fees charged for the Vanguard (and/or Fidelity) funds?

It would be worthwhile to ask your benefits department for more details about what exactly the "STAFF RETIREMENT PLAN" and "TDA Plan" are.  E.g., are they both 403b plans, or is one a 401k, or a 457, or a Non-Qualified Deferred Compensation, or...?

Also, does "The maximum amount you may contribute is $18,500 for this calendar year" apply only to the TDA Plan, or is that $18,500 to each, or $18,500 total, or...?

Might also be worthwhile to ask your benefits department "do you have some communication that explains all this?" because from what you have shared, it doesn't appear they make it easy for folks to understand.

Catica

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Re: What to do with my money?
« Reply #131 on: March 28, 2018, 03:13:41 PM »
OK, because I had Vanguard in the past and I rolled over to TIAA at some point, I can still see the 403b plan in Vanguard (which is $0 right now) and the funds that are available to me:<snip>
It appears you do have options better than most.

Do you have the fees charged for the Vanguard (and/or Fidelity) funds?

It would be worthwhile to ask your benefits department for more details about what exactly the "STAFF RETIREMENT PLAN" and "TDA Plan" are.  E.g., are they both 403b plans, or is one a 401k, or a 457, or a Non-Qualified Deferred Compensation, or...?

Also, does "The maximum amount you may contribute is $18,500 for this calendar year" apply only to the TDA Plan, or is that $18,500 to each, or $18,500 total, or...?

Might also be worthwhile to ask your benefits department "do you have some communication that explains all this?" because from what you have shared, it doesn't appear they make it easy for folks to understand.
Ok, I just talked to them and I have a PDF that has all the fees.  I can't understand that document.  How can I show it to you?
The difference between the STAFF RETIREMENT PLAN and TDA is only that the employer wants to keep their contribution separate from my contribution.
The $18,500 apply only to the TDA Plan.

robartsd

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Re: What to do with my money?
« Reply #132 on: March 28, 2018, 03:47:21 PM »
If it is less than 4 MB you can probably just attach it to a post (see "Attachments and other options") on the post reply page.

MDM

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Re: What to do with my money?
« Reply #133 on: March 28, 2018, 03:47:33 PM »
Ok, I just talked to them and I have a PDF that has all the fees.  I can't understand that document.  How can I show it to you?
A few options:
1) If you don't mind sharing it "as is", you can attach it to a post: click on the plus sign next to "Attachments and other options".
2) If you would prefer to exclude any part of it, then see
How to add image to post? or
Posting images in the Bogleheads forum - Bogleheads for ideas (both Bogleheads and MMM work with the img tags).

Screen capture tool for Windows Postimage.org has worked, but there are other tools that may work just as well.

Quote
The difference between the STAFF RETIREMENT PLAN and TDA is only that the employer wants to keep their contribution separate from my contribution.
The $18,500 apply only to the TDA Plan.
Ok, now that part makes sense.

Catica

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Re: What to do with my money?
« Reply #134 on: March 28, 2018, 09:35:28 PM »
Ok, I just talked to them and I have a PDF that has all the fees.  I can't understand that document.  How can I show it to you?
A few options:
1) If you don't mind sharing it "as is", you can attach it to a post: click on the plus sign next to "Attachments and other options".
2) If you would prefer to exclude any part of it, then see
How to add image to post? or
Posting images in the Bogleheads forum - Bogleheads for ideas (both Bogleheads and MMM work with the img tags).

Screen capture tool for Windows Postimage.org has worked, but there are other tools that may work just as well.

Quote
The difference between the STAFF RETIREMENT PLAN and TDA is only that the employer wants to keep their contribution separate from my contribution.
The $18,500 apply only to the TDA Plan.
Ok, now that part makes sense.
here it is

MDM

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Re: What to do with my money?
« Reply #135 on: March 28, 2018, 11:54:31 PM »
here it is
Wow!  That's an excellent plan!

If you don't mind telling, is this a K-12 school district, or a university, or a hospital, or...?

You almost have to try hard to do something wrong with those choices.

I might suggest one of the Vanguard Target Retirement Funds, but only because I'm more familiar with them.

See the three-fund portfolio wiki article, and the articles linked there on TIAA, Fidelity, and Vanguard, and go with whatever seems best to you.  Again, whoever arranged this plan did very well on behalf of the employees so take advantage!

The ticker symbols in the wiki article may not match what you have, because the wiki assumes "normal" fund classes and you have "institutional" class funds - better than an individual can get in an IRA.

Catica

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Re: What to do with my money?
« Reply #136 on: March 29, 2018, 08:02:00 AM »
here it is
Wow!  That's an excellent plan!

If you don't mind telling, is this a K-12 school district, or a university, or a hospital, or...?

You almost have to try hard to do something wrong with those choices.

I might suggest one of the Vanguard Target Retirement Funds, but only because I'm more familiar with them.

See the three-fund portfolio wiki article, and the articles linked there on TIAA, Fidelity, and Vanguard, and go with whatever seems best to you.  Again, whoever arranged this plan did very well on behalf of the employees so take advantage!

The ticker symbols in the wiki article may not match what you have, because the wiki assumes "normal" fund classes and you have "institutional" class funds - better than an individual can get in an IRA.
It's university.
OK, I read the wiki article and need to reread it as it's not totally clear to me.  That's because I don't know what I want, how much in stocks, how much in bonds, mutual funds etc.  I don't totally know the good and the bad of each, I guess I need to read and learn the basics.
Would there be a reason to split my contributions between different investment firms?  I do have such option.  Also, do I keep my existing 403b in TIAA or move it?  I can also invest the employer's contribution differently than my contribution.  So I'm not sure how to proceed with that.
« Last Edit: March 29, 2018, 08:18:50 AM by Catica »

robartsd

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Re: What to do with my money?
« Reply #137 on: March 29, 2018, 11:59:32 AM »
To build a 3-fund portfolio:
TIAA: TCIEX (foreign.06% ER), TIEIX (US .05% ER), and TBIIX (US Bonds .12% ER).
Fidelity: FSPNX (foreign .06% ER), FSKTX (US .04% ER), and FSXTX (US Bonds .04% ER).
Vangaurd: VTSNX (foreign .09% ER), VSMPX (US .02% ER), and VBTIX (US Bonds .04% ER).

Unfortunately your plan document doesn't list a value for TIAA's administration fees - only that the costs are distributed uniformly across participants. Vangaurd's admin fee is $34/yr, Fidelity's is $9.25/quarter ($37/yr). Of course as your account grows administration fees become less important and expense ratios become more important. With a balance over $200,000 a .01% difference in expense ratio is over $20; so Vanguard's savings in expense ratio is probably worth the admin fee for you even if TIAA had $0 admin fee.

If you want heavy foreign exposure (more than 40% of your equities), Fidelity might be best, otherwise Vanguard looks the best. Vanguard also looks the best for target date fund gross expense ratios.

Catica

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Re: What to do with my money?
« Reply #138 on: March 29, 2018, 06:51:25 PM »
To build a 3-fund portfolio:
TIAA: TCIEX (foreign.06% ER), TIEIX (US .05% ER), and TBIIX (US Bonds .12% ER).
Fidelity: FSPNX (foreign .06% ER), FSKTX (US .04% ER), and FSXTX (US Bonds .04% ER).
Vangaurd: VTSNX (foreign .09% ER), VSMPX (US .02% ER), and VBTIX (US Bonds .04% ER).

Unfortunately your plan document doesn't list a value for TIAA's administration fees - only that the costs are distributed uniformly across participants. Vangaurd's admin fee is $34/yr, Fidelity's is $9.25/quarter ($37/yr). Of course as your account grows administration fees become less important and expense ratios become more important. With a balance over $200,000 a .01% difference in expense ratio is over $20; so Vanguard's savings in expense ratio is probably worth the admin fee for you even if TIAA had $0 admin fee.

If you want heavy foreign exposure (more than 40% of your equities), Fidelity might be best, otherwise Vanguard looks the best. Vanguard also looks the best for target date fund gross expense ratios.

Thanks.  Would you do this just for new contributions or would you transfer the existing 403b from TIAA to Vanguard?

robartsd

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Re: What to do with my money?
« Reply #139 on: March 30, 2018, 02:39:17 PM »
I would transfer existing to Vanguard so you don't have to pay administrative fees to both Vanguard and TIAA.

Catica

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Re: What to do with my money?
« Reply #140 on: March 30, 2018, 09:39:54 PM »
I would transfer existing to Vanguard so you don't have to pay administrative fees to both Vanguard and TIAA.
How does the transfer work?  Does it go to my tIRA or will it be a separate plan?
« Last Edit: March 31, 2018, 05:58:50 AM by Catica »

robartsd

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Re: What to do with my money?
« Reply #141 on: April 02, 2018, 01:49:57 PM »
I would transfer existing to Vanguard so you don't have to pay administrative fees to both Vanguard and TIAA.
How does the transfer work?  Does it go to my tIRA or will it be a separate plan?
You'll have to check with your benefits administrator at work, but most likely if you are able to do an in-service rollover from TIAA to Vangaurd it would be from 403b to 403b (but we've already seen that your plan is better than most). Let them know that you like the 403b investment options at Vanguard better and that you'd like to switch to Vanguard moving your existing funds. They should be able to help you set that up.

Catica

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Re: What to do with my money?
« Reply #142 on: April 03, 2018, 09:14:43 AM »
I would transfer existing to Vanguard so you don't have to pay administrative fees to both Vanguard and TIAA.
How does the transfer work?  Does it go to my tIRA or will it be a separate plan?
You'll have to check with your benefits administrator at work, but most likely if you are able to do an in-service rollover from TIAA to Vangaurd it would be from 403b to 403b (but we've already seen that your plan is better than most). Let them know that you like the 403b investment options at Vanguard better and that you'd like to switch to Vanguard moving your existing funds. They should be able to help you set that up.
Great, thank you.  I'll do that.

OurTown

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Re: What to do with my money?
« Reply #143 on: April 03, 2018, 01:34:44 PM »
This is great, what a fantastic and charitable community!  Catica, I hope you realize you are getting invaluable advice here free or charge. 

Catica

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Re: What to do with my money?
« Reply #144 on: April 03, 2018, 01:57:45 PM »
This is great, what a fantastic and charitable community!  Catica, I hope you realize you are getting invaluable advice here free or charge.
Yes, I do realize that and I appreciate all the help I have been given here.  Thank you everyone.