Author Topic: Simplifying and Lowering my 403(b) costs  (Read 1217 times)


  • 5 O'Clock Shadow
  • *
  • Posts: 45
Simplifying and Lowering my 403(b) costs
« on: October 22, 2015, 02:53:53 PM »
My retirement accounts are a mess (lots of different funds) and I'm just beginning to straighten them out.

I'm 59, and for the last 25 years, I've haphazardly saved a bunch in my 403(b) accounts.  (I have other taxed accounts I'll deal with later).  I plan to retire in 3-6 years and now realize that I need to understand finances and money.

I've recently learned about cost and expense ratios and am trying to trim the cost of my investments.  Right now I'm focusing on my accounts with Valic (later I'll deal with TIAA-CREF accounts).  I have two Valic accounts, one with a past employer and one with a current employer.

Both accounts are actually annuities. 

Old Company Annuity Account: 90K invested in a Valic Global Social Awareness Fund.  Expense Ratio is 1.64% (Yikes.  I think the fund is .64% and the Annuity Management "Portfolio Director Plus" is another 1%.) I am not taking advantage of a  fixed account option in this account (FIXED ACCOUNT PLUS) that has a guaranteed 4.5% rate.   

Current Company Annuity account: 432K invested in a Valic Global Social Awareness (cost 1.64%), and a Valic Stock Index fund (cost 1.4%)  Fixed account is also available here, has nothing in it, but it is only 3%.

1.  Old Annuity Account: (90K)   Should I keep the old account and switch everything to the 4.5% fixed annuity option?  The Valic representative is the one who pointed out the 4.5% rate in the old account and suggested this option.  It's a high rate because it is a very old account (started in 1992). This sounds reasonable to me.  My understanding is that there are no fees if the money is in the Fixed annuity portion of this account.  Does this sound like a reasonable move and what else do I need to think about?

2. Current Annuity Account:  (432K) I need to change this to mutual funds instead of an annuity account.  The Valic rep recommended that I switch from this annuity account to a mutual fund account to get rid of the Portfolio Director Fee of 1%. (He also recommended that I add a Valic Portfolio Management fee (.6%), but Iím not going to do that.)  I have looked at some of the mutual funds available in a Valic account at my institution, and I donít see Vanguard or Fidelity Index funds in the Valic options.  I am going to stop further payroll deductions to this account.

3.  Future Mutual Fund account Fidelity is an alternate vendor at my institution.  I opened a mutual fund account with them and am going to put my future 403(b) funds here in  Spartan Index and Spartan bond funds.  I think I would like to transfer the New Account Valic funds  (432 K) to this Fidelity account.  I need to ask about surrender and/or transfer fees.  Anything else to think about? 

After I've fixed my accounts I also need to do asset allocation across these accounts and my private accounts, but that is a subject for another day.

Thanks for any advice.  I have already learned a ton!