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I have been contributing to ING for 35 years and have become concerned about their fees and the impact on my returns,?

What I can do at this late date in my career? Do I just hang in there or look to transfer to a company with lower fees? At this time I contribute into a 403b and a 457 with ING, a 401k is not available to me. Are the 401k ratings appropriate for me to use when comparing companies?

Jun 24, 2014 by J from Cleveland, OH in  |  Flag
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I would tell you that there are 3 options that you have to help control the fees that you pay for your 403b + 457b plans.

1st Option - at the fund level you can analyze the fees that are being charged by the funds that you are invested in within your accounts and if possible you could move them into other funds that have lower fees. Of course you want to make sure that your overall portfolio allocations are still in line with your risk tolerance level and match what you expect to earn in returns to meet your long term financial goals.

2nd Option - Assuming you are over 59 1/2 years old you should be able to rollover some or all of your accounts into an IRA Rollover account. Once you do that you can completely control the costs you are paying and choose funds or even Exchange Traded Funds that have very low internal fees.

3rd Option - If your employer offers other investment companies other than ING to invest in, you could transfer your 403b or 457b accounts to another company that has lower fees than ING. (TIAA-CREF is known to have very low fees and they are one of the big players in the 403b marketplace in the country).

I hope this helps, best of luck to you and your retirement planning.

Comment   |  Flag   |  Jan 20, 2015 from Plano, TX

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Phil A. Matheson Level 11

Please have an advisor that specializes in retirement plans. The same advisor could also review your account to help you maximize efficiencies in the current plan. Their may be ways to help minimize fees including using lower cost investment options within the plan. So many possibilities with your situation. Good luck

Comment   |  Flag   |  Jun 24, 2014 from Costa Mesa, CA

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Yes, fees do eat into your net portfolio returns. You have to keep in mind that you will have to pay fees no matter what custodian you use for your 403(b) plan. However, annuity based plans offered to participants have higher fees than non-annuity based plans because they also come with some guarantees. Unfortunately those guarantees are triggered by your death so they are actually an insurance policy that only your beneficiary can collect.

Whether it’s worth making a change after 35 years depends. Check to see what the guaranteed death benefit is and whether you want to have the guarantee for your beneficiary. If the answer’s no, then it may be worthwhile to change.

One of my pet peeves is that many schools systems and other governmental organizations offer insurance company based retirement plans. Part of the reason is that insurance companies focus on this market. As a result, the teacher or government employee ends up paying more in fees than they should. You may have other choices, so check it out or have someone do it for you.

2 Comments   |  Flag   |  Jun 25, 2014 from Suffolk, VA
Rich Winer

I totally agree with you! It's criminal that the school districts allow and foster their teachers to become easy prey for unethical insurance agents who recommend nothing but annuities. Many are not even securities licensed and can only sell fixed or indexed annuities. Their agenda is not to educate and advise teachers about how to effectively save and invest for retirement. Their sole agenda is sell highly commissioned products, and why almost every school district allows it to happen is beyond me.

Flag |  Jun 25, 2014 near Woodland Hills, CA
Anthony Thomas Isola, CFP®

Being a former teacher, I saw all of this first hand. Unions accept political donations in exchange for recommendations of these products. Firms that administer the plans for the districts have instituted a pay to play program which eliminates many low cost providers from being on the platform. Many schools do not even offer the 457 alternative which is ridiculous. The game is very dirty one ripe for reform.

Flag |  Jan 30, 2015

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2 votes

You should certainly be concerned with the fees in your retirement plan. Your employer is required to provide you with the details on these fees so you can get an idea of how significant they are. Keep in mind that the administrator of the plan provides recordkeeping, accounting and transaction services and while the fees for these services vary greatly, the differences are often attributable to the size of the plan as a whole, so make sure you are comparing to plans of a similar size.

While you are not required to contribute to the 403(b) with your employer there may be some advantages such as an employer match and higher contribution limits. If you transfer your account balance to an IRA you should have much more flexibility in terms of investments but lower contribution limits and no match. Not all plans allow you to transfer the money out while you are still working.

If your plan allows you to transfer out while still employed find a reputable and experienced advisor in your area that you can work with. They will be able to assist you with the paperwork required to process this without risking IRS penalties and tax consequences.

It would be counterproductive to request a check for the balance in your account because there will be mandatory tax withholdings, even if you plan to deposit the funds directly into another qualified account in your name. Your best choice is to process a trustee to trustee direct rollover so that the entire account balance is transferred tax and penalty free.

Feel free to contact me for help with any other questions.

Thank you! mark@markjsnyder.com

Comment   |  Flag   |  Jul 01, 2014 from Medford, NY

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Rich Winer Level 20

Before I can answer your question, I will need to know what specific fees are causing you concern and whether your 403B and 457 plans with ING are fixed or variable annuities or simply an investment account with mutual fund options. You may want to check with your employer to see if they will allow you to move your accounts to another custodian or even a self-directed 403B account at a brokerage firm like TD Ameritrade or Fidelity.

The fees in variable annuities can be extremely high and cut into your returns each and every year. However, you may find the value in having living benefits such as guaranteed income for life or a death benefit might be worth the extra costs. A woman called into CNBC after her husband had passed away. Although he had lost money in the 2008 bear market and his account was less than what he originally invested, his widow received a death benefit equal to at least the amount he originally invested. Whether or not annuity death benefits, living benefits and guarantees are worth the cost is a personal decision that must be made by the annuity owner.

Regarding 401K ratings, if you are thinking of changing, I would look for an open architect platform that allows you to buy almost all available mutual funds such as FTJ Fundchoice or Aspire 403 B, two custodians I have used for clients with limited 403B options allowed by their school districts. If you can have your account at a brokerage firm, even better.

Comment   |  Flag   |  Jun 24, 2014 from Woodland Hills, CA

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J, I don’t have all the facts, but typically in a 403(b) plan, there are a limited number of vendors that you can select from. They typically offer annuities and mutual funds, though the vendors are most aggressive selling the annuities. And ING is a major provider of annuities, particularly inside of 403(b) plans. So, I don’t know for sure, because they do also have mutual funds, but it is a good assumption that you are invested in an annuity, and it is likely a variable annuity. 403(b) plans were originally just tax-deferred annuities, and were permitted to offer mutual funds in 1974, just about when you started. To be fair, it was before my time, so I don't have specific knowledge about what was offered then.

The scenario for 457 plans is not necessarily structured the same, so it may or may not be the same scenario.

My opinion is that the best thing an insurance company wants you to do in an annuity is for you to do nothing. My best advice is to seek advice from a trusted financial advisor in your area, preferably a CFP®. Seek referrals from trusted friends and associates. A good advisor will be able to determine where the best value is for you going forward. He or she may recommend an exit strategy to best fit your needs, and it may involve some surrender charges for monies contributed for the past few years. That is always a tough pill to swallow, but it may be the wise alternative to paying high fees for the next decades..

If you still have some years left before you retire, you may want to get in touch with HR and see if they have an alternative investment option of mutual funds as something to consider to contribute for your remaining years of employment. Again, a good financial advisor in your area will be able to advise you best.

Comment   |  Flag   |  Aug 20, 2014 from Delray Beach, FL

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Layton Jacob Cox Level 11

You will have to pass on a little bit more information. What fees are you specifically concerned about? How much are you contributing? What services are you receiving for these fees?

Ultimately, if the plan's fees are outrageous then you have two options:

Complain to HR till they fix it (less likely to happen) Meet the matching contribution and then save any excess investments into an IRA using index funds

Comment   |  Flag   |  Aug 28, 2014 from Tucson, AZ

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