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Author: quaxy Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75653  
Subject: Help on 403 pleeze Date: 4/28/1999 1:42 PM
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Hello.
I have one question. It requires a bit of background. Let's see if I can state it clearly.

We just dumped our tax-deferred annuity that was snail paced and moved about $80k into 403(B) mutual funds (we're teachers). We took a big hit for early withdrawal, and our "new" financial advisor put us into some high fee back loaded funds. That's the background, now here is the question.

We have our money in four mf companies -- Janus, AIM, Putnam, Oppenheimer. Lots of high fees in some of these funds. Regardless of their individual performance records...my question is...are we spread too thin? Is four companies, with three mfs per company too many?

I'm asking because we want to also now include a low-fee Vanguard Index fund but we're afraid we're spreading ourselves too thin. We can't pull the money and pay another withdrawal fine.

Nutshell -- would anyone suggest should we go with a fifth mf company or not?

Any please, if you have any related advice, I'm all ears.

Thanks a million (someday)
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Author: jocave One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10215 of 75653
Subject: Re: Help on 403 pleeze Date: 4/28/1999 4:13 PM
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We just dumped our tax-deferred annuity that was snail paced and moved about $80k into 403(B) mutual funds (we're teachers). We took a big hit for early withdrawal, and our "new" financial advisor put us into some high fee back loaded funds. That's the background, now here is the question.

First, a bit of confusion. 403(b) plans are qualified retirement plans (much like a 401(k)). One cannot simply roll an annuity into a 403(b). Was the rolled annuity previously part of another 403(b) plan?

We have our money in four mf companies -- Janus, AIM, Putnam, Oppenheimer. Lots of high fees in some of these funds. Regardless of their individual performance records...my question is...are we spread too thin? Is four companies, with three mfs per company too many?

Depends on the criteria. You clearly have more funds than necessary for diversification purposes. It may be a pain for record-keeping purposes, though this is less important here than if they were held in a taxable brokerage account. If any of the funds charges a flat fee quarterly, annually, etc. rather than merely a % of assets, holding that many funds may well be financially wasteful.

I'm asking because we want to also now include a low-fee Vanguard Index fund but we're afraid we're spreading ourselves too thin. We can't pull the money and pay another withdrawal fine.

First, where are you going to hold this Index fund? If you're looking to buy in a taxable account, I'd say go for it-- no benefit to holding 1 fund in 2 accounts vs. 2 different funds in those same 2 accounts. If you're able to buy the fund through the 403(b), why not move some of the money invested in the other funds in the 403(b) to the Vanguard? Moving money between funds in a 403(b) shouldn't be a taxable event and shouldn't cause a fine. Of course, as per my initial comment, I'm a little confused as to exactly what your $80k is currently tied up in, which may severely impact this advice.

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Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10220 of 75653
Subject: Re: Help on 403 pleeze Date: 4/28/1999 10:56 PM
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Dear quaxy,

In hindsight I ask: why did you take the hit & move all your TSA funds at once? With patience you could have made partial transfers & avoided premature withdrawal penalties... I won't beat this dead horse!

As for adding a new mutual fund (Vanguard Index Fund at that), what's the problem? You can always start funding a new investment vehicle without necessarily tampering with an old one! So you don't like a fund you're in - stop the flow/don't add new dollars! Let it lie dormant... Direct new funds into the fund(s) you want. The only limitation to the number of funds you choose to use may be imposed by your employer.

Best of luck! PP

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