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Author: NerdiFool Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19348  
Subject: Re: 403(b) funds performing poorly Date: 1/31/2000 5:53 PM
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Hi pwehrung:

You wrote:
********
I have 30K in two Pioneer Funds; Pioneer Growth and Pioneer Equity Income Fund-Class A in a 403(b) plan. Now I am retired and no longer contributing. These funds are doing poorly and I want to unload them as efficiently as possible and get into an index fund. I am 59 1/2. Any ideas how I should go about it?
********

I looked at both of those funds you have, and if it were my money, I'd be long gone from those. What you need to accomplish is called a IRA Direct Rollover Distribution. There is tax problem if you do a distribution to yourself, takeing the money out into your own hands, you have very limited time to get it into your new fund, which can lead to problems. These are caused by the fact that mutual funds will hang on to your money as long as possible, plus mailing delays, then you have to go to more trouble to prove to Uncle that it wasn't your fault. The Direct Rollover Distribution is safe, efficient and usually doesn't take more than a month (I had one that took 6 months, but that had 8 funds in a single IRA portfolio).This is what I would do, if I were you:

You mentioned that you want to do it efficiently, so I assume you will opt for an Online Broker. If you find this too new or frustrating, you can do all that I will outline below by old fashioned snail mail, just not quite as efficiently. First select a direct online discount broker. Please make sure it is a DISCOUNT broker. you don't need to pay commissions, so look around. The go as low as $7.00. I've been with mine for near 2 years now, and it is, in spite of rumors, online brokers are safe. There is an article on the Fool about selecting an Online Broker that will be helpful. Then check onto the Online Broker Message Board, and you can get input from more users than just the Nerdifool. Once you know which Broker you want, call them or sign on to their web site, and get their account application for and IRA account. They will mail that to you, or if you want to use one that has local offices, you can go straigt in. Fill that out with the infromation about where your money now resides (your 403B trustee), then take it to a bank or Notary for the proper certification. These are required by the IRS to be notarized. My brokerage did that for me because I can go there personally. Once you send that in to the Online Broker, along with a copy of your last statement from the former trustee, the new broker will send the demand to your current trustee, who will then sell your old mutual funds, and forward the money directly to your new trustee IRA account. While you are waiting for the money to transfer, you will be able to log onto your new online broker web site and learn how to use his facilities (get quotes, research etc.)

Now you have to decide what to invest in. You suggested that you are thinking of putting it into an Index Fund. I would not recommend that for all of your money; most certainly it will do better than your current funds, but you need some security as well. I currently allocate my IRAs as follows: 20% pure stock; 32% stock based index fund and 48% bond index funds. This has been working well for me, for some time now, providing excellent growth and good income as well. If you don't need the income from it, then just allow the money to be reinvested. I am an avid recommender of the Gardner's books on investing. Everything they say is not directly about retirement, but when applied with some common sense to your own situation, it works like a champ. Get the books and read, read, read.

I know, everybody says I talk too much, but the things you folks ask aren't easilly answered in terse script bytes.

Fool ON pwehrungfool

The Nerdifool.
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