403 b tax shelters Information
By John Markle (OHS Building Representative)
Recently the district has added Aspire to its OMNI list of allowable tax shelters. The current accepted list allows only tax shelter annuities. Aspire is now the only non-annuity on the list.
If you are unaware of the difference between an annuity and an index fund; I will attempt to explain the difference as simply as I can. Annuities were designed by Foxes, sold to our profession by wolves and we are the sheep. They are insurance products that generally charge more than 2% per account. I have had VOYA’s Opportunity Plus since the mid-1990s when I first joined the profession. At the time, NYSUT endorsed the program, so I thought they must have done their due diligence. I had limited information about annuities and the excessive fees. I have been contributing to my 403b TSA for over 20 years. I pay VOYA an annual fee of close to 2% each year. Index funds charge less than 1%.
When my account was smaller, I naturally didn’t think much about the 2% fee. However, there is a national buzz right now regarding the fees of tax shelter annuities. For example an account with $300,000 will be charged $6,000 per year. An account of $500,000 is charged $10,000 per year. If you live a long life and your account reaches a large number such as $750,000 you will be paying $15,000 per year - just in fees at 2%.
Aspire is not an annuity. It is a record keeping company that works as an aggregator of mutual fund companies and investment products. Through the Aspire platform the staff member can get access to over 10,000 funds (including low cost/low fee index funds from Vanguard and Fidelity). Aspire also allows you to keep your personal financial advisor – provided that you wish to use that particular person.
Not wanting to trust me? Check out “Teach and Retire Rich” podcast #11 (October 7, 2015)
Watch you tube. John Oliver has a wonderful 21 minute comedy/informative monologue regarding annuities and index funds. https://www.youtube.com/watch?v=gvZSpET11ZY
Check out the NY Times article by Ron Lieber (3/16/2018) entitled “Teachers and Annuities: A Questionable Match and Hard Products to Shed”
I recently enrolled in Aspire’s platform. I then had to notify OMNI of the change. I then had to transfer all of my VOYA accounts to the new Aspire account. I will now pay Aspire $40 a year record fee + .15 management fee + whatever the fee is of the accounts I choose. An investor could chose VTSAX (Vanguard Total Stock Index Admiral Fund) which charges only .04%. Therefore, that person’s new fees would now only be .19% + $40). On an account of $300,000 that would be $610 instead of $6,000. This change alone just saved the investor more than $5,000 a year – every year. Imagine how much faster your account would accumulate wealth if you could have thousands of dollars in fees each year.
If you are unaware of the difference between an annuity and an index fund; I will attempt to explain the difference as simply as I can. Annuities were designed by Foxes, sold to our profession by wolves and we are the sheep. They are insurance products that generally charge more than 2% per account. I have had VOYA’s Opportunity Plus since the mid-1990s when I first joined the profession. At the time, NYSUT endorsed the program, so I thought they must have done their due diligence. I had limited information about annuities and the excessive fees. I have been contributing to my 403b TSA for over 20 years. I pay VOYA an annual fee of close to 2% each year. Index funds charge less than 1%.
When my account was smaller, I naturally didn’t think much about the 2% fee. However, there is a national buzz right now regarding the fees of tax shelter annuities. For example an account with $300,000 will be charged $6,000 per year. An account of $500,000 is charged $10,000 per year. If you live a long life and your account reaches a large number such as $750,000 you will be paying $15,000 per year - just in fees at 2%.
Aspire is not an annuity. It is a record keeping company that works as an aggregator of mutual fund companies and investment products. Through the Aspire platform the staff member can get access to over 10,000 funds (including low cost/low fee index funds from Vanguard and Fidelity). Aspire also allows you to keep your personal financial advisor – provided that you wish to use that particular person.
Not wanting to trust me? Check out “Teach and Retire Rich” podcast #11 (October 7, 2015)
Watch you tube. John Oliver has a wonderful 21 minute comedy/informative monologue regarding annuities and index funds. https://www.youtube.com/watch?v=gvZSpET11ZY
Check out the NY Times article by Ron Lieber (3/16/2018) entitled “Teachers and Annuities: A Questionable Match and Hard Products to Shed”
I recently enrolled in Aspire’s platform. I then had to notify OMNI of the change. I then had to transfer all of my VOYA accounts to the new Aspire account. I will now pay Aspire $40 a year record fee + .15 management fee + whatever the fee is of the accounts I choose. An investor could chose VTSAX (Vanguard Total Stock Index Admiral Fund) which charges only .04%. Therefore, that person’s new fees would now only be .19% + $40). On an account of $300,000 that would be $610 instead of $6,000. This change alone just saved the investor more than $5,000 a year – every year. Imagine how much faster your account would accumulate wealth if you could have thousands of dollars in fees each year.
| teach_and_retire_wealthy_2017_update__2_.pptx |
| omni_form.pdf |
| 403_b__open_investments.xlsx |