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Getting Personal: What to do with extra cash
Getting Personal
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On tap this week: What to do with an extra $500 a month, and is funding a business from your 401(k) a really bad idea?
Chris' advice to the caller that an institutional transfer of her TSA will be without fees is dubious. The very fact that she referred to her 403b as a TSA (Tax Sheltered Annuity) implies that the investment is with an insurance company. These annuities in 403b accounts have very high expense ratios (including mortality and death benefit charges) but most importantly for this situation, they have very high surrender fees. Some annuities have surrender fees that last until 14 years after the final contribution. An institutional transfer to a rollover IRA could cause the caller to lose as much as 5% of her account to surrender fees. In this situation, the best advice would be to let the money sit there until it can be transferred without incurring any surrender fee.
Variable annuities (with high expense ratios and surrender fees) are unfortunately the only investment vehicles available to many non-profit and government employees. Employees should demand lower cost options. Saving for retirement is hard enough without significant amounts of money going to the financial service industry.
Hi Tess, I'm part of a Class Action Settlement which hasn't yet been settled. I received a brochure mentioning that I could contact the customer service of my loan holder for a "modification". Two of the items offered under modification
are 1)lower interest rate & reduction of principal owed on the loan. They both interest me & would love to implement either of these two on my loan. How else do I find out, I've already gone to all the websites, what really is available to me at this point? The judge has ordered "us" Pick-a-Payment Mortgage loan with World Bank to contact their customer service. I have & all they insist on doing is running me through their foreclosure program along with everyone else who is in foreclosure. I feel I am in a different category. No one wants to give me any info. Where else can I get more info? Thnx so much.
Marketplace response to question regarding TSA's was inadequate. As a minimum the questioner should have been told to consult a fee based fiancial advisor before doing anything with a terrible investment as a TSA. I suspect sadly that that Tess Vigeland has no concept of the TSA. Putnam beware.
