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If I decide to keep my American Funds because the penalties are too high can I keep them and move on to Vanguard?
Hypothetically, could I contrubute to both Vanguard and American?
Or can I atleast let the American funds sit there?
This is the last step I need to know before I move on.
Thanks
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2 403bs? can you have 2 at one time?
#2
Posted 29 January 2008 - 11:43 AM
You can have two 403B accounts if you wish
I would transfer it if you can because its in B shares but I don't know what the surrendar charge is. Or you can forget about it. I wouldn't contribute to it not at 1.39% a year expense ratio. At some point down the line I think B shares will convert to A shares.
Your new expense ratio with Vanguard will be about .25%. Thats a great advantage.
#3 Guest_Skeptical_*
Posted 29 January 2008 - 11:55 AM
Lincoln,
Great work on the allocation and on moving forward. If you are allowed by your plan sponsor to move those American Funds to VG, and you wish to do so, don't let the "penalty" scare you off. As I mentioned in a previous post, you spent that money the moment the purchase of the class B share was made. You can now either pay a surrender charge TODAY, or pay the same amount or more over the life span of those B shares. They do indeed convert to class A shares with the expenses dropping by .75% in year eight. If you bought shares last pay period, then that is EIGHT years from your last pay period.
Call American and ask for the exact dollar amount you will be charged to redeem your shares. Calculate that amount as a percentage of the total balance. Remember that the surrender fee is based on the original purchase amount, while that 1% 12B-1 fee is based on your current (higher) balance. I'll bet a simple calculation will reveal that a jump to VG will pay off long before those B shares convert to class A. If you want us to do the math part, gives us two pieces of data; the dollar amount of the surrender fee and your current balance.
Once again, great work!
Jim
Great work on the allocation and on moving forward. If you are allowed by your plan sponsor to move those American Funds to VG, and you wish to do so, don't let the "penalty" scare you off. As I mentioned in a previous post, you spent that money the moment the purchase of the class B share was made. You can now either pay a surrender charge TODAY, or pay the same amount or more over the life span of those B shares. They do indeed convert to class A shares with the expenses dropping by .75% in year eight. If you bought shares last pay period, then that is EIGHT years from your last pay period.
Call American and ask for the exact dollar amount you will be charged to redeem your shares. Calculate that amount as a percentage of the total balance. Remember that the surrender fee is based on the original purchase amount, while that 1% 12B-1 fee is based on your current (higher) balance. I'll bet a simple calculation will reveal that a jump to VG will pay off long before those B shares convert to class A. If you want us to do the math part, gives us two pieces of data; the dollar amount of the surrender fee and your current balance.
Once again, great work!
Jim
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