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Teacher88

School District Third Party Fees?

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16 hours ago, Teacher88 said:

Here is another thing to think about.  When I retire I will get $95 for each sick day I have saved up.  That will amount to almost $30000.  The money has to be deposited into a 403b according to our contract.  Now granted that would only amount to $45 in fees with Aspire, but none of my colleagues understand that.  They are currently paying fees of around 5% for an AXA account(or similar), which means when they retire they will be losing around $1500.  I do my best to educate those that actually want to learn about their retirement, but I can count them on one hand.  

  

Isn't it likely you will move your 403b money, including the sick day 30k, to a traditional IRA shortly after retirement? From then on, you'll pay nothing more than the expense ratio! 

 I don't think you should be nervous about your vendor situation, using SB Direct Invest, with Aspire as a backup. There's no reason to think that NEA will give up the millions per year they get from SB. The reasons that SB and NEA started Direct Invest haven't changed. If anything, the pressure to offer a low-cost index fund 403b option has increased with the growth of index fund investing at the cost of actively-managed funds! 

Do you think getting Vanguard or Fidelity as a vendor is likely to help get your colleagues to move away from AXA etc.? It seems doubtful to me. You've done great if you've got as many as 5 others at your school to learn investing basics! Maybe a few of them will spread the word also? You can lead a horse . . . .

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I never really thought about what happens to my 403b after I retire.  Is the normal thing to move it to a traditional IRA?  Looks like I have some reading ahead of me.  I guess I just assumed I would leave my money in the account.  I would appreciate any wisdom on that topic.  When I retire I will have money in a 403b, a NYS457, and a ROTH.  

Thanks,

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When you separate from the employer with which you have the 403b and 457 plans, you can roll over them over to a traditional IRA. This is strongly recommended if the retirement plans have high fees. Simplification is also a good reason. If you change employers, the rollover is allowed to either an IRA or into the new employer's plans (if the new plans allow it). 

Hopefully your Roth IRA is at a low-cost vendor such as Vanguard or Fidelity, so retirement won't change anything with it or a taxable account. 

One post-retirement consideration is the possibility of converting some traditional IRA money to a Roth IRA while in a possible low income tax bracket. This can get complicated with spouse's retirement, pension income, social security income all involved in the guess on taxable income in retirement. Another consideration is the required minimum distribution (RMD) from tIRA (and 403b, 457 etc.) accounts that starts at age 70.5. At the start the RMD is 3.7% of the previous year end balance. After 10 years, it's 5.4% and increases every year. If you had 1M in tIRAs, at age 70.5, you would withdraw 37K that adds to your taxable income. With the pension and maybe SS, will the RMDs push you into a higher income tax bracket? This motivates some folks to think about Roth conversions in low taxable income years so as to reduce their tIRA balances. 

 

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Teacher 88

My wife is also eight years younger than me and she retired a year before I did !! Look if I can do it you can too. Your salary in New York is probably higher than mine ever was here in Virginia .We are a right to work state and  teacher salaries are stagnant. I would imagine your pension is better too.I am actually very close to my second million although today's stock collapse has set me a few steps back. I am glad you have come to this site as you will get more good accurate (and honest) specific 403b advice than any place else. Good for you that you discovered Bogleheads Forum.The sooner I got away from financial advisors, the more my money grew.  Seems like a huge contradiction doesn't it?They are a huge distraction during the accumulation stage. No-one knows  and cares more about you than you!!. Just keep saving through thick and thin, don't ever take a loan from it, and make a goal to up your savings amount every year. I believe if you can get your savings rate to 25% you can easily get to a million. If you have $250,000 saved up already  (did I understand that correctly?) Your million dollar goal and beyond is more than possible.

Saving a million is not about just the money.  Money is not everything in and of itself.Its about the fact that it buys you freedom to live a life free of working stress. Just knowing you have a backup account beyond just your teacher's pension is great feeling of security for your family!

We are here to help you realize your goal. Fire away your questions. You won't be disappointed. Also keep reading articles and books on investing. You will surprise yourself  how much you will absorb that you can put to use toward your goal. When it comes to fees, focus on the lowest possible expense ratio but don't sweat the smaller details and fees. Just keep saving and yes DAMN THE TORPEDOS!!!

P.S. Once you retire you should get out of your 403b/457b and move it to a traditional IRA of your choice. Absolutely!!

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Thanks for all the advice/information/expertise.  Last I checked I was around $225,000, not bad, but not a million yet!  I actually just got back from a negotiating committee meeting.  We are putting the finishing touches on our contract.  We are going to challenge the district over our right to invest directly with Vanguard or Fidelity.  So my fight is not over just yet.  The best part is that I have actually been able to get the other members of the committee on board with me.  When I joined the committee 4 years ago my number one mission at the time was to change our investment options.  Very few people listened to me then, now all of a sudden they are making it a priority.  All we are asking the district is for the ability to pay the fees so they do not have to.  That seems more than reasonable to us, but who knows what the district will say.  

Edietel:  I just went to your Omni page.   https://omni403b.com/PlanDetail.aspx?clientID=5U2bHneagTg=    If you look at the top on the upper left it says 403b plan.  If you pull up my districts plan it says Omni P3 Plan under it.  I am not sure if Omni will allow us to add Vanguard/Fidelity to our current plan.  They would somehow have to make a different tab with just those two companies on it I would think.  I cannot get a straight answer out of Omni.  This might be an issue I cannot get around.  

Krow36: Yes my ROTH is with Fidelity.  That is one reason I would like to move my 403b over to them as well.  I like the website and I like them as far as customer service goes.  I was wondering what retirement would do to my tax bracket.  I am hoping to retire with a pension around $70000.  Even with a million dollars in tIRA I think I will be ok.  I guess a lot depends on what my wife will be earning then.  Thanks.    

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Great thread. I'm pleased Teacher88 is using the ability to directly invest in Vanguard as a negotiating item. I tried to get our union on board with that very point and since I was the only one with that 'issue' it didn't get much attention. But we did get Aspire. Edietel, I certainly would like to know how to go about getting Vanguard added back. What is the wording to use? My district simply refers such requests to OMNI and washed their hands of the topic. OMNI, of course, simply says they're not on the approved list. End of story. Neither will entertain the request, as if they cannot. Short of using it as a negotiating tool, what else can be done?

Working for number of years to get a pension is losing its steam, in my book. A 'penalty' for retiring before 62, and another one before 55 if less than 30 years, and another one for not having 20 years. At 55, I'll have the under 62 and under 30 years penalties. And probably the less than 20 year penalty too.

Ever since I caught on to the 403b fiasco, I took control of my investments, spending and future. No longer will I look at it as a penalty but instead as a supplement to my 457 and 403b and Roth IRA savings. No reason why they can't be my primary source of income instead of my pension. I've been purposefully maxing them out in recent eye-opening years for this reason.

I am the younger wife, also by 8 years, and my husband just retired. He has a pension and a 457. No way I want to delay our fun and future until I avoid the dangling penalties. And then what?? I pushed the envelope my whole life, I walked out of the ER after getting hit by a car while biking 6 months ago, and we are happy healthy (almost there again, myself) and diversified. The 403b fiasco taught me to invest in rental real estate and between all those buckets plus SS, I'm good with walking out after 16 years. Easy? No. But life is short and we all heard those stories.

Sad, but teachers just don't think they have options or control. And new teachers? 40 years of teaching until full retirement? Great, if you want that. But understand that you have options that put you in control.

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9 hours ago, MoeMoney said:

I certainly would like to know how to go about getting Vanguard added back. What is the wording to use? My district simply refers such requests to OMNI and washed their hands of the topic. OMNI, of course, simply says they're not on the approved list. End of story. Neither will entertain the request, as if they cannot. Short of using it as a negotiating tool, what else can be done?

I would love to know what other people think about this. In short, I don't know. I didn't get Vanguard added at my district - it was already there when I got hired. But, while other districts are dropping them, it doesn't appear to be going anywhere.

It's my understanding (based on what others have said in other threads) that OMNI will add vendors if the HR folks ask (insist?) that they do so. If paying an extra fee is the reason a district doesn't want to add them, they can simply look to my district and see that it can easily be passed on to the employee with no added hassle. If it's true that HR just needs to speak up, then "simply refer[ring] such requests to OMNI" is an admission that they don't want to deal with the hassle. This is why some people have gone the route of getting signatures from colleagues who want the vendors added and pledge to use them when they are. The HR folks are busy (aren't we all?) and might not want to take on extra work to appease one frustrated teacher. If only they knew that adding a low cost option like Vanguard would also benefit them...

I hesitate to defend OMNI, but they probably cannot act unilaterally to make changes. That has to come from the school. They could certainly be more transparent and helpful, though.

Does anyone else on here have experience getting their districts to make changes to OMNI offerings? How did you facilitate that?

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On 3/29/2018 at 1:13 PM, Teacher88 said:

 

When I call OMNI what I want to know is if there is any way for the teacher to pay the fee to be able to invest with Vanguard/Fidelity.  I tried calling them three times so far today and all I get is an answering machine...

 

 

Teacher88, did you get to speak to someone at OMNI about this? I've yet to see any district get them back after losing them over the fees. 

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I did talk to a rep at Omni.  I explained my dilemma and was told my business office would need to call them.  I tried to get her to tell me how much Omni charges the district per person but she would not say.  I asked if vanguard could be added to the P3 list my district offers but she claimed she was not sure.  

I have my union president fired up over this issue and she is a bulldog.  We will see what happens and I will keep you all posted.  I have done a lot to educate her on 403b fees and she is not happy.  She admits that when the district made this change nobody on the negotiating committee understood anything about investing.  She was not even aware the change was made.  Time will tell.

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10 hours ago, Teacher88 said:

I did talk to a rep at Omni.  I explained my dilemma and was told my business office would need to call them.  I tried to get her to tell me how much Omni charges the district per person but she would not say.  I asked if vanguard could be added to the P3 list my district offers but she claimed she was not sure.  

I have my union president fired up over this issue and she is a bulldog.  We will see what happens and I will keep you all posted.  I have done a lot to educate her on 403b fees and she is not happy.  She admits that when the district made this change nobody on the negotiating committee understood anything about investing.  She was not even aware the change was made.  Time will tell.

You are lucky to get your union president fired up about this. Way, way back in the day, when my union president heard I wanted TIAA on the union's approved 403b (Union approved, not the district's available list) list he tried to ban me from coming to meetings, and later on, his VP was convinced I was a "paid rep" and that I was going to personally benefit because "my company TIAA" would get more contributions. A PAID REP! I KID YOU NOT!

Since I was not running for anything and I didn't want any kind of favors from the union except to allow TIAA to make a presentation at the very least, I thought the entire matter was hilarious.  They never let TIAA make a presentation because the other TSA vendors blew a head gasket when TIAA signed on to the district to be available on the 403b. They hated TIAA for good reason. 

Anyway this stuff happened way back in 2000s, and some things have changed. 

Good luck,

Steve

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