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Gina NY

choosing a 403b plan

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I work for a school district in a New York suburb. I have 20 years under my belt. I recently met with a new financial rep because I wasn’t happy with the one I had. She informed me that my 403b plan had very high fees. I decided that I should look into switching companies but not sure who would be the best for me. I am 48 years old and like I said have 20 years in the retirement system. I would like some guidance as to who I can switch to as my service provider. Even when I research online one site says don’t invest in a specific service provider and another site says to invest in them. It’s very overwhelming and confusing. Feedback would be greatly appreciated! 

Attached is a picture of the Service providers we can choose from! 

FF90423A-3E05-48C5-A94F-BF95B505F0B7.jpeg

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GinaNY, welcome to the forum!

Can you give us some more information? Which vendor are you using now? What is the name of the vendor’s plan you are using? Can you give us an idea of how much you are contributing per year? 

Security Benefit has a very low-cost 403b plan called NEA Direct Invest. It offers 8 low-cost Vanguard index funds. There is an annual administration fee of $35 for accounts under 50k. Part of the reason this plan is very low cost is that it is internet based and there is no local rep to deal with. Would you be comfortable with a 403b plan where there was no local rep? There are several posters on this forum who can help you navigate NEA Direct Invest, and move your present 403b money if you decide to do that.  https://www.securitybenefit.com/individuals/products/mutual-fund-custodial/nea-directinvest.aspx

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Gina, 

Those are all American Fund products. They may have higher costs/fees. I think you need to invest in Security Benefit DIRECT INVEST and invest in Vanguard funds I will Let Krow or Ed give you more info on that option  since they know more than I do about it but that is the route you need to go. I don't think you want to go through an advisor if you want low fees. Advisors will always add to your cost and their motives are questionable and often self serving. They make a commission. A new advisor is the same as your older advisor. If you want to truly get the lowest fees you must follow our advice.

 

 

Can you please attempt to answer these questions:  The information might be on an old statement or online

Where are you investing  in now?  Funds?  Plan ?

Do you have an advisor? With what company?  Who is the new advisor you spoke with (company )

How much are you contributing now?

 

Thanks Tony

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Yes it helps. As Tony mentioned, you are using American Funds mutual funds. They are class A funds which means they have a 5.75% load. For every $100 you contribute through payroll deduction, only $94.25 goes in to your account. In addition the mutual funds have an expense ratio (ER) of about 0.60%, and a $10 admin fee per year.

If you were using the Security Benefit NEA Direct Invest 403b plan, your index mutual funds would have no loads and could have an expense ratio of about 0.06%. The $35 per year admin fee is very reasonable and is dropped when your balance gets to 50k. 

Are you aware of the State of NY 457 plan? NY state teachers are able to invest using this plan, which is very, very low-cost. It may or may not be on your school district's 457 vendor list. Of course it should be, and if it is not, you could ask that it be added. You can contribute to both a 403b and a 457 , up to 18.5k each. So the 457 is something to learn more about. 

However, you can't move your expensive 403b into the 457 if both plans are with your district, so you need a low-cost 403b home for your 403b money. The best option is the NEA Direct Invest 403b plan. 

Please answer Tony's questions. It will help us help you.

 

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13 minutes ago, krow36 said:

Yes it helps. As Tony mentioned, you are using American Funds mutual funds. They are class A funds which means they have a 5.75% load. For every $100 you contribute through payroll deduction, only $94.25 goes in to your account. In addition the mutual funds have an expense ratio (ER) of about 0.60%, and a $10 admin fee per year.

If you were using the Security Benefit NEA Direct Invest 403b plan, your index mutual funds would have no loads and could have an expense ratio of about 0.06%. The $35 per year admin fee is very reasonable and is dropped when your balance gets to 50k. 

Are you aware of the State of NY 457 plan? NY state teachers are able to invest using this plan, which is very, very low-cost. It may or may not be on your school district's 457 vendor list. Of course it should be, and if it is not, you could ask that it be added. You can contribute to both a 403b and a 457 , up to 18.5k each. So the 457 is something to learn more about. 

However, you can't move your expensive 403b into the 457 if both plans are with your district, so you need a low-cost 403b home for your 403b money. The best option is the NEA Direct Invest 403b plan. 

Please answer Tony's questions. It will help us help you.

 

The good news is if she is in American Funds and there are no surrender fees so she should be able to transfer it over to direct invest. Right?

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I recently moved funds that are not in my 403b to Fidelity. It is there that  I spoke to an advisor. Because my place of employment no longer lets us use Fidelity for the 403b plan I was not able to move that money from American Funds to Fidelity so my 403b stayed in the funds I showed you earlier.  It is the fidelity advisor that pointed out the high fees I was paying on my 403b. 

I also have a Roth IRA but as per my accountant he prefers I contribute my money into the 403b. I’ve only contributed $7800 towards the 403b last year so I will need to increase the amount. 

I recently removed the advisor I was working  with previously so there is no advisor representing me for my 403b. The company my district uses is Omni so any changes I would like to make would be through them. 

i am not aware of the 457 plan. Who would I speak to about that? Omni? 

As far as the NEA Direct Invest Plan is that   a service provider my district works with? I don’t see it on my list of service providers. 

Thank you for your input so far.

Eugenia

image.jpg

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NEA Direct Invest is a Security Benefit (SB) 403b plan. You can google it. I meant to add a link but forgot. NEA is of course the National Education Assoc., so the national teachers union is joining an insurance company. Other SB 403b plans are very expensive and are despised by folks on this forum. 

Yes, speak to OMNI about your district's 457 vendors.

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39 minutes ago, Gina NY said:

So on my list “security Benefit” is listed as a service provider. Is that the same as the one you are recommending?

Yes, Security Benefit is on your 403b provider list, so all their offerings are available to you. https://www.securitybenefit.com/individuals/products/mutual-fund-custodial/nea-directinvest.aspx 

The NEA Direct Invest is the only SB plan that we recommend. You should probably not talk to a SB rep/salesperson. They are not involved in the NEA Direct Invest 403b, and would likely try to sell you a very expensive 403b plan. Study the website on NEA Direct Invest. Click on the "Enroll now" button to explore. Ask questions here. Call the phone number if needed. There are mixed reports on the quality of service via phone. If you are persistent, and understand what is available and what you want, you will succeed. Hopefully setting up an account will go smoothly, although there will be paperwork signing with OMNI as well as with the district and SB. It takes some time to set up an account, and after that, you can start the process of moving your AF balance to NEA Direct Invest. This transfer process often takes a month or more, so patience is needed. 

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I am a bit confused which is your provider list since you are showing multiple pos and lists

If the last list is your latest list then besides Security Benefit, Aspire and Lincoln both offer a self direct option that will allow you some pretty good options without an advisor if available to you.

I don't want to overwhelm you with information but you do have some good possibilities. I commend the fidelity advisor for informing you that you were paying high fees.

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Good catch Tony. I didn't notice that the 2nd list had several additions to the first list. Is the 2nd one more up to date? And yes Aspire is also an excellent choice, slightly more expensive than NEA Direct Invest, but certainly very usable and much better than AF. 

Gina NY, can you go to the OMNI website for your district and do a copy and paste of the vendors for your district for us? Both 403b and 457 please.

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The last pic is the latest list (the one with Lincoln, Security Benfit, and Aspire). 

I am happy that she pointed it out to me as well. I would have never known otherwise. Unfortunately she couldn’t help me any further since Fidelity was no longer an option for my 403b. 

So should I also look into Lincoln and Aspire or continue to focus on Security Benefit?

Thank you for your help and guidance. It is greatly appreciated especially since no one is comfortable giving out financial advice. I don’t know who to turn to so this is a step in the right direction!

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Gina

Since you are interested in low fees I would explore Direct Invest First with Security Benefit. If that becomes a struggle for any reason you still have Aspire. Try and tap into Vanguard Index Funds through their Target Funds and if you can transfer all your assets over to It from American. Looks like American has been eliminated however from your list. I would still try it. 

I would  do a Vanguard Target Retirement fund   which will be low cost, and self managed so you can set it and forget it since Vanguard will automatically adjust it for you as you get closer to retirement. Sign up for the one closest to your probable retirement date. If you do the target retirement you are set. All you will ever have to worry about is increasing your contributions . NO ADVISOR NEEDED AT ANYTIME.

IMHO the target fund is a good option for you but others may disagree.  I hope we are not confusing you with all this information. It can be overwhelming if you are not familiar with investing.  But what we tell you is honest and truthful.

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