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Kevin P

403(b) Choices

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Krow,

Sorry I missed the post on the 19th. I've been doing a lot of reading online and it sometimes scrambles together.

A couple of updates. Still fact gathering on others. So the 12b-1 fees are being credited back. Looks like the load fees are being waived. It still leaves the high fees for each fund plus the advisors fee. 

I asked my wife to get the list of vendors for the 457 plan from the HR clerk and her response was - "what's a 457 plan?". 

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Kevin P, it’s possible you can find her district’s 457 vendor list, if there is one, yourself. Look through the district’s website, sometimes it’s there. If you know the third party administrator that the district uses, check there also.

The NY state 457 is an excellent, super low-cost plan which is available to all NY public school teachers IF their district adds it to their 457 vendor list. Come to think of it, I think you can phone the NY state 457 plan and they will be able to tell you if they are on her district’s list. If all she is able to contribute is $4000 a year, it would be much, much better to use the 457 than the expensive 403b. Hopefully you can find a less expensive 403b and transfer her current balance at Lincoln to it.

Can you provide us a link to the Legend 403b plan that has Vanguard funds? I’m glad to hear that she isn’t being charged front-end loads. Have you confirmed it by comparing her pay statements with her Lincoln Investment statements?

It’s fairly common for teachers to have little interest and/or time in the details of retirement savings. It frequently falls to their spouses to battle through the many obstacles to finding a good plan. Hang in there! It’s perfectly legal and acceptable for you to make calls for her, and join her for appointments.

 

 

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Krow36, 

Thank you for your patience with me. Not being a teacher myself this is all new to me and I feel like I'm searching around in the dark with sunglasses on. 

Here is a link from Legends Website. https://www.legendgroup.com/provider-list/     Looks like it's just a list of all the groups that Legend has access to.

I did the math from the statements - in case it was hidden in the number of shares vs price per share - it checks out. 

We were looking to get the amount up to $10,000. That's what kind of got the ball rolling on this. She's in a very small district - we're talking graduating classes of 50 or less. It appears that they just don't have the knowledge, people or information as available as one would like or think. I'll take a look at their site again. I'll also look into calling the NY 457 and get info that way.

I think you're so correct on the little interest or time. They just see money being saved and earning without thinking that they could be doing much better. Not many are thinking long term retirement in their 20's, 30's & 40's. I've met the advisor before and he's a great salesman. My wife has talked to a couple of retired teachers about him in the last couple of weeks and they had a few choice words that I won't repeat here.

Thanks again for the help. 

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Talked to the account executive from the NYS Deferred Compensation plan that's responsible for our county. Her school is not on their list. At this point he told me to get his information into the hands of HR so she can reach out to him and try and get the ball rolling to make this happen. 

So if this happens that solves the solution of where to put new money. Still trying to get through to higher ups at Lincoln to see what she can do about her 403b investment. 

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Hopefully the NY state 457 info will motivate your HR department to add it to the vendor list. I think it’s probable that adding it will require a buy-in from a higher-up in the district. If you find out who actually makes the decision, and if rules have been established for making additions, you’ll be better able to  focus your efforts.

 

Kevin, the link you provided for Legend doesn’t give the info that you need, which is: the names of the different 403b plans that Legend offers in her district. You need to know the funds and their expense ratio offered in each plan, and each plan’s fees (mgt/wrap fees, flat fees/yr etc.). I don’t know if you can pry this info out of her current rep? You may have to talk to his boss or his boss’ boss?

I looked at the 403b plans that Legend offers in CA. https://www.403bcompare.com/vendors/1052#/productlist Granted they may offer different plans in NY. Only FREEMARK and STARS look to be worth a quick look:

FREEMARK: Mgt/wrap fee is 1.25% to 2.25% with breakpoints, 7 Vanguard funds including 500 Index, Small Cap Index, Developed Mkts (Int’l) and Total Bond Index. I think the 2.25% mgt/wrap fee for her 10k makes this plan way too expensive. (Breakpoints allow different fees depending on the account's balance. 10k would no doubt get her the most expensive fee.)

STARS: Mgt/wrap fee is 1.50%, 9 no-load funds including TIAA S&P 500 Index (0.06%), TIAA Int’l Eq Index (0.06%), TRPrice US Bond Index (0.30%). Also too expensive in my opinion.

As for getting a better 403b plan from Lincoln Investment (LI), you should try to get the Participant Directed Platform for her. If that is unsuccessful, find out if the LI Retirement Solutions Premier is available. It’s available in CA:  https://www.403bcompare.com/vendors/1068#/productlist

In CA it has a mgt/wrap fee of 1.25% (and an optional advisor fee of 0.3% which she doesn’t need), and 65 Vanguard Investor class funds. This plan is expensive but it offers more diversified and much lower-cost funds that what she is in now.

You should find out if her current LI plan allows her to drop the advisor and his fee. If so, what are the remaining fees? The weighted expense ratio of her current funds could be greatly reduced it she dropped the expensive funds (0.90% and above) and moved that money into the lower ER funds:

FDBAX-Federated Bond Fund Class A Shares, Corporate Bond, ER 0.86%

GFAFX-Growth Fund Of America Class F-1, Large Cap Growth, ER 0.70%

I think she (and you?) have online access to her account? If so, this exchange may be able to be done online (maybe after dropping the “advisor”?). Otherwise by mail, or through the rep. I think you need to be with her when dealing with the rep, and be prepared for what you (and she) want from him.

 

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Sorry for being a little late to this discussion. Kevin, thank you for sharing this, and thank you for trying to make sense of the insane world that is the K-12 403(b). Thank you too to all of the 403(b) advocates helping you out.

I don't believe this was shared but if you want to use an advisor ask them these questions: https://403bwise.com/pdf/403bwise_Advisor_Questionnaire.pdf and make them sign this pledge: https://403bwise.com/pdf/403bwise_Fiduciary_Pledge.pdf

We have created a special directory of fiduciary advisors who pledge to answer these questions and to sign the Fiduciary Pledge. These advisors will work across state lines. I know that Amy and Anthony are in the New York area:  https://403bwise.com/directory

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