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dankupper

403b Questions/Options

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I am currently maxing out my 403b through Aspire. They only charge 15 basis points and $40 annually. I am invested in the low-cost Vanguard Total Stock Market Index. I think this is a fairly low-cost option since the expense ratio, to my knowledge, is under .5% and is, in fact, around .3%.

What are your thoughts on Aspire vs. NEA Direct Invest through Security Benefit? To my knowledge, the Direct Invest program only charges $35 annually on accounts with balances under 50k and no annual fee with accounts on balances over 50k. I don't believe they charge an administrative fee or have an expense ratio, but I'm not positive.

Should I switch? Or, stay with Aspire? I do not know much about Security Benefit.

Thank you and I look forward to hearing back from you!

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Dan

You might do a search on this discussion board. This has been discussed in detail before.  My feeling is (and others might not agree) is that Aspire and or NEA Direct both have good options and I would not sweat the annual fees or administrative fees too much but instead focus on getting the lowest fund expense ratio possible which would mean investing in index funds through Fidelity or Vanguard. I do know Aspire has a self direct option which allows you to choose a super low cost fund so what is not to like? What we encourage folks to do here is avoid loaded funds, high expense ratios, and surrender charges that are mostly part of insurance company products. And to not trust the advice of insurance peddling puedo advisors. I think either one is good to answer your question. Your focus should now be on saving as much as you possible can. Lets face it , few of us are able to escape some sort of administrative fee in a 403b platform. Its just part of the product DNA.

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Dan

Direct Invest funds will have expense ratios. Every fund charges you something. The key is to go low as is possible and then focus on a good asset allocation.  Study the links Dan Otter just sent.

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9 hours ago, dankupper said:

 I am invested in the low-cost Vanguard Total Stock Market Index. I think this is a fairly low-cost option since the expense ratio, to my knowledge, is under .5% and is, in fact, around .3%.

Vanguard funds come in 2 classes, Investor and Admiral. The TSM Index Investor fund has an ER of 0.14% and the TSM Index Admiral fund has an ER of 0.04%. Once the balance in the index Investor funds gets to 10k, Vanguard will convert the Investor shares to Admiral shares. I'm not sure if Vanguard requires Aspire to start you out with Investor shares, or lets you start out with Admiral shares. I think in the past it was allowed, but I'm not sure. You should ask Aspire. In accounts held directly with Vanguard, once you have a 10k balance in the Investor fund, Vanguard will ask you if you want to convert to Admiral shares.  

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Krow

I owned Vanguard through Aspire before I retired. They did NOT convert the shares to Admiral. I was stuck in investor shares .At the time Admiral shares were not even  available for me. Don't know if things have changed or not.

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Okay great! This is really great information, Tony and krow36. I appreciate it! I will follow up with Aspire now and will circle back to this forum.

Thank you once again!

Best,

Dan

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Actually, I just checked my allocation. I am 100% invested in Vanguard Total Stock Market Idx Adm (VTSAX). This is the best I'll get, correct?

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Yes, VTSAX at an ER of 0.04% plus the 0.15% is probably the lowest cost per fund balance possible through Aspire. The additional $40/yr fee does add to 0.19%.

As you've mentioned, using VTSAX in the Security Benefit NEA Direct Invest will cost only the fund's ER of 0.05% if the balance is above 50k, and an additional $35 if the balance is under 50k. 

Since you've said that Security Benefit is a 457 vender for your district, I assume it is also a 403b vendor. If that were not the case, I would recommend being satisfied with Aspire. Working to add Security Benefit to a vendor list is not ethical in my opinion due to the predatory nature of their plans other than Direct Invest. You might benefit from using Direct Invest but many (most?) of your colleagues will end up in high-cost (over 2% in fees!) plans. 

 

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Thank you, krow36. Security Benefit is offered as a 403b in my district. I already previously switched 403b vendors from MetLife to Aspire over a year ago. I guess I circle back to my original question of whether or not I should switch over from Aspire to NEA Direct Invest through Security Benefit. I have done some reading and it looks like there is a some shady behavior on behalf of Security Benefit and maybe still perhaps some learning to do with Direct Invest? Wondering if I should just be satisfied with Aspire.

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Dan

My index funds did very well when I was with Aspire.I saw growth equivalent to regular directly owned vanguard index funds. The last 7-8 years before my retirement I owned Vanguard funds through Aspire. I also tapped into our state 457 plan that was too good to pass up.  They had Blackrock index funds that rivaled Vanguard in cost and  in some cases even  cheaper!. The 457B plan had a .19 administrative fee but rock bottom fees on expense ratios. 

Personally, you are in a good place with Aspire and I don't think I would move. Your fees are very low. You should be content. You are correct about Security benefit. They sell many high fee products. I would focus on making sure you have a diversified portfolio . If you can, go  help others move away from the bad guys who are ripping them off and towards Aspire.

Also do you own any other fund besides Total Stock Market? You might want to add an allocation to  total international and total bonds through Vanguard.

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Thank you, Tony. That sounds great and I appreciate your input.

In regards to your question, I do have some international exposure as well. I'll let you know if I have any other questions in the meantime!

Best,

Dan

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  • I use Security Benefit's NEA DirectInvest and I documented the plan here.
  • I documented exactly how I enrolled in the plan here.
  • I'm an enthusiastic support of NEA DirectInvest and I couldn't be happier with it. However, it is worth acknowledging that Security Benefit is an unethical company and through a mixture of incompetence and shadiness they won't help you too much in setting up the account...it is largely on you to fill out the correct paperwork.
  • Aspire is costing you an extra 0.15% per year plus an extra $5-$40 annual fee depending on your balance. Only you can determine if the headache of switching is worth the savings.

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I agree with Tony on this one. And it's easy to understand why Ed chooses NEA for himself.

I recommend Aspire to colleagues for their 403b and 99 times out of 100, they want the friendly low-cost Aspire FA and not the direct invest option. It is this reason why I do not recommend starting with a 457 because they simply want someone to help (besides me) and the 457 comes with no help (like the NEA and Aspire direct-invest options). Rather see them start and continue contributing than walking around waiting to decide and gain confidence.

If I had to choose either the 457 to 403b for myself, I'd choose the 457. Fortunately, I max out both.

(When I was sickened by the plight of the 403b plans here, before I knew about the 457 option, and before I got Aspire added, I borrowed from my s***ty 403b and bought a real estate investment. Paying off that loan with rent, and I'll never have to roll it into an IRA or take RMD's.)

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