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gerry lef

Low Cost 457b Providers, Any Suggestions?

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Hi folks, in trying to reduce cost and increase competition, does anyone know of a good low cost 457b provider? Low cost being defined as good selection of index funds and total expenses below 50-60 bps.

 

Being a govt. employee in California, the best I have found so far is the CalPERS 457 program with total costs of around 50-60 bps.

 

I am exploring Pension Specialists so if you have experience with them what do you like or do not like?

 

Current providers are: FTJ fundchoice (all the vanguard funds, but not cheap at 85bps plus the fund expenses), Valic & Hartford (high cost annuity products that are "dinosaurs" for deferred comp plans) and Nationwide (more expensive than FTJ).

 

Thanks, Gerry L.

 

 

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Hi,

 

 

Give CalSTRS a call, I have been told they are in the process of rolling out a 457 plan. They are calling the new plan CalSTRS Pension2. I know it says 403b in the information, but still give them a call.

 

 

 

CalSTRS Pension2SM will feature some of the existing investment funds plus several new investment options. Select from 10 investment choices from well-known mutual fund families, such as Vanguard, TIAA-CREF, DFA, and Dodge & Cox. CalSTRS has developed easy choice portfolios and asset allocation models to coincide with each investor’s risk tolerance and future plans.

 

Investing in a 403(b) will never be easier: simply choose CalSTRS Pension2SM, pick the target date portfolio closest to your retirement date, and then decide if you are a conservative, moderate, or aggressive investor.

For questions, call the toll-free CalSTRS Pension2 information line at TIAA-CREF at 888-556-2950, Monday through Friday, 5 a.m. to 7 p.m. or Saturday, 6 a.m. to 3 p.m. (PT), or contact CalSTRS Active Financial Choices at 888-394-2060.

 

I have had the CalPERs 457 at my school district since 2003. I have had no problems with the plan.

 

I hope this information helps you out.

 

 

jyork,

 

Redding, Ca

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Thanks jyork.

 

The CalSTRS 457b program is only for school districts and their employees (from CalSTRS).

 

The CalPERS 457b plan is ok and it is a possible option for us. It is certainly cheaper than anything I have now by about 45bps.

 

My employer, Mono County, also offers a 401a option that is an employer match for retirement health care. The match is up to 3%. CalPERS was trying to get a 401a program as well, but the employer contribution got cut out of the bill.

 

I was trying to get a low cost provider that provided both the 457b and 401a.

 

While my current 457 and 401 plans are not terrible, they are too expensive at 106 bps (average) for a vanguard and fidelity spartan index portfolio.

 

Gerry L. in Mammoth Lakes.

 

 

 

 

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Hi,

 

I am surprise the CalSTRS 457 Plan is only for School Employers.

 

Have you called Fidelity? When I was shopping for a 457 Plan, I a called Fidelity and they told me my school employer could have them as a vendor, but I would have put $24,000 into the plan to get it up and running.

I could not get enough of my fellow employees to join the plan, so I add the CalPERS 457 plan instead because CalPERS did not require a dollar amount to start the plan.

 

 

Hope this helps you out. Let me know what you come up for a 457 provider.

 

 

jyork

Redding, Ca

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Hi Gerry,

 

I work for a municipality and I was fortunate enough to have an understanding Mayor who allowed me to pick the 457 plan provider and I chose Fidelity because of their wide array of funds but more importantly for the Spartan Index Funds- 10 basis points.

 

In addition to the mutual fund expense ratio, they also charge a 24.00 annual account maint. fee. In total their fees are much more reasonable than the alternatives that I wasted no time in crossing off of my list. They were as follows:

 

ICMA, NATIONWIDE, CITISTREET, AND HARTFORD. TIAA-CREFF had upfront costs that the administration was not willing to pay for so that left Fidelity which did not charge anything to get the program up and running.

We needed a minimum of 5 participants and they had to defer a minimum of 25.00 per pay period.

 

Vanguard does not offer a 457 plan, I already checked so I would suggest Fidelity for their low costs. There telephone number to the 457 plan reps is 1-800-868-1023

 

Good Luck.

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ft6 and jyork,

 

Fidelity is still an option for us. They will start a 457b program for us, but not a 401a program unless we can bring $1 million in assets. I have a couple of problems with Fidelity besides not offering a 401a program. Once you leave their spartan funds, the expenses jump (a lot in some cases). I also worry that sales people will steer employees into the higher priced or speciality (fidelity select air transportation) funds.

 

But I have not written Fidelity off yet!

 

Vanguard does offer a 457b and 401a programs you just need a lot of assets (millions and/or tens of millions) to get them interested. In talking with Vanguard they work with a couple of flat fee firms, pension specialists is one of these firms, so I am exploring this option as well. Pension Specialists as far as I can tell base there fee on initial assets and they do offer some vanguard admiral shares.

 

One thing is for sure, it is also anyways cheaper to go direct with a mutual fund company provided you have the assets to get them interested. The more people who touch your money the more expensive it gets!!!!!

 

I am leaning towards CalPERS, Fidelity and/or Pension Specialists. Now the work with admin and HR continues.

 

edit:

ft6, what were the costs with the citistreet plan? Citistreet does the admin for the CalPERS 457 plan.

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Hi folks, in trying to reduce cost and increase competition, does anyone know of a good low cost 457b provider? Low cost being defined as good selection of index funds and total expenses below 50-60 bps.

 

Being a govt. employee in California, the best I have found so far is the CalPERS 457 program with total costs of around 50-60 bps.

 

I am exploring Pension Specialists so if you have experience with them what do you like or do not like?

 

Current providers are: FTJ fundchoice (all the vanguard funds, but not cheap at 85bps plus the fund expenses), Valic & Hartford (high cost annuity products that are "dinosaurs" for deferred comp plans) and Nationwide (more expensive than FTJ).

 

Thanks, Gerry L.

 

 

AMI Benefit Plan Administrators. 866-436-6703. Ask for John Halchuck.

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