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StevieRayClapton

Just Set Up My Wifes 457 Online... Nationwide

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I have been researching the Nationwide horror stories and was very aprehensive regarding this. She is a county employee. The National Association of Counties has a exclusive relationship with Nationwide. So basically, if she wants a 457, that's it.

 

Reading through the site, we discovered that they allowed apparent direct investment in the Fidelity Contrafund. While they go to great lengths to document the fees for the Variable Annuities they sell, there is no mention of any additional fees for the mutual funds they allow. I realize from my previous 403b with VALIC, that these folks are very good at hiding fees. I just can't find them in the Nationwide plan.

 

We did not purchase any of the insurance products they offer.

 

Since this is the only option she has, we didn't see any other choice. We are in the 28% bracket so the tax savings are significant. We both have Roth IRA's as well.

 

Observations? Helpful ideas?

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Trying to be proactive, I sent the following note to NACO.

 

 

Ms Cole,

My spouse is an employee of a tiny county which offers the NACO/Nationwide as the only 457 choice. As an employee of a nonprofit hospital myself, I am very familiar with new IRS regulations which will impact on 403b and 457 plans. Obviously, there is a significant impact on the employer fiduciary responsiblity and requirement for due diligence.

 

Here is a quote from a current article at NAGDCA

 

"In the final analysis, the public officials charged with responsibility for operating a participant-funded 457(b) or 403(b) plan and overseeing its operations owe a duty to the employees who defer a part of their pay into the plan. A part of that duty is to make sure the employees are receiving fair value for the costs that come out of their retirement savings account, to make sure they are receiving a fair return on their invested dollars compared to the revenues being generated by the investment provider and the plan's advisors. The task is not difficult - it just requires attention and a willingness to do a little probing."

 

Since my wife is offered one choice and one choice only, this is pertinent. NACO specifically holds itself up as an organization that is monitoring the plan via peers in an advisory committee.

 

A simple google search of Nationwide reveals an unsettling pattern of lawsuits, revenue sharing abuses, high fees, and severely impacted retirement savings. How does NACO define due diligence and fiduciary responsibility in light of these findings? I personally invest directly into no load Fidelity mutual funds via my 403b7. Other than a $5/yearly fee, there are no additional fees other than those specifically set forth in the fund prospectus.

 

It is noted that NACO receives in excess of $7 million dollars a year from Nationwide in return for an exclusive contract. Does NACO in turn require that Nationwide provide a non-annuity product that does not exceed the industy average (or better) for fees?

 

I and my spouse have a direct vested interest in your actions in this regard. In the new light of revised regulatory rules and increased plan scrutiny, we anxiously await NACO's response.

 

 

 

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If there was a booklet provided along with her investment options, in fine print under the page listing all possible investments, you will most likely find the Plan's administrative costs. If you don't have said book, ask them for a copy of their prospectus.

 

 

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If there was a booklet provided along with her investment options, in fine print under the page listing all possible investments, you will most likely find the Plan's administrative costs. If you don't have said book, ask them for a copy of their prospectus.

 

 

Vince, I now have both books. Other than the funds fees listed in the Fidelity prospectus, I can find no additional administrative fees. Almost sounds too good to be true.

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