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I am so glad I found this sight. My employer, a not for profit ambulance company, is going to be offering us a 403b plan. After reading some things on this sight, I'm kind of worried. What questions should I ask when we are presented with this plan? How do you tell a good plan from a bad one? My employer is going to match 3%, is this good or not so good? Any help would be appreciated.

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I am so glad I found this sight. My employer, a not for profit ambulance company, is going to be offering us a 403b plan. After reading some things on this sight, I'm kind of worried. What questions should I ask when we are presented with this plan? How do you tell a good plan from a bad one? My employer is going to match 3%, is this good or not so good? Any help would be appreciated.

 

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I'm afraid that you'll get as many different opinions as you do respondents to your questions. The important thing to remember is that there is no one-size-fits-all definition of a good plan. I'm hopeful that your employer will offer you a good selection of both full-service and no-load plans, and that each employee can choose according to his/her level of financial education. Employees who aren't as financially astute will probably find good help available to them from one of the full-service providers, though they should do a good deal of comparison shopping before making their selection. Employees who already know their way around a 403(b) might feel more content with a no-load program. A good plan will have both available to you.

 

By the way, a 3% match is a very good thing. Not as good as a 4% match or a 5% match, of course...but there are plenty of people out there whose 403(b) plans offer no employer match whatsoever, so you're already ahead of the game. All of the employees of your company should do everything humanly possible to contribute at least that 3% to their accounts, so they can fully benefit from your employer's match. To do less is to leave money on the table.

 

Hope that helps. I'm sure other input will follow!

 

 

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The 403(b) was most likely "sold" to the decision makers. This is most probably a high cost vendor like ING, SBG, Valic, Prudential, Travelers. Try to get your decision makers to offer a 457(b) no-load investment provider as an alternative to the loaded 403(b). Watch out for fees, fees and more fees. GET INVOLVED, LEARN AND HAVE FUN DOING IT!

 

Peace,

Joel L. Frank

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Alternatively, before antagonizing your employers by presuming their guilt and/or negligence in this matter, find out if the selection of 403(b) providers already includes a low-cost provider. It's quite possible that it does.

 

In terms of the decision to use a full-service provider, be aware that not everybody feels that all fees are evil, but be absolutely certain that you know what you're getting in exchange for whatever fee is being charged to you. Paying a small percentage per year might well be worth it IF you are getting fair value in return. This should include financial advice from someone qualified to give it.

 

Hope this helps.

 

 

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With your employer offering a 3% match it makes total sense to contribute even if the fees are higher than normal. In essence the employer is paying those fees from a portion of the match. I was still make sure you ask the right questions, but get that free money.

 

ScottyD

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When looking at fees, if you are new at this, you must add up two types of fees. The first fee is the one that the insurance company will charge you as a percentage of assets each year. If you have $50,000 in an account, for example, they might charge you 1.25%. This is how they recoup their costs for putting the deal together and pay the sales agents their commissions.

 

The other fee is what the investment funds themselves (your investment options) charge you. This is how they recoup their expenses for marketing, recordkeeping, etc.

 

There are other fees (like an annual contract charge) usually a fixed dollar amount like $30.00 a year or something like that, but those aren't the ones that really matter.

 

MOst 403b vendors also charge surrender fees that lock you into their plan, but that is another issue.

 

If you add up the first two types of fees they could add up to anywhere from 1.5-4.0% total.

 

This is where you need to pay attention. Remember that 3 percent fees will erode your final result by 45% after 30 years. It is like the steady drip, drip, drip of a leaky water facucet. It doesn't seem like much at first, but after 30 years......

 

Check out all the options and get back to us. Does your plan have any low cost index funds?

 

 

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