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Hello. Just found this site and would love some help on basics. Although I have maxed my contributions to my federal TSP, I want to get my wife started on a plan and we can use some more tax deferrals. She works for a public school that offers 403b plans and 457b plans. We have been in email contact (that I started) with a polite but aggressive financial planner who works for ING, one of the county's 403b providers. She sent a folio with lots of investment options but fees are confusing. I will ask of course before we enroll, likely next week, but my basic questions are:

 

Which is less expensive for us, a 403b or a 457b?

Is ING considered a solid 403b provider?

If we opt for some type of fixed investment plan at least until the market seems smoother (the ING rep says they have a guaranteed 4% return on a plan), will fees eat up a sizable portion.

 

Your help is very much appreciated.

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Hey Gesh,

 

I suspect when you compare your wife's options to your TSP you will be greatly disappointed. The TSP plan is a model in terms of fees and investment choices (my opinion). To your questions...

 

Which is less expensive for us, a 403b or a 457b? — It depends on available vendors. For example, if you have Vanguard or Fidelity as a 457(b) option and ING as a 403(b) option, the 457(b) would be less expensive. Which vendors to you have available to you in each plan?

 

Is ING considered a solid 403b provider? — ING is a firm that more often than not is know for high fees.

 

If we opt for some type of fixed investment plan at least until the market seems smoother (the ING rep says they have a guaranteed 4% return on a plan), will fees eat up a sizable portion — It depends on the terms. If you are looking for a fixed investment I would look at TIAA-CREF, if available.

 

To learn more about the 403(b) including impact of fees I recommend checking out our 403(b) Participants section.

 

Dan Otter

 

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Hey Gesh,

 

I suspect when you compare your wife's options to your TSP you will be greatly disappointed. The TSP plan is a model in terms of fees and investment choices (my opinion). To your questions...

 

Which is less expensive for us, a 403b or a 457b? — It depends on available vendors. For example, if you have Vanguard or Fidelity as a 457(b) option and ING as a 403(b) option, the 457(b) would be less expensive. Which vendors to you have available to you in each plan?

 

Is ING considered a solid 403b provider? — ING is a firm that more often than not is know for high fees.

 

If we opt for some type of fixed investment plan at least until the market seems smoother (the ING rep says they have a guaranteed 4% return on a plan), will fees eat up a sizable portion — It depends on the terms. If you are looking for a fixed investment I would look at TIAA-CREF, if available.

 

To learn more about the 403(b) including impact of fees I recommend checking out our 403(b) Participants section.

 

Dan Otter

 

 

Thanks Dan. It looks like the 457b plan provider is Great Western. There are a few options for the 403b - ING (whom I contacted, really at random), Financial Directors, LLC, Horace Mann, AIG, Lincoln Financial Group, and Metlife. I certainly agree that the TSP is very inexpensive and well-run. Too bad I wasn't smarter with my own account (meaning, more consservative).

 

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Can you get fee breakdown on products for these companies? As a starting point you could look at California's 403(b)compare site. Start on the "find a vendor" link on the right hand side. The products offered in California should be similar to the ones available to your wife.

 

Dan Otter

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Does your wife happen to work for a large school district in the northern part of a southern state (county name starts with an "F")? If so, DO NOT have her sign up for a 403(b) right now. That county is currently undergoing bidding to select providers and there's no guarantee that whoever she signs up with will be available in a few months' time, or that they'll grandfather existing contracts. Check the school system's benefits page if you want more info re: this. Even if ING gets selected as a vendor under the new system, they'll probably be changing their product lineup in response to the bid specifications. Regardless of what the very aggressive--and if I'm thinking of the right person, very attractive--ING annuity shark tells you, no one knows if ING will be a choice once the school board casts its votes. If they are, I doubt their product will be anything too great; their current one is certainly nothing spectacular. The only halfway decent provider on that list is Financial Directors; they're the only ones who offer a non-variable annuity. Again, no guarantees they'll be selected under the new system either. Great West has secured the 457 payroll slot for the next three years so if you go with them, you'll at least be assured they aren't leaving anytime soon. Their platform doesn't have a lot of choices but they tout low fees and it's pretty self directed. If you're eager to start something pre-tax for your wife, this is probably the way to go.

 

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"Does your wife happen to work for a large school district in the northern part of a southern state (county name starts with an "F")? If so, DO NOT have her sign up for a 403(b) right now. That county is currently undergoing bidding to select providers and there's no guarantee that whoever she signs up with will be available in a few months' time, or that they'll grandfather existing contracts."

 

So funny. Did this district not hear about the new regs back on 7/25/07? Another top notch job!

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So funny. Did this district not hear about the new regs back on 7/25/07? Another top notch job!

 

 

The district has known about the new regs since the news broke. They did implement certain changes for existing vendors at the time and are now going through the RFP process to figure out which provider(s) to keep. They've done a less than stellar job handling the issue by all accounts. I'd bet money they select a couple big name insurance companies to be providers...a real shame because this is a huge school system and its employees deserve much better.

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Does your wife happen to work for a large school district in the northern part of a southern state (county name starts with an "F")? If so, DO NOT have her sign up for a 403(b) right now. That county is currently undergoing bidding to select providers and there's no guarantee that whoever she signs up with will be available in a few months' time, or that they'll grandfather existing contracts. Check the school system's benefits page if you want more info re: this. Even if ING gets selected as a vendor under the new system, they'll probably be changing their product lineup in response to the bid specifications. Regardless of what the very aggressive--and if I'm thinking of the right person, very attractive--ING annuity shark tells you, no one knows if ING will be a choice once the school board casts its votes. If they are, I doubt their product will be anything too great; their current one is certainly nothing spectacular. The only halfway decent provider on that list is Financial Directors; they're the only ones who offer a non-variable annuity. Again, no guarantees they'll be selected under the new system either. Great West has secured the 457 payroll slot for the next three years so if you go with them, you'll at least be assured they aren't leaving anytime soon. Their platform doesn't have a lot of choices but they tout low fees and it's pretty self directed. If you're eager to start something pre-tax for your wife, this is probably the way to go.

 

 

Yes indeed. Large county starting with F, in northern part of southern state starting with a V. Thanks for the tip. We'll look into the 457b plan from Great Western and put off the lady (whom I haven't met in person) from ING. I may email her and ask abotu the 403b bidding in the county. I'l let you know what she says.

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