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joman52

Finding Better Options

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I hope I'm in the right place. My wife is a teacher and has had a 457 plan through Vanguard for several years, no load index fund, very efficient.

 

Vanguard is no longer on the district's approved list and most if not all all of the approved ones are insurance companies.

 

I don't want an annuity, want a mutual fund. How do I find a better option? Does anyone know anything about the following companies (on their approved list)?

 

Ameriprise (American Express)

Equitable (457)

Horace Mann

Lincoln Investment Plan

Lincoln National Life

Met Life

Midland

NY Life Ins

Planmember/Securities

Kades Margolis -GWN

Legend Group

Security Benefits Group

AIG Retirement- (Variable/VALIC

 

Joe

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joman 52,

 

As you probably know, the providers you have listed are never going to be as cheap as Vanguard. There are some providers out there (see the 403b ASP post) that can offer 457b plans with index funds for 50 bps or less, but adding providers for many of us is like swimming upstream.

 

I have access to Nationwide, Hartford, AIG/Valic and FTJ Fundchoice. The cheapest is 100-110 bps for an index portfolio.

 

Are you in California by chance. CalPERS overs a 457b plan for around 50bps. No it not Vanguard, but that may be one option for you.

 

If not in CA, does your state have a plan that you can join. It is worth a try!

 

Good Luck!

 

GerryL.

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Thanks, no I'm in Pennsylvania. The state has a plan which I belong to but is not available for teachers. I guess I should know thiss but what does bps mean?

 

joe

 

 

joman 52,

 

As you probably know, the providers you have listed are never going to be as cheap as Vanguard. There are some providers out there (see the 403b ASP post) that can offer 457b plans with index funds for 50 bps or less, but adding providers for many of us is like swimming upstream.

 

I have access to Nationwide, Hartford, AIG/Valic and FTJ Fundchoice. The cheapest is 100-110 bps for an index portfolio.

 

Are you in California by chance. CalPERS overs a 457b plan for around 50bps. No it not Vanguard, but that may be one option for you.

 

If not in CA, does your state have a plan that you can join. It is worth a try!

 

Good Luck!

 

GerryL.

 

 

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bps are basis points. It is another way to show what you are paying in admin fees, advisor fees, 12b-1 fees, and other???? to invest in a certain fund, cost of a middleman etc. Usually any thing over 100 bps is listed as 1% or more.

 

For example; 100 bps = 1% or .01

 

So, for my cheapest 457b plan, I pay 1% of total assets for a basic index portfolio. On a theoretical $50,000 account balance, that would equal $500 per year in fund expenses.

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Joe-

 

I give you a lot of credit for searching for the best possible option for your wife. I agree with your assessment that most (if not all) of the approved providers are insurance companies. Vanguard fell off many approved lists as they did not initially sign information sharing agreements provided by the school districts. It may not hurt to have you wife and her colleagues ask the school district to add Vanguard back onto their approved list. I say this because I saw the following update on Bogleheads (posted on May 6th from a PA teacher):

 

"... Also, it might be worth pushing to get vanguard on the list. After some pushing from our faculty my school district just signed vanguard to our 403b last week. It made me very happy to see."

 

Hopefully the same can happen in your wife's school district. Best of luck!

 

-Phil

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bps are basis points. It is another way to show what you are paying in admin fees, advisor fees, 12b-1 fees, and other???? to invest in a certain fund, cost of a middleman etc. Usually any thing over 100 bps is listed as 1% or more.

 

For example; 100 bps = 1% or .01

 

So, for my cheapest 457b plan, I pay 1% of total assets for a basic index portfolio. On a theoretical $50,000 account balance, that would equal $500 per year in fund expenses.

 

 

I just received an email response from Vanguard inquiring if they offer 457(b) Plans - as a Provider/Vendor. They said they do not. (They do offer 403(b) plans)

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joman 52,

 

As you probably know, the providers you have listed are never going to be as cheap as Vanguard. There are some providers out there (see the 403b ASP post) that can offer 457b plans with index funds for 50 bps or less, but adding providers for many of us is like swimming upstream.

 

I have access to Nationwide, Hartford, AIG/Valic and FTJ Fundchoice. The cheapest is 100-110 bps for an index portfolio.

 

Are you in California by chance. CalPERS overs a 457b plan for around 50bps. No it not Vanguard, but that may be one option for you.

 

If not in CA, does your state have a plan that you can join. It is worth a try!

 

Good Luck!

 

GerryL.

 

 

And note that the expense ratio reported by the fund will likely not include all expenses. A relatively recent report I read on insurer-based investment offerings showed that actual expenses were usually double the reported expense ratio. If you Google "403(b) expenses" you can probably find it.

 

BruceM

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One of the problems you are having is that your district is offering too many vendors, so there is no quality standard in the plan design (think surrender fees) and no price reductions/negotiations. If your district consolidates to a single vendor you actually will have a provision called open architecture, which will provide access to the low cost mutual fund families you are looking for (Fidelity, Vanguard, and American Funds) while also offering advise and guidance for the participants who are looking for a high touch plan. The Illinois Public Pension Fund offers a Best Practice single vendor combined 457(b)/403(b) plan that used the buying power of its member communities to build a supplemental retirement program. You can get more information by emailing donh@ippfabenefits.org.

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