Jump to content
Sign in to follow this  
fuccille

Help Choosing Between My 403(B) Options!

Recommended Posts

I've been with AXA for 11 years and have recently discovered what a bad place to be putting my money. I'm a teacher and only have 403(b) offerings. My options in my district are currently:

 

American Funds - R3 Investments

American Funds - R4 Investments

AXA Equitable

Franklin Templeton Bank & Trus, F.S.B

MetLife

Variable Annuity Life Insurance Company (VALIC)

 

Can someone tell me which is the best one to go with? I plan on taking everything out of my AXA account.

Share this post


Link to post
Share on other sites

Hi Fuccille,

Welcome to this forum. Let me guess where you read that AXA was "a bad place to be putting my money."

Was it the Wall Street Journal?

Psychology Today?

or the NY Times 5 part series on 403(b)s with public k12? :-)

 

Sorry, but I would not put my money in any of those companies on your list.

 

What state do you live? Sometimes your state pension plan has a good 403b offering. Here in California almost all teachers can use what we call Pension 2, which is a great plan offered by our state teachers pension plan.

Another option might be your state 457(b) plan.

 

Again, welcome to the forum,

Steve

Share this post


Link to post
Share on other sites

Fuccille

 

Its all about fees and your choices are not good. Even the American Funds which are good funds have high expense ratios in the R3 R4 class . Agree with Steve. Look for an alternative. Check if you have access to a state 457b. Sometimes the 457b has better choices worth tapping into. Be careful of moving your money from AXA, and paying a surrendar charge and then just moving into another bad choice. I foolishly did that years ago thinking I was going into something better. I was so wrong!!! I was no Einstein to say the least!

 

Let us know what you find . The only other alternative is a Roth IRA or saving in a taxable fund . Or to push your school system to get you a very low cost plan that allows you to self direct your money to the funds of your choice that are low fee NON-Insurance product. One example would be ASPIRE. It would be easy to add if you can convince your school system to put forth the effort .

Share this post


Link to post
Share on other sites

None of the 6 on your provider list is all that great. VALIC does offer a mutual fund based 403b which is much better than any annuity based 403b plans. It’s called VALIC Mutual Fund Product and has a few index funds and comes with a Management/Wrap fee of 0% to 1.0%, depending upon the amount invested in your school district. For a small district, the fee would be higher. You can find out your district’s fee from the VALIC rep. The total fee would probably be around 1.0%, maybe a bit higher. Again much better than an annuity based plan at AXA or VALIC or MetLife. But far from ideal.

The AF R3 and R4 offerings are through independent brokers and so have fairly high expense ratios (but don’t have the usual AF 5.75% loads). Using the AF American Balanced fund as an example, the R3 fund (RLBCX) has an ER of 0.94% and the R4 fund (RLBEX) has an ER of 0.63%. You would have to contact the broker to find out any additional fees he/she would add on the the funds’ ER.

Franklin Templeton has expensive funds with ERs of 1% plus and at least some of the have 5% loads! Way too expensive.

Does your district use a Third Party Administrator (TPA) such as OMNI? OMNI has a P3 program that districts can sign up with and that allows the use of Aspire. With Aspire you can use Vanguard’s low cost index funds for an additional 0.15%.

If I were you, I’d go talk to the HR office and ask if you can get a low fee index fund providor like Fidelity added to the list. That would be ideal and could benefit your fellow teachers as well. Sometimes it requires 5 or 10 employees to join the request for the added vendor. Here’s a link to a podcast (#32) with a teacher who got Fidelity added to the list. http://teachandretirerich.com/podcasts/

I second Steve's idea of using a 457 plan instead of the 403b plan if your state offers one. Please tell us your state and also if your district uses a TPA.

Share this post


Link to post
Share on other sites

I am in New Jersey. I am definitely going to try and push my district for better options. In the meantime would you recommend I stop contributing to my current 403b and start putting my monthly deductions into a Roth IRA?

Share this post


Link to post
Share on other sites

I am in New Jersey. I am definitely going to try and push my district for better options. In the meantime would you recommend I stop contributing to my current 403b and start putting my monthly deductions into a Roth IRA?

 

YES!

Share this post


Link to post
Share on other sites

Something I just discovered I may be able to participate in is NEA DirectInvest. Does anyone know anything about this?

 

krow36 knows all about NEA Direct Invest. It appears to be a good plan, but may not be worth the effort trying to get enrolled. Its a long political story regarding our unions. Here is a previous discussion: http://board.403bwise.com/index.php?showtopic=6120&hl=%2Bdirect+%2Binvest

Share this post


Link to post
Share on other sites

Have you read the thread on the NEA DirectInvest that is currently running? In order to use DirectInvest, your district has to have Security Benefits on their provider list. I doubt that SB would jump through the hoops to get on the provider list just so you could use their Direct Invest. Security Benefits sells mostly very expensive annuity based 403b plans to uninformed teachers. By adding SB to the provider list, you are putting your uninformed colleagues in danger. If you can get your district to add another provider, it should be Fidelity, Vanguard (probably unlikely) or Aspire.

 

I agree that you should contribute the max of 5.5k to a Roth IRA before using a matchless 403b, or even a good matchless 403b, because you can pick your own low cost provider like Vanguard or Fidelity for the IRA.

 

I haven't been able to find a good state-wide plan for NJ teachers, either a 403b or 457.

Share this post


Link to post
Share on other sites

I can't thank everyone enough on here for your input. I stopped all of my AXA contributions as of today! I am meeting with our school business manager to push for having the best options in our district, armed with all of your information. Wish me luck :)

Share this post


Link to post
Share on other sites

You can do it !!!! Let us know how it goes and in the interm if questions come up write them down and post them here and we will help answer them. You are doing a great thing for yourself but also for your fellow teachers and staff.

 

 

Tony

Share this post


Link to post
Share on other sites

I will keep you all posted and thank you for your continued support. I can only hope that I can get changes made so incoming teachers are informed and don't wind up in the position I'm in 11 years into my career. It's disheartening to have discovered my savings with AXA has been riddled with high fees and is now being held captive to high transfer fees. However, it's not too late to make a difference!

Share this post


Link to post
Share on other sites

Fuccille- I'll just offer my encouragement as you approach your district for better options. Our district offered Fidelity as a low cost provider but then took it away when regulations were changed. We were left with expensive insurance products. I asked over and over to get Fid. back but it was to no avail. Then one day after a year or two as I was asking again for Fidelity or Vanguard the payroll person got very and said I could have Fidelity. I didn't understand how the answer could be no for so long and then all of a sudden it was yes.

 

I guess the message is to keep trying.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...