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Km112791

First Year Teacher 403B Question

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First, Thank you so much to 403bwise and specifically this forum for answering so many of my questions! What an awesome resource! I'm a 25 year old first year teacher at a school district in Long Island, NY. Same deal, AXA reps are in my teacher lounge once every 3 months talking to me about working with them. I wanted to use Vanguard or Fidelity but three years back they were taken off our participating service providers list. Below are the vendors that my school district offers now. I was wondering if any of these vendors have low fees? I know most are insurance companies. If not, is it better to not even invest through a 403b and instead open up personal accounts through Vanguard? Any help/guidance is appreciated!

 

American Century Services LLC

AXA Equitable Life Insurance Company

GWN/Employee Deposit Acct

Mass Mutual VA

MetLife

Mutual Inc/PlanMember Services

NY Life Ins. & Annuity Corp.

The Legend Group/ADSERV

Thrivent Financial for Lutherans

Voya Financial (Natl NY)

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Km112791, welcome to the forum!

Check out the PlanMember Direct Program: https://pdfs.planmember.com/PDFs/PMPARTNERS_SALESandMARKETING/FloridaModelPlan/PartFactPMDirectFactSheet.pdf

The funds offered: http://planmember.com/programinfo/index.cfm?currentpage=Direct%20Program

You can use Vanguard Admiral class index funds: Total Stock Mkt, Total Int’l Stock Mkt and Total Bond Mkt. PlanMember adds an additional 0.35% to Vanguard’s very low expense ratio. These ERs are actually lower than the ones Vanguard uses in their own 403b. They use Investor class funds only. This is the only vendor on your list that I would suggest you use.

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KM, congratulations on being a 25 year old, first year teacher and asking these questions. I would investigate starting with a Roth IRA in Vanguard. You can invest up to $5500 per year. Also, you can do this independent of your district and deal directly with Vanguard. You need $3000 for most of their Index Funds. However, their Target Date Funds can be started with only $1000. Here is the link to Vanguard's page on getting started: https://investor.vanguard.com/ira/how-to-open-an-ira

The Vanguard 2050 Target Date Fund has an expense ratio of 0.16%. The $20 annual account fee is waived if: "you sign up for account access on vanguard.com and choose electronic delivery of statements, confirmations, and Vanguard fund reports and prospectuses."

Not knowing all of your specific information it would be difficult to decide what is best for you. However, the fact that you are getting started at 25 leads me to believe that you will make an informed decision.

I am curious, how did you know to ask these questions about fees and to "beware" of AXA? Most of the teachers in my building (young and old) are unaware of these issues.

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I agree with MattP that contributing to a Vanguard Roth IRA should be at the top of your “investing for retirement” list. If you are married, your spouse should also start out contributing to a Roth IRA whether or not the spouse has earned income. It can be based on your income.

Since you live in NY, you have an excellent 457 plan that should be available to you. Check with your district’s HR office. If it’s not now a option, you should request it. This plan is very low cost, and has a distribution advantage over 403b plans. I would use it over the PlanMember Direct 403b.

Deferred Compensation Plan 457: guide to the plan https://www.nysdcp.c...Options.pdf?r=1

guide to investing https://www.nysdcp.com/tcm/nysdcp/static/Brochure_NYSDCP_Education_Kit.pdf?r=1

plan partners & fees https://www.nysdcp.com/tcm/nysdcp/static/fee_transparency.pdf?r=1

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MattP-Thank you that was very helpful. I was already planning on setting up a Roth IRA though Vanguard first but that just confirmed it for me. This past year, a friend had recommended Tony Robbins book "Money Master the Game" to me. If it wasn't for reading that book, I almost definitely would have set up an account with AXA. It is so true though that nobody is aware of the issue with fees. I've brought the topic up to as many people as I could in my school (young and old), and not one person was aware of the issue. I also find that since I am young and in my first year they are quick to discredit my thoughts and suggestions.

 

Krow36 - Thanks for the information regarding the 457 plan. I recently brought this up to a coworker who seemed to think that my district doesn't offer a 457, but I will call HR this week and get a definite answer on that.

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KM112791,

1) max your Roth IRA

 

2) In NY you have the 457 option. If your district does not offer it, ask them to include in. They can. Then ask them again, until they do.

 

3)While you're asking, ask them to add Aspire to your lineup of 403b options. They are on the approved vendor list so it only takes a phone call and maybe a bit of paperwork. They are all overwhelmed in the business office, as teachers are too, so be respectful but be unyielding. It is your money and your future.

 

4) inform your co-workers. Teachers notoriously follow the herd mentality, even when it's the AXA guy in the lounge every other day.

 

5) You are on track to be using your Roth IRA, your 457 and your 403b plan at the same time one day so don't stop now.

 

Good luck. And big congratulations to you for being 25 and so wise! Keep reading.

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