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TonyZ

Aspire or NEA Direct Invest

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TonyZ, it's great that Security Benefit is on your district's 403b vendor list. The target retirement funds in SB DI are too expensive, so you should go with the 3 Vanguard funds that Ed uses. 

If you decide you want to contribute to a 457 plan as well as to a 403b plan, Lincoln Investment is a very good choice for a NJ teacher. 

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Hey Guys,

Hope Everyone had a great week.

 

I stopped my 403b payments to Axa and applied online to NEA Direct Invest and waiting to hear back from them. 

 

Question: 

The account is listed as a 403b(7). I did some research and I just want to make sure that I’m right. From what I gathered because it’s self directed it’s a 403b(7) and not a 403b. Is that correct? 

Thank you in advance. 

 

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Hey Guys,

I have stopped my contributions to Axa and have signed up with NEA Direct Invest.

I have done some research and want to make sure I’m correct, a 403b(7) is  a self directed tax sheltered account? 

Thank you 

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25 minutes ago, TonyZ said:

Hey Guys,

Hope Everyone had a great week.

 

I stopped my 403b payments to Axa and applied online to NEA Direct Invest and waiting to hear back from them. 

 

Question: 

The account is listed as a 403b(7). I did some research and I just want to make sure that I’m right. From what I gathered because it’s self directed it’s a 403b(7) and not a 403b. Is that correct? 

Thank you in advance. 

 

The 403b(7) designation means that it a mutual fund based 403b plan, called by the IRS a "custodial account". Prior to the 403b(7) law, all 403b plans were annuity plans offered by insurance companies. Being self-directed is not a factor. Security Benefit has 403b(7) plans that are sold by local reps and are very expensive, with fees over 2%. SB's NEA Direct Invest is the only low-cost custodial account they have.

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Okay, I think I get it now. This is like another language but once you know it you get it. Bc of the type of funds provided is why it’s a 403b(7). 

So much to learn.

 

Thank you 

 

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The "funds" in a 403b annuity are indeed different from the mutual funds in a custodial 403b7 account. The insurance companies often call them "sub accounts" instead of funds. They are based on mutual funds but have higher expense ratios (ERs) due to costs added by being offered by the insurance company. In addition, the 403b annuity will have a "mortality and expense" fee of at least 1% and probably an administration fee of maybe $35. The total fees frequently add up to over 2%! This compares the the SB NEA Direct Invest plan using the 3 Vanguard index funds where the total fee adds up to about 0.07% (if the balance is over 50k so that the $35/yr fee is dropped).

The difference between an annuity-based 403b and a mutual fund-based custodial account 403b is not just due to a sub account/mutual fund difference. It's all the extra fees in the annuity. 

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K so Type of funds also has a direct correlation with the fees and costs of the fund. I’m glad I can pay less fees with Direct Invest. 

 

Thank you 

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Great news for you!  The 403B(7) is non-annuitized and is a much better option for you for all the reason krow36 mentioned, plus I would assume, no surrender fee, and in general just easier to track your investments and performance.  The "sub accounts" of traditional 403B annuities are very confusing and difficult to track what you are actually invested in.

 

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Hey Guys,

I applied online to SB NEA Direct Invest and it took about a month but I just recieved a letter from them stating that they’ve recieved my application but are unable to establish a new account because they have not recieved the employer documentation. I need to “contact my employer to submit the required plan documents” and have no idea what this means. I sent over to the BA office a salary reduction agreement yesterday and I am not sure if this is what they need. Also, who has my “plan number”, is this something I get from SB or my school directly? 

Thank you,

TonyZ 

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This link provides the Security Benefit Direct Invest phone # that has worked best for other posters. https://board.403bwise.com/topic/7056-security-benefit’s-nea-directinvest-number/ 

I would call SB up and find out exactly what they need. If they are already on your school district's 403b vendor list, they should have your employer's plan document. Find out if SB is indeed on your district's vendor list. There's nothing about the NEA Direct Invest 403b that would require anything from the district different from SB's other expensive plans. 

I think the plan number is a number that the district or the Third Party Administrator assigns to each vendor, although perhaps it can be assigned to each vendor's plan? If the latter, perhaps no one in your district has opted for NEA Direct Invest, so it doesn't have a number yet?? If your district uses a TPA, ask them for the SB plan number. If not, ask your district. Sometimes the TPA's or district's websites provide the plan number.

Don't get discouraged. You are in this for the long haul. NEA DI is worth pushing for!

 

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Tony,

Did you speak to your union president about adding Security Benefits? I was able to get support from her after meeting to discuss our poor options in the district (we had 4 vendors at the time, all insurance companies). Since Security Benefits in endorsed by NEA, it went smoothly and I moved all my money to Direct Invest with Security Benefits. 

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