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Tricia C.

Need Help Selecting 403b Service Provider

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Hi!  I am a teacher with Prince Georges' County Public Schools in MD. 
Earlier this month my employer changed over to US Omni. I'm hoping that the 403bwise community can help me decide on the "least of all evils" among their list of service providers. They have a list of service providers under both a 403b and a 457b plan (see attached). It's about the same vendors for both types of plans...
I am hesitant to invest with TIAA after hearing about their 2017 fallout. I've learned more about Aspire on this discussion board, and was wondering if that may be the best option from the list. 
Something I've recently learned about through this discussion board are state-sponsored supplemental retirement plans. I'm still in the process of researching this program in my state. I'm hoping that it may also be a viable low-cost investment solution for my retirement plan. 
 
Finally, just want to add that I'm really grateful for this community and for Dan & Company for establishing this valuable resource and platform for teachers!
 
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403b

Your best option is Security Benefit’s NEA DirectInvest, documented here.

Lincoln Investment also offers a self directed plan in some areas that is pretty good.

Aspire is probably your third best choice, documented here.

Plan Member Serivces has a direct plan that is probably your fourth best option, documented here

TIAA likely comes in fifth, but your district may have negotiated a better deal than mine, which is documented here.

457b

You should definitely find out if your state has sponsored a 457b, they’re often very good.

Unfortunately, NEA DirectInvest isn’t offered as a 457b and you should see if Lincoln’s direct plan is offered as a 457b.

Aside from that your best options are Aspire followed by PlanMember’s direct plan.

TIAA

I think they’re an unethical company that is living off a past reputation of a company that is fundamentally different than they are today.

I would still invest with them if they offered you the lowest expenses...but they don’t.

People on this form will still speak highly of them. I think that is sentimental. Apparently they sometimes offer a guaranteed 3% return with minimal/no fees that is a good alternative to holding bonds, but that isn’t available in my district. 

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I agree with Ed that your best choice on the OMNI list for a 403b is the Security Benefit NEA Direct Invest. I don't think the self-directed Lincoln Investment plan is available to you in MD. Aspire is a good 2nd choice for the 403b.

For a 457, Aspire is the lowest cost vendor on the OMNI vendor list. MD has a state-run 457 that looks very low-cost but it is only available to MD state employees. However there is a state-run 403b plan with  the same Vanguard funds with very low expense ratios. I don’t know if there is an additional admin fee.* You should see if that can be added to the OMNI 403b vendor list. It’s often not difficult to get a state-run vendor added to the list. https://www.marylanddc.com/iApp/rsc/fundPerformanceViewPreLogin.

*Just found the admin fee info:

Quote

 

Performance data is net of all fees and expenses charged by the underlying fund, back to inception, but may not be net of the applicable plan charges. The plan may charge an annual asset fee which could be as much as 0.95% and would have lowered performance if reflected and applicable. Additionally, the plan may charge a separate annual administrative fee, which could be as much as $75.


 

This is discouraging and looks likely to rule out the state-run 403b. Most state-run 403b/457 plans have much lower admin fees. NEA Direct Invest certainly beats the MD 403b plan!

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Very strange! I clicked on the Maryland plans and got different info!  https://www.marylanddc.com/iApp/tcm/marylanddc/index.jsp

I clicked through to see the 457 offerings (they also have 403b and 401k plans that I didn't investigate): they have some excellent very low fee Vanguard offerings, which you'll need to pick from a list of much higher-priced funds. (These include institutional class Total Bond, Total International and SP500 funds.) I searched for fees and it appears there are additional fees as follows: 0.14% of your total balance per year, paid monthly, to a maximum of $2000/year.  Plus an additional fee of 50 cents per month (weird).  I'm made a little queasy by the fact the plan is operated by Nationwide, who are notorious for making it difficult to discover all the expenses.

Here's what I found at https://www.marylanddc.com/iApp/tcm/marylanddc/about/how_do_they_work_fees.jsp

Retirement Plan Fees

Maryland Supplemental Retirement Plans (MSRP) is required by Maryland law to pay all costs associated with the plans. The Board of Trustees (the Board) collects these fees by charging participants, based on account balance.

Annual account fees

The annual fee per participant is currently 0.14 percent of your account balance. This fee:

  • Is charged monthly and reported on your quarterly account statement
  • Covers services provided by the Board of Trustees – 0.05 percent, and Nationwide® Retirement Solutions (Nationwide) – 0.09 percent
  • Can’t exceed a maximum of $2,000 per account, per calendar year

Additional administrative fees

In addition to the 0.14 percent annual account fee, a monthly charge of 50 cents is charged to all 401(k), 457(b), and 403(b) plans. This fee:

  • Is not charged against 401(a) match plans
  • Is not charged against accounts of less than $500
  • May be adjusted periodically at the Board’s discretion to sufficiently cover service provided by MSRP and Nationwide

Mutual fund fees

There are costs associated with the mutual funds that are available for investment. These costs are detailed in the fund prospectuses, and are deducted from the return on your investment. 

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Hi, Krow36.

The link you posted doesn't seem to work-- it comes up with a "System error" window. 
Can you please direct me to the web page where you found the quote on admin fee info? 
I found a description of their fees on this page: https://www.marylanddc.com/iApp/tcm/marylanddc/about/how_do_they_work_fees.jsp  Which is the same info Whyme just now posted 🙂 

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I'm baffled by what krow36 found--I can't replicate it.  I clicked through the link and got a list of funds.  I also went back and looked at 403b as opposed to 457 options, and at a glance both the fund choice and the fee statement appeared identical.

I don't know anything about Security Benefit's options, but perhaps someone (Ed, you up for this?) will jump in with a comparison. 

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PS: I just looked at Ed's file about Security Benefit DirectInvest.  If I understand it correctly, they just charge a $35 annual fee, which is waived for account balances over $50,000.  It looks like they have slightly higher-cost (non-institutional) versions of the same Vanguard funds that the Maryland plan has, but those are still very low cost funds.  If I've got that right, the DirectInvest plan would probably be preferable over the long haul, because it doesn't have any fee tied to the size of your balance.  Getting started, that .14% is small potatoes, but it will add up over the years as your balance grows.  (Still, .14% is a lower fee than most 457 plans offer.)

One thing I note in Ed's documentation of the plan--he said it was difficult to access (sounds like they have a sales force steering folks into higher-fee options, another argument for fiduciary regulations).  I'm sure Ed will be a great resource if you do decide to open a DirectInvest account, Tricia.

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That’s great the the admin fees are very reasonable (0.14%). Sorry I couldn’t find the actual fee page. The fee info I quoted was below the page that listed all the funds. It did seem strange that Nationwide used “as much as ____” rather than the actual current fees.

I think that only the 403b plan is available to “Teachers”, not the 457 or 401k or 401a plans. In any case, the Security Benefit NEA Direct Invest is the lowest cost 403b option using the 3 basic Vanguard Admiral funds that Ed used.

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Krow, I was only able to find that fee page via the search box.  The state must have mandated that.  I have a Nationwide 457b (the only option in my district), and I'm still not sure I've sussed out all of their fees: they bury them, layer them and pretty much do everything possible to avoid transparency.  

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Thanks, Krow. I found the page you were referring to! 
Ditto, Whyme. That was the same method I used to located their fee information.  

Makes me wonder how the info Krow found reconciles with the information on the Retirement Plan Fees page? Or are these fees in addition to the annual 0.14% mentioned? 

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Tricia C., I think you and whyme have found the current fees. The fee info I found was stating the fees that Nationwide could use in the future. Future fees could be more or less than current fees, but Nationwide has to compete with other large insurance companies for these recordkeeping/administrator jobs so it's probably more likely for the fees to go down as the plans grow in assets. I believe that fee changes would have to be approved by the fiduciary-based committee that controls the plan. These state-run plans usually have to be self-supporting, that is pubic funds are not used in their administration or to lower fund ERs. 

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I think Krow found some boilerplate language that probably doesn't apply beyond the fee description I copy-and-pasted above.  

I'd put nothing past Nationwide in terms of sneaky fees, but I suspect the state mandates fee transparency in such accounts.  So I'd guess that that list covers it.  If you are concerned and are considering this plan, you might want to also post over at the "Bogleheads" forum--there are a larger number of participants there, and you may find people who actually have accounts with the Maryland state supplemental retirement plan.  (Especially given that that program also offers 401k accounts.)

Again, if you can fight your way past the "advisors," Security Benefit DirectInvest looks like a great option. 

I read Ed's account of picking the DirectInvest option for his wife's plan (https://educatorsfightingforfairness.wordpress.com/our-story/)--it is harrowing!  An advisor actually enrolled his wife in a different high-fee plan when she submitted the paperwork for DirectInvest.  Wow, that is profoundly unethical.  I hope you don't encounter such shenanigans. 

PS: I posted this before I saw Krow's post above.  Bottom line, we both think that list of fees covers it.

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