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Advising my Teacher Wife

In need of 403B education

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My wife is a teacher in Iowa. We are looking at her 403B options. I am including a link to the 403B investment options in hopes that you guys can help to educate me. VTSAX is one of the options and is listed with a fee of 0.26. VITSX is listed under the Voya options at 0.04. Are these fees in line with typical expenses. I noticed that at the top of the Horace Mann options, where the VTSAX is listed, it says that a .20 administrative fee is included in the fund fee. Is that typical? Sorry if this is too many questions but I figured you guys may be able to save me a day of google search.

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My first question is by any chance is there a State  457b plan available to her? You would be smart to check that out.

Voya is your best choice but only in a limited way.You can buy Vanguard Total Stock Market Index at a good  typical cost and apparently no administrative fee. That one fund might be all you need for now if your wife is just starting out and is young. 

Your 403b choices are not Ideal. These seem not to be annuity products which is a good  thing but you are still paying more than you should be for the funds.  Mass Mutual  have Vanguard funds. Voya actually does not show an administrative fee but the fund choices have high expense ratios except Total Stock Market. You could simply buy Vanguard Total Stock Market index  as mentioned earlier. Or I would go with either a Blackrock life path target fund (very easy)or create a portfolio from the Vanguard funds you have in Mass Mutual .Something like this:

Vanguard 500 Index

Vanguard Total Bond

Vanguard International

Vanguard Small Cap Index

Or you could go TD Ameritrade and buy funds in a self directed account. In that case I would use VOYA (fees may vary)

Regardless you need to dig deeper to get all the fees they  may charge.  It may be more than the administrative fee plus the expense ratio of the underlying funds. These companies are sneaky and don't always put all their fees front and center.

Tony

P.S. Maybe an IRA directly with Vanguard outside a 403b might be a choice depending on how much she plans on saving. It certainly would be cheaper.

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21 hours ago, Advising my Teacher Wife said:

. I noticed that at the top of the Horace Mann options, where the VTSAX is listed, it says that a .20 administrative fee is included in the fund fee. Is that typical?

Usually I see the administrative fee separately stated from the expense ratio of the fund. Looks like your wife's funds show them combined. Not necessarily a bad thing. In fact it adds to clarity. I am wondering though if this truly would be the total cost of owning the fund or if there may be any other fees involved. Dig deeper to make sure. It is not  uncommon to see an administration fee of some sort added in 403b plans. The goal should always be to get the best funds at the lowest possible cost considering all costs and fees. Vanguard works out well because they are very low cost so that even with additional fees added by the 403b plan you still come out pretty good.

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