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Tom F

Do most providers of 403B plans charge extra for adding a 457

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My wife's school does not currently offer a 457.  She is making the case they should add one.  We are trying to anticipate any roadblocks.  Number one coming to mind is costs.

 

Do most providers of 403B plans charge extra for adding a 457 to their offerings.  I am assuming they would have the same mutual fund options, just allow employees to contribute to either plan.

 

We are in a state where we only have one plan to choose from (chosen by a school committee).

 

 

 

 

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If your school district restricts their employees to a single 403b provider, I wonder if that provider (Lincoln in your wife's district) offers a 457 plan? Do your districts use a third party administrator (TPA) to help with administrating their 403b? That is usually the case. The TPA charges the district for this service, something like $30 per enrolled employee. This fee can be paid by the district or by the employee or by the vendor. The expensive vendors are happy to pay the fee. The low-cost vendors such as Fidelity may pay it, perhaps depending on the number of employees? I think ideally the district would pay the fee, and if so, that should be the only fee that would concern the district in adding a 457 plan. If a single vendor provided both the 403b and the 457, the TPA could charge separately for the 2 plans.

Because your districts have only a single vendor, the district may be using an expensive advisor, which could double their fee in a 457 plan is added. This might be in addition to the TPA. 

Lincoln charges a single custodian account fee for both the 403b and 457 plans, at least in one of their platforms (Participant Directed Platform). That may be the case with Lincoln in your wife's district. But that fee is paid by each participating employee, not by the district. If a district restricts the 403b to a single vendor, the district has some leverage to reduce the fees, compared to a multi-vendor district. 

 

 

  

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