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gchs

"old Plans"

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I approached my SD concerning the current offerings and possibility of adding a low fee vendor. Althoug there was open discussion, a comment was made that employees who were enrolled in some of the current plans, prohibit adding new vendors to the list.

So when a SD drops a vendor, what happens to those empoyees enrolled with that vendor?

 

I showed our SD CPA this website and encouraged him to have a good look at why I was asking for a new vendor. He encouraged me to write a letter to the Supt. to see if we could develop a plan doc. I read the form letter from this site asking for new vendors. I would love to adapt that but I need hard facts about our current vendor list. For example, I called Amer. Exp. and I rec'd much info on their fees, but it depends on the MF or annuity and A shares vs. B shares. Another words, all the vendors have multiple fees DEPENDENT on what type of TSA you sign.

I just want to present basic info. but it gets very complicated. So my question is how can I simplify fee info. to compare the black & white of plans and get action.

Thanks-

All of the vendors were NOT familiar with a 90-24 either, but most I spoke with had surrender fees up to 7 yrs. !

 

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Guest Sierra

The CPA that you mentioned should be intricately involved in

writing a Plan Document.

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Thanks Sierra for your reply.

So are you sayig you feel the CPA should do most of the homework or would it already be on file? He mentioned a study team to discuss the SD"s current offerings and what it might evovle into. His opinion is I should contact the Supt.

I feel overwhelmed with info. and still under educated to take on this role.

I need any and all feedback if anyone has undertaken a role to change their SD's plans.

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Guest Sierra

It seems the CPA is passing the buck to the super. The CPA is the ideal candidate to lead this "team" and design a PD that can be formerly adopted by the Board of Education. Also, tell the CPA that the SD should also offer a 457(b) plan. See if you could opt into the 457(b) plan of the State in which you work. This can be done by SD in the State of New York and Califonia.

 

Peace,

Joel

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There are a few separate and distinct items that may need to be addressed. Following are suggestions as to how to proceed.

 

1. gchs indicated that there are limits to the number of vendors that can be offered by his/her SD and thus the addition of a low-cost vendor would necessitate the elimination of a current vendor, which may be difficult to overcome.

 

Response: The contribution remittance process for any employer is costly, and the result is that most SD's probably have a finite number of "Vendor Remittance Slots" on their payroll systems.

 

I do not believe a plan document is going to help to address this constraint. It is a matter either re-allocating existing or expaning "Remittance Slots" on the payroll system.

 

2. gchs indicates the SD has many vendors currently.

 

Observation: But there is no discussion of how these existing vendors were selected or given preference for the scare "Remittance Slots" on the payroll system. Is there currently any TSA or 403(b) governance structure or procedure that can be looked at to inform you as to informal and legal precedence?

 

3. gchs would like a simple way to compare the SD's numerous vendors and fees and surrender schedules, etc, etc. to better organize a case for adding a low cost vendor.

 

Response: That research and presentation is going to require significant time and analysis directly propotional to the number of vendors offered. The devil is in the details. I would suggest spreadsheeting the vendors, their investment choices, fees, surrender penalties, and other key contract provisions. Again, any existing TSA or 403(b) governance structure or procedures would be helpful.

 

4. Final observation: Most SD's have not wanted any formal or informal role in governance of the TSA/403(b). Such a role implies liability and cost that SD's seek to avoid.

 

A plan document is a good first step in the SD playing a role in the TSA/403(b) vendor procurement process. Another good first step would be to document the procedure required for a vendor to obtain (and keep) a "Remittance Slot" on the payroll system.

 

Hope this provides a few additional ideas for your consideration.

 

Cheers,

 

Danc

 

 

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Also, tell the CPA that the SD should also offer a 457(b) plan. See if you could opt into the 457(b) plan of the State in which you work. This can be done by SD in the State of New York and Califonia.

 

 

Thank you all for responding! Yes, it is overwhelming to research and change a SD's vendors list. There are many reasons I am unable to lead this battle...Hopefully, our CPA will take an active role, as he was interested in knowing more..

I wanted more inf on the following quote:

.., tell the CPA that the SD should also offer a 457(b) plan. See if you could opt into the 457(b) plan of the State in which you work. This can be done by SD in the State of New York and Califonia.

 

1.A vendor told me it would be more beneficial to max out a 403(b) then go to a 457-Is that true?

2. Are 457's usually handled by the vendors along with 403b's? I guess I do not know enopugh about 457's. what exactley should I ask the SD concerning opting into a 457(b)? I live in GA.

Thanks again-I passed this site onto all teachers at my school, but no one I have spoken to seems to be passionate enough to make "noise".

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Guest Sierra

<!--QuoteBegin--gchs+Mar 24 2005, 07:48 PM-->

QUOTE (gchs @ Mar 24 2005, 07:48 PM)
<!--QuoteEBegin--> <!--QuoteBegin--Sierra+Mar 23 2005, 11:05 PM-->
QUOTE (Sierra @ Mar 23 2005, 11:05 PM)
<!--QuoteEBegin--> Also, tell the CPA that the SD should also offer a 457(b) plan.  See if you could opt into the 457(b) plan of the State in which you work.  This can be done by SD in the State of New York and Califonia.

 

<!--QuoteEnd-->

<!--QuoteEEnd-->

Thank you all for responding! Yes, it is overwhelming to research and change a SD's vendors list. There are many reasons I am unable to lead this battle...Hopefully, our CPA will take an active role, as he was interested in knowing more..

I wanted more inf on the following quote:

.., tell the CPA that the SD should also offer a 457(b) plan. See if you could opt into the 457(b) plan of the State in which you work. This can be done by SD in the State of New York and Califonia.

 

1.A vendor told me it would be more beneficial to max out a 403(b) then go to a 457-Is that true?

 

THIS WOULD BE TRUE IF THE 457 WAS A HIGH COST PLAN AND THE 403B A LOW COST ONE. BUT IT SELF SERVING ON THE PART OF THE VENDOR BECAUSE THE OPPOSITE IS TRUE.

 

2. Are 457's usually handled by the vendors along with 403b's? I guess I do not know enopugh about 457's. what exactley should I ask the SD concerning opting into a 457(b)? I live in GA.

 

GET ONTO THE WEBSITE OF THE 457 PLAN OFFERED BY THE STATE OF GA AND SEE IF IT IS MADE AVAILABLE TO LOCAL GOVERNMENTAL ENTITIES LIKE SD.

 

Thanks again-I passed this site onto all teachers at my school, but no one I have spoken to seems to be passionate enough to make "noise".

 

THE LACK OF "NOISE" IS SWEET MUSIC TO THE HIGH COST VENDORS. THE HIGH COST VENDORS FLORISH IN THE 403B K-12 MARKET BECAUSE OF THE FACT THAT THE REGS DO NOT REQUIRE EMPLOYER INVOLVEMENT BEYOND DISPERSING A MONTHLY CHECK TO THE VENDORS. THE INVESTED ASSETS ARE OWNED AND CONTROLLED BY THE INDIVIDUAL NOT A PLAN TRUST AS IS THE CASE WITH A 457(B) PLAN. LEGALLY THE 403(B) IS NOT A PLAN BECAUSE THE ASSETS ARE OWNED AND CONTROLLED BY THE INDIVIDUAL. RATHER THAN GOING TO YOUR FAMILY'S KITCHEN TO SIGN YOU UP THE VENDOR'S REP USES THE SCHOOL'S CAFETERIA TO SIGN UP A DOZEN TEACHERS. JUST LIKE NO-LOAD FIRMS DO NOT COME TO YOUR KITCHEN THEY ALSO DO NOT COME TO YOUR WORKPLACE. THEY DO NOT SOLICIT!! THIS IS WHY IT IS CRITICALLY IMPORTANT FOR THE ER TO ASSURE THAT NO-LOAD FUNDS ARE MADE AVAILABLE TO ITS TEACHERS AND TO DISCLOSE TO TEACHERS THAT THEY MUST TAKE THE INITIATIVE IF THEY WANT TO INVEST IN A LOW COST ENVIRONMENT. GO ONTO THE NYC WEBSITE AT: WWW.NYC.GOV/DEFERRED COMP AND YOU WILL SEE HOW AN ER TAKES CARE OF ITS EMPLOYEES WHEN IT COMES TO DEFERRED COMPENSATION INVESTING. <!--QuoteEnd-->

<!--QuoteEEnd-->

Please look for my reply in CAPS.

 

Peace and hope,

Joel

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gchs,

Joel's assessment on the lack of noise and the high priced vendors is right on. The 403b world is indeed silent. This is where you come in. One person making noise in an otherwise totally silent invironment is threating enough for the high priced vendors. Things are changing and I have a feeling the vendors are feeling it. So, the only person who needs to be passionate about this issue is you. A lot of big things happened historically with one person. But you are not alone. You have friends on this site who know the feeling.

Let the noise begin,

Steve

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To follow up on gchs's point: several years ago my district had few (actually, zero) good choices for 403b investing. After several calls and letters to a number of no-load firms, I actually got one to sign the hold harmless agreement. It took some work, but it was worth it. One person making some noise can sometimes make a difference.

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westerndad :

Do you dare disclose which firm would sign a hold harmless agreement?

 

Joel and all others,

 

I appreciate your very specific feedback on where to find help. I will continue to push -I wish I had more time... (like all of us)

 

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gchs:

 

The firm that signed the hold harmless agreement was INVESCO. It was a decent no load firm at the time. However, it was bought out by the scandal-ridden AIM, and I certainly do not contribute any more money to that company. Fortunately, Fidelity is now an option in my district. I believe that it is open to any district under the umbrella of the LA County Office of Education (though i would not swear to that).

 

By the way, ER is employer (I think!).

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