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Vanguard Now with Omni P3

Vanguard with Omni P3  

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  1. 1. Is Vanguard's fee structure (Vanguard Fee is $5 a month/$60 a year plus fund expenses.) with Omni P3 appealing to you?

    • yes - thank you Vanguard
      1
    • no - still too expensive
      0


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Hi Everyone,

 

Just heard that Vanguard is back on Omni's P3 provider list. Vanguard Fee is $5 a month/$60 a year plus fund expenses.

So 200k .04% fund expense is $80 plus $60 annual fee= $140

 

Has anyone else heard this? I will be calling my district office tomorrow to confirm, but it looks like good news is coming.

 

Thoughts?

 

JC

Vanguard 403(b) Services_Core Fund Offering 4Q19.pdf Vanguard 403(b) Services Program.pdf

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From memory, Scott Dauenhauer posted on the FB 403b Group that the OMNI fee for using Vanguard was $60/yr. That is in addition to Vanguard’s Newport Group’s admin fee of $5/mo ($60/yr). So for OMNI users of Vanguard, it’s $120/yr. For a $200,000 balance, that would be a 0.06% fee. Not that significant. (Scott Abrams’ thread of Jan 17).

For smaller balances of new accounts $120/yr is more significant. For a $50k balance:  $120/50,000 = 0.24%. That’s still not an unreasonable admin fee. After a few years, hopefully maxing out the 403b, the $$$ type of fee becomes less and less significant. A flat $$$ fee is a more favorable fee to larger balances than an assets under management fee, and I think you should welcome it.

The often recommended CalSTRS Pension2 403b has an admin fee of 0.25%.

CalSTRS Pension2 would levy a fee of $500 on a $200,000 balance. Compare that to OMNI P3’s $60 TPA fee on Vanguard accounts.

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I will have to check up on that. The information I was passed just talked about Vanguard's $60 annual fee not Omni's fee of an additional $60.

I'm in NY and am having a difficult time with not dropping the 403b altogether and moving to the 457 which has an administrative fee which is a combination of a $20 annual fee, paid in two $10 semi-annual installments and an asset-based fee calculated as a percentage of a participant's account balance. The annual asset-based fee is estimated to be 3.0 basis points, paid in two 1.50 basis point semi-annual installments. The asset-based fee will be charged only on accounts with balances in excess of $20,000. Account assets subject to the asset-based fee are capped at $200,000.

So for the NY 457 $200,000 would be $20 + ($200,000*0.0003) = $80 annual fee MAX since the asset-based fee is capped at $200,000. That $80 turns out to be an admin fee of .04%

Isn't that better?

Is there something I am missing?

 

Thanks all.

 

JC

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Yes, it's better! It all depends on the size of the balance. The NY state 457 plan probably has the lowest cost admin fee of all the state run 457 plans. There's a limited number of NY state school districts, municipalities and state employees. The Vanguard 403b plan is potentially open to all school districts and non-profits in the US. It has to deal with transfers from the multiple vendors that most school districts also have. Imagine having to deal with all those insurance companies! 

The Fidelity K-12 403b has an admin fee of $24/yr which is lower than either the Vanguard or the NY state 457 admin fee. I suspect this is a 403b loss leader, and Fidelity is able to support this loss with the sale of their numerous more-expensive activly-managed funds. 

My point is that the 403b admin fees of Vanguard, Fidelity and the admin fees of the NY state 457 are all incredibly reasonable! Combined with their low ERs, they are the envy of most of those in 403k plans in the for-profit world. You should be grateful for your access to both the Vanguard 403b and the NY state 457. 

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Thank you for the reply. I actually called Fidelity and was told in order for them to come to my district we would have to start with a 100 million account. I’m not sure that’s happening. I am very grateful. Thanks again for the reply. 
 

JC

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Option 3: All of the above.

Of course it is appealing to me, but it doesn't mean I don't want it lower. As krow pointed out Fidelity beats them in both the admin fees and the expense ratio fees. Security Benefit's NEA DirectInvest charges a $35/year fee.

As long as we're talking about somebody who is saving a good deal (let's say maxing out their 403b) then these admin fees in the 10s of dollars are trivial and I'd focus on the other fees.

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