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I work for a suburban New Jersey school district with roughly 1500 employees.

Our local association has established a working group to explore our 403(b) plan vendor choices as we want to effect positive change.

I am a long-time member of this board but haven’t posted much and wanted to reach out to everyone today for your thoughts  our working group is starting its work soon.

Here is some background information.

We have  a TPA that the board hired after the IRS rewrote 403(b) regulations about 10 years ago.

We have a handful of 403(b) vendors. Most offer either mutual funds or annuities at retail prices- the typical K-12 options.

The TPA has an option to buy American Funds’ institutional class shares with no loads and fees somewhere in the range of 70 to 90 basis points. 

(In addition, the district has a single-vendor 457 plan which is administered by VOYA.  I believe the options are annuities priced similarly to the typical K-12 products and may have deferred sales charges.)

We would like to review our 403(b) vendor options as we work towards working with our board and business office. Can anyone share your experiences with Vanguard, Fidelity, or NEA Member Benefits working with K-12 districts? Or experiences with other vendors that proved favorable?

Thanks,

Jeff

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As a NJ district, I wonder if you are aware of the Lincoln Investment Participant Direct 403 B/457b plan which is only available to school districts in NJ and a few districts in NY and the Chicago area? It's a fantastic plan for those districts if Lincoln Investment Group is on the vendor list. It's also a 457 plan option. The admin fee is $35/yr it would cover both a 403b and a 457 account. Most Vanguard funds are available. It is internet based and must be opened by getting the PDF application form from a regional Lincoln Investment office. Local reps can tell you who to call. This arrangement has been said to have been  organized by the NJEA, the NJ state-wide union??Another rep has said that NJ state law requires that be offered??

 

 

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That self directed Lincoln plan is good, but given that it is limited to specific areas, I’d always wonder how permanent such a plan is. If I were you I’d sleep easier knowing I had Vanguard and Fidelity available. Given the choice, I don’t see any reason to stray from those two.

Security Benefit’s NEA DirectInvest is an elite 403b, but given the choice I’d bypass them in favor of a vendor that won’t actively steer investors towards other exploítative options. See Vanguard and Fidelity. 

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I agree with Ed. Never trust an insurance company and their "reps." Those reps are not genuine fiduciaries or genuine investment advisers, they are sales personal 100%. Sure, you might start out with a great plan, then Lincoln changes.... What do you do then?  

American funds even without the loads are too expensive. 

We generally agree here to go with Vanguard, Fidelity, TIAA, or your states' 457(b) plan. Here in California, we also have a great 403(b) plan through our state teachers' pension plan. 

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I agree that Vanguard (403b) and Fidelity (403b and 457) are the best to add to the vendor list. Next best is Aspire (403b and 457). If a NJ district, next best is Lincoln Investment for their low-cost Participant Directed Platform (403b and 457). I would put Security Benefit's NEA Direct Invest (403b) last, and in fact would never recommend that they be ADDED to the vendor list because they would sell annuities to uninformed colleagues. LI sells expensive custodial plans but not annuities.(?)  Besides NJ, LI has been reported to allow the low-cost option in a few districts in NY, in Philadelphia and in the Chicago area.

Edit: I just learned the although LI doesn't sell annuities in CA, it does sell annuities in other states. So I think you should stick with Vanguard, Fidelity and ASPire.

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17 minutes ago, krow36 said:

I would put Security Benefit's NEA Direct Invest (403b) last, and in fact, would never recommend that they be ADDED to the vendor list because they would sell annuities to uninformed colleagues. LI sells expensive custodial plans but not annuities. 

Great point! 

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Does anyone have experience with IPX? It seems like Aspire, but less expensive. $50 a year for Fidelity funds.

 

Thanks in advance.

 

JC

 

 

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21 minutes ago, JC. said:

Does anyone have experience with IPX? It seems like Aspire, but less expensive. $50 a year for Fidelity funds.

I don't know why you're phrasing the expenses this way and I'm deeply skeptical of the "$50 a year for Fidelity funds" phrasing because:

  • Vendors typically charge a flat rate to have the account (like Vanguard's $60/year) and/or an AUM to have the account (like Aspire's 0.15%/year).
  • Furthermore, vendors at least to my knowledge, don't give different fees for a family of funds (like say Fidelity funds in your example)...they may inflate a fund's expense ratios.

Additionally, I went to their website and it doesn't provide any useful information despite having pages and pages of "content." This is the same approach used by vendors looking to rip-off investors because they want you to call or they want to send a rep to you so they can apply high pressure tactics to get you to sign up for something you don't understand. They certainly don't want you to understand the product in the comfort of your home and then count on you signing up because it is so awesome.

So although I don't have any experience with IPX, I have every reason to believe they're unethical.

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3 hours ago, EdLaFave said:

I don't know why you're phrasing the expenses this way and I'm deeply skeptical of the "$50 a year for Fidelity funds" phrasing because:

  • Vendors typically charge a flat rate to have the account (like Vanguard's $60/year) and/or an AUM to have the account (like Aspire's 0.15%/year).
  • Furthermore, vendors at least to my knowledge, don't give different fees for a family of funds (like say Fidelity funds in your example)...they may inflate a fund's expense ratios.

Additionally, I went to their website and it doesn't provide any useful information despite having pages and pages of "content." This is the same approach used by vendors looking to rip-off investors because they want you to call or they want to send a rep to you so they can apply high pressure tactics to get you to sign up for something you don't understand. They certainly don't want you to understand the product in the comfort of your home and then count on you signing up because it is so awesome.

So although I don't have any experience with IPX, I have every reason to believe they're unethical.

Hi Ed,

Thank you for the response. From my understanding IPX has three different types of accounts that you can open all with a different fee structures and investing opportunities.

 

What the representative shared with me seems to be confirmed by 403bcompare.

 

Here is there product list https://www.403bcompare.com/vendors/1966#/productlist

 

And here is the plan that gives access to Fidelity Funds for a $50 flat fee.

 https://www.403bcompare.com/products/272#/investmentoptions

 

Ed thinks IPX is unethical. Does anyone else have an opinion?

'

Thanks again Ed. 

 

JC

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2 hours ago, JC. said:

Ed thinks IPX is unethical.

Just to be clear, what I said is that I have every reason to believe they’re unethical because they don’t list any useful information on their website. I reserve my actual judgment until I have the necessary information.

I followed the link you sent. I see a $50/year custodial fee and I see a $121 annual cost fee listed at the top. I’m not sure what is what there.

I also see you have access to:

Fidelity 500 - 0.02%

Fidelity Mid Cap - 0.03%

Fidelity International - 0.04%

Fidelity Emerging Markets - 0.08%

Fidelity Intermediate Treasuries - 0.03%

So if you only have to pay $50 on top of those expense ratios and there aren’t any other fees then this is a really good plan. 

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I was wondering if anyone knows if Charles Schwab offers any 403(b) services for schools. I found a document online related to Schwab 403(b) but saw little mention of 403(b) on the Website when doing a quick look.

Here is a custodial agreement I found:

https://www.schwab.com/public/schwab/nn/schwab_403b7_account_agreement.html

 

Whatever insights people have would be appreciated.

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17 hours ago, EdLaFave said:

Just to be clear, what I said is that I have every reason to believe they’re unethical because they don’t list any useful information on their website. I reserve my actual judgment until I have the necessary information.

I followed the link you sent. I see a $50/year custodial fee and I see a $121 annual cost fee listed at the top. I’m not sure what is what there.

I also see you have access to:

Fidelity 500 - 0.02%

Fidelity Mid Cap - 0.03%

Fidelity International - 0.04%

Fidelity Emerging Markets - 0.08%

Fidelity Intermediate Treasuries - 0.03%

So if you only have to pay $50 on top of those expense ratios and there aren’t any other fees then this is a really good plan. 

I'm with you Ed. I really appreciate the thoughts. I agree, the website is weird. I have been emailing with a representative and everything seems like its on the up and up. I had never even heard of this company. The link I sent from 403b compare seems to confirm what I am being told. The $121 they reference seems to be the $50 fee, plus the cost of owning funds. The site estimates this 71 fee by taking   the average expense ratio of all investment options. and multipling it by a 10k investment. I would just use the Fidelity SP 500 index fund FXAIX .02%.

 

It sounds almost too good to be true, which is why I'm questioning it. I also have a Vanguard proper option, but that is $60 a year and I would rather Fidelity funds.

 

Thanks again Ed.

 

JC

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3 hours ago, Jeff the Teacher said:

I was wondering if anyone knows if Charles Schwab offers any 403(b) services for schools. I found a document online related to Schwab 403(b) but saw little mention of 403(b) on the Website when doing a quick look.

Here is a custodial agreement I found:

https://www.schwab.com/public/schwab/nn/schwab_403b7_account_agreement.html

 

Whatever insights people have would be appreciated.

I have yet to see them as an option, but I would be surprised if they didn't have some way of addressing that market.

 

JC

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46 minutes ago, JC. said:

The link I sent from 403b compare seems to confirm what I am being told.

If you sign up for it, please report back over time and if there aren’t any catches then I’ll document it and add it to my list of best vendors on my site. 

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