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MIA-MD

From 403b To 401k Plan

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Joel, if you can't expand your imagination to consider the notion that a staff of a few hundred people, mostly concentrated in one place, might have different needs than a geographically and financially diverse group of HALF A MILLION teachers, then I don't know how to respond to that. You are predisposed to assume nefarious intent on NYSUT's part, so by all means, have at it. But at least TRY to provide some evidence, OK?

 

This remains an apples and oranges comparison, in every respect. One group needs a 401(k) account, the other a 403(b). One group consists of 500,000 members, the other of a few hundred. One group is spread statewide, the other concentrated in one city (Albany). I suspect that there are great differences in the income levels of the two groups, as well. I know for a fact that some teachers in New York State make less than $30,000, while others nearing retirement (especially those in the southern part of the state) have six-figure incomes. Any financial services professional, I would think, would agree that these two very different groups might well require two very different approaches.

 

It's also possible that NYSUT thought that their negotiating clout would be better spent on providing at least one low-cost full-service provider to their membership, which is why they worked with ING to bring such a plan to fruition, while maintaining the availability of all the no-load funds they could.

 

Not being part of the decision-making process, I don't know...and neither do you, Joel. But it's counterintuitive to suggest that NYSUT looked after its own while screwing the 500,000 of us that they represent for a living. If that were the case, do you honestly think we would tolerate that, or even rise to defend their work?

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Guest Sierra

FT: I bet there are numerous school districts in NY that have smaller staffs than the teachers' union yet they have loads as well as no-loads to choose from. As an advocate of choice (employees should have loads and no-loads to choose from) why doesn't your advocacy extend to the professional and administrative employees of your teachers union? Why should they be stuck with the no-load no-help variety? Surely some of those "few hundred" would benefit, as you have, by working with a rep from ING. Moreover, how does the union's no-load 401(k) plan address the issue of service?

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It's so nice to have the diverse views represented by the various people on this forum and I thank you for your time. NOw, I'm sure you've had this question posed before but if giving the choice would you even opt for a 403b plan rather than a 401k? Since I am not with a school district, we have the option to look into other retirement plans and I'd like to get your views on this. As I've said before, our 403b plan isn't matched as we also have a defined pension plan that is total funded by the employer, thus matching contribution to a 401k or 403b is not really an option. In this case, is it even reasonable to continue with a 403b plan?

This is an interesting discussion but it's not directly addressing my questions (see quote). I'm meeting with a New York Life rep as well as my current advisor from AXA in a few days and would like to be prepared. Also, has anyone ever heard of TIAA-CREF refusing to write a contract with a 501c(3) company? Apparently, we tried to open a group account with them about six years ago that was rejected for some reason.

 

Thanks.

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FT: I bet there are numerous school districts in NY that have smaller staffs than the teachers' union yet they have loads as well as no-loads to choose from. As an advocate of choice (employees should have loads and no-loads to choose from) why doesn't your advocacy extend to the professional and administrative employees of your teachers union? Why should they be stuck with the no-load no-help variety? Surely some of those "few hundred" would benefit, as you have, by working with a rep from ING. Moreover, how does the union's no-load 401(k) plan address the issue of service?

 

To the extent that some of these are excellent questions, you should address them to the professional and administrative employees of the union, not to me.

 

But the answer to your big question: it'd be great if there were any such thing as a multi-provider 401(k). And yes, I'd be a staunch advocate of choice in those circumstances. But I've never heard of any such creature. Is it possible for an employer to have a 401(k) that offers more than one provider? If not, the majority of these questions are moot.

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This is an interesting discussion but it's not directly addressing my questions (see quote). I'm meeting with a New York Life rep as well as my current advisor from AXA in a few days and would like to be prepared. Also, has anyone ever heard of TIAA-CREF refusing to write a contract with a 501c(3) company? Apparently, we tried to open a group account with them about six years ago that was rejected for some reason.

 

Thanks.

Sorry to have apparently hijacked the discussion here, MIA-MD. To return to your question, given that matching contributions aren't on the table, I would strongly favor a 403(b) over a 401(k), only because the 403(b) allows the employer the flexibility to offer a number of different financial providers, which would accomodate both those who need financial assistance as well as those who don't.

 

TIAA-CREF, from what I can gather from others' postings, is a different company now than it was a few short years ago, and they are walking away from smaller pieces of business in favor of larger ones. I guess that's economies of scale, but I don't know. Anyway, I'll let others who have direct dealings with them elaborate more.

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Guest Sierra
FT:  I bet there are numerous school districts in NY that have smaller staffs than the teachers' union yet they have loads as well as no-loads to choose from.  As an advocate of choice (employees should have loads and no-loads to choose from) why doesn't your advocacy extend to the professional and administrative employees of your teachers union?  Why should they be stuck with the no-load no-help variety?  Surely some of those "few hundred" would benefit, as you have, by working with a rep from ING.  Moreover, how does the union's no-load 401(k) plan address the issue of service?

 

To the extent that some of these are excellent questions, you should address them to the professional and administrative employees of the union, not to me.

 

But the answer to your big question: it'd be great if there were any such thing as a multi-provider 401(k). And yes, I'd be a staunch advocate of choice in those circumstances. But I've never heard of any such creature. Is it possible for an employer to have a 401(k) that offers more than one provider? If not, the majority of these questions are moot.

You miss the whole point of investing in an individual account plan. Your union, as employer, and the union representing a "few hundred" employees fully understand the principles that Danc recently shared with us. You may want to take another read of his post.

 

It is more than obvious that if your union, as employer, believed that an agent distributed VA was best for pre-tax investing it would have extended the deal it negotiated for its 500,000 members with ING, to its own workforce.

 

Aren't you just a bit curious on how the union's no-load 401(k) plan addresses the issue of "service"? Maybe this model can be made available to the 500,000 members as well. But then the union's benefit trust subsidiary would no longer be entitled to that $4,000,000 ING paid endorsement fee.

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Aren't you just a bit curious on how the union's no-load 401(k) plan addresses the issue of "service"? Maybe this model can be made available to the 500,000 members as well. But then the union's benefit trust subsidiary would no longer be entitled to that $4,000,000 ING paid endorsement fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

The union is not getting any fee at all. The non-profit benefit trust is, to the benefit of us, the members. The benefit trust is NOT a subsidiary of the union. And they're not getting a $4 million fee. They're getting a $3 million fee.

 

Since I'm clearly going to have to repeat it a few more times before it sinks in, I thought I'd condense future posts into this one. Perhaps you can study the above sentence, repeat it quietly to yourself, and at least quote accurate facts the next time you attempt to take on this subject.

 

 

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You miss the whole point of investing in an individual account plan. Your union, as employer, and the union representing a "few hundred" employees fully understand the principles that Danc recently shared with us. You may want to take another read of his post.

 

It is more than obvious that if your union, as employer, believed that an agent distributed VA was best for pre-tax investing it would have extended the deal it negotiated for its 500,000 members with ING, to its own workforce.

 

 

You may want to take another read of MY post, above. The one that mentions "apples and oranges" a lot.

 

And while it is "more than obvious" to you that if my union loved the Opp Plus program so much it would have extended it to its own workforce, it's more than obvious to me that their workforce uses a 401(k) plan, NOT a 403(b). So of course, Opp Plus wasn't an option.

 

If you don't understand the differences between a 401(k) and a 403(b) plan, perhaps you could do a little reading on the side and rejoin the discussion when you're better prepared?

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Guest Sierra

And while it is "more than obvious" to you that if my union loved the Opp Plus program so much it would have extended it to its own workforce, it's more than obvious to me that their workforce uses a 401(k) plan, NOT a 403(b). So of course, Opp Plus wasn't an option.

================================================

Of course it was as option: VAs are permitted for 401(k) investing to the same extent as 403(b) investing. C'mon you know that! Again: Why wasn't the union's endorsed VA extended to it own workforce?

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Thanks for addresing my question FT. . .I'd like to hear from the rest of you about the 401k vs. 403 discussion. It seems FT is accusing others of not fully understanding the difference and I for one confess my ignorance. Please elaborate. The 403b novices on the forum are anxiously awaiting your response.

 

TRI, Joels (I want to be a buddy), Joes, Dan, anyone???????

 

 

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Of course it was as option: VAs are permitted for 401(k) investing to the same extent as 403(b) investing. C'mon you know that! Again: Why wasn't the union's endorsed VA extended to it own workforce?

Annuities may have been an option. Opp Plus, which is very specifically A 403(B) PLAN, was not.

 

As for why the union made a different choice for its much smaller, more centralized, (presumably) higher-paid staff, ask them. I don't presume to know. I suggest you ask them, and report back to us with your findings. But if you simply jump to your usual set of conclusions without an iota of evidence to support them, I will absolutely call you on it. Again.

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Thanks for addresing my question FT. . .I'd like to hear from the rest of you about the 401k vs. 403 discussion. It seems FT is accusing others of not fully understanding the difference and I for one confess my ignorance. Please elaborate. The 403b novices on the forum are anxiously awaiting your response.

 

TRI, Joels (I want to be a buddy), Joes, Dan, anyone???????

 

Surely SOMEONE else has an opinion to help this guy out? Or do we really have to let another potentially useful thread turn into NYSUT v. ING again?

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Guest TR1982

MIA-MD,

I'll be honest, I can't remember anymore whether a 501c-3 organization can have a 401k plan. There was a period in the 1980s when it was allowed but that window was closed after 1987. With the most recent changes in tax law, I don't recall hearing that 401k was now available to 501c-3 organizations. If you verify that it is, and I don't think it is, then there are 2 key decisions that have to be made:

 

1) If the employer establishes a 401k plan then the employer is on the hook for the plan and must act as a fiduciary. They own it, not the employees.

 

2) If the employer goes the 401k route, automatically they will incur some costs to perform plan administration. These costs will run between 1-2k per year. This is a cost you cannot get around. There will also be fairly substantial paperwork and administrative issues above and beyond what is required in a 403b plan.

 

If a 403b is established, there is no plan administration and the no fiduciary obligation, since the contracts are individually owned.

 

You can have almost any investment medium you like in either plan type, subject to price and availability.

 

Hope this helps.

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Guest Sierra

MIA: The individual's assets in a 403b plan are owned by the individual not a Trust, as is the case with a 457(b)/401(k) Plan. Because of this legal difference the 403(b) employer has practiced a hands off approach when it comes to allowing ees to invest in 403b. Over the decades this hands off approach has led to a multitude of duplication of investment options that is clearly not in the best interests of the ees. How many money market funds is enough?---how many bond funds is enough--how many large cap/small cap funds is enough--how many international funds is enough---how many stable value funds is enough? I trust you get the point. Just because the law allows an infinite number of 403b solicitors to come into the workplace to sell their products doesn't mean that the law requires the er to adopt that route. The employer is free to limit the number of 403(b) vendors to one just like the 457(b)/401(k).

 

Peace and Hope,

Joel

 

 

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