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railspike

Is a Third Party Administrator Required to Access Low-Cost Vendors?

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I work for a pretty small non-profit which offers a 403b as our only retirement account option. Unfortunately, the only vendors we have access to are Invesco and, you guessed it, Equitable (AXA). I've been going back and forth with our HR department (which essentially consists of one person) and executive director since the spring, trying to get an additional vendor added. After initially telling me I could use whichever vendor I wanted, when I connected HR with the Vanguard 403b department, they reversed course and said it was too complicated since we don't have a third party administrator, and if I wanted to contribute, it would have to be to one of our current options.

Given how uninformed HR is about this, I highly doubt they are handling all the paperwork required of a plan sponsor. Is it possible that AXA and Invesco handle all that themselves? If so, are there any low-cost vendors that we could work with in the same manner, sans TPA? Since my work seems open to adding a new vendor, but HR is unwilling to do anything about this, I'm just trying to do as much of the work as possible for them in hopes of moving it along. Any suggestions are appreciated. Thanks.

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It seems foolish that your non-profit does not have a TPA. Their 2 vendors will pay the per employee TPA fee. Aspire will use part of their $40/yr fee they charge employees to pay TPA fee. They add only 0.15% to low-cost Vanguard or Fidelity funds. Vanguard will collect the fee from the employee and forward it to the TPA. I think it's likely that Vanguard is not interested in being a vendor for a non-profit that has no TPA. 

I think I would just invest in a Vanguard or Fidelity or Schwab taxable brokerage account. It can be tax efficient if you use stock index funds like the Total Stock Market Index fund. You can organize monthly withdrawals from your bank, so that it's all automatic. 

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