403(b) Vendors and New Teaching Job

[bennetbp]

I am a teacher and recently changed school districts. My previous school district I was working in made Vaguard available to us for our 403(b) plan, however, my new school district does not. I was wondering which of the following annuity company is my best option to go with. Thank you for your help in advance!

Allmerica
American General
Ameriprise
AXA Equitable
First Investors
Great American
Voya Financial (ING) Aetna
Lincoln Life
Mass Mutual
Reserve
Security Benefit
Valic

[forummm]

You will have to see which firms let you invest in low-cost index funds with your employer's 403b, and what those costs are.

[BarkyardBQ]

What forummm said.

My wife's 457 at Voya allows a TD Ameritrade Self Directed Brokerage Account, which allows us to transfer contributions from Voya to TD as cash and invest in commission free Vanguard ETFs. Her Voya plan charges .19% in addition to the ER of the 5 Vanguard funds to get their kickback. The SDBA costs roughly $60 a year fixed... much better than %'s of a growing 'stache.

Check your options from each of those plans and then see what additional fees they have. I prefer plans where they have a fixed custodial fee per year over plans that charge a % of assets.

I'd also roll your current 403b to a Vanguard Traditional IRA to keep your money in funds you like.

See if your district offers a 457 along with your 403 and prioritize the 457 over the 403 if the options are better.

[WorkingToBeFIREd]

You will have to see which firms let you invest in low-cost index funds with your employer's 403b, and what those costs are.

This.

We are in the process of moving my wife's 403b away from The Legend Group with it's facepunch worthy funds that have ERs between 0.9% and....wait for it....wait for it....2.79%.  Yes, that's right.  It's almost past a facepunch and closer to groin kick.

Anyway, we are dispatching that shit post haste and moving to Aspire.  They have an open platform and allowed her to add the Holy Trinity of Vanguard Admiral Share funds - VTSAX, VBTLX, and VTIAX (as well as VTABX, although we may not use that one).  Not quite as good as zdrave's experience, as Aspire charges a 0.15% (15 basis points) asset management fee, as well as $40/year management fee.  Compared to the prior ERs, though, even paying the asset fee will literally save us thousands of dollars per year in straight expense, and more if you count the potential gains by keeping that extra money invested.  I think other Mustachians have mentioned Valic as having a similar setup, but haven't researched them as they are not an approved provider for her district.

403b plans seem to be one of the last holdouts of nearly unregulated greed, so to an extent it's finding the least of the evils.  I'd look for anything that has low-cost index funds with no asset management fee (basis points/percentage) and, failing that, go for an "open brokerage" plan that will let you add funds a'la carte even if there's a small asset fee assigned. 

Best of luck...

[Lski'stash]

I switched over from Axa to Valic this summer. Axa's fees are really high (mine were 1.13%) as is there surrender fees for switching (5 percent of everything invested until they've had the money for seven years). Valic also offers a few vanguard funds so that's a plus. You have a lot more to choose from than I do though, so that's great! Just find the people with the lowest fund fees that offer vanguard.

[FLBiker]

Like others said, it depends on the funds and fees.

That said, of the ones you mentioned, VALIC and Voya are both available to me (via my 403b) and both are OK (Voya is a bit better).  Again, though, that's based on what they offer for us.  I can't speak to either, personally - I'm with TIAA-CREF.  It's not as good as Vanguard, but it's not bad.

[TomTX]

Get the HR people to add Vanguard as an option. Explain how it's less expensive and it was available in [Old District Name] - so you're not used to seeing such high fees.

If they balk, make sure they are aware of the Supreme Court decision in Tibble v. Edison. They have an ongoing fiduciary obligation to you and MUST offer low cost options.

http://www.forbes.com/sites/nextavenue/2015/05/20/what-the-supreme-courts-401k-ruling-means-to-you/

[snappytom]

You will have to see which firms let you invest in low-cost index funds with your employer's 403b, and what those costs are.

This.

We are in the process of moving my wife's 403b away from The Legend Group with it's facepunch worthy funds that have ERs between 0.9% and....wait for it....wait for it....2.79%.  Yes, that's right.  It's almost past a facepunch and closer to groin kick.

Anyway, we are dispatching that shit post haste and moving to Aspire.  They have an open platform and allowed her to add the Holy Trinity of Vanguard Admiral Share funds - VTSAX, VBTLX, and VTIAX (as well as VTABX, although we may not use that one).  Not quite as good as zdrave's experience, as Aspire charges a 0.15% (15 basis points) asset management fee, as well as $40/year management fee.  Compared to the prior ERs, though, even paying the asset fee will literally save us thousands of dollars per year in straight expense, and more if you count the potential gains by keeping that extra money invested.  I think other Mustachians have mentioned Valic as having a similar setup, but haven't researched them as they are not an approved provider for her district.

403b plans seem to be one of the last holdouts of nearly unregulated greed, so to an extent it's finding the least of the evils.  I'd look for anything that has low-cost index funds with no asset management fee (basis points/percentage) and, failing that, go for an "open brokerage" plan that will let you add funds a'la carte even if there's a small asset fee assigned. 

Best of luck...

I agree that 403b's seem to be one of the last holdouts of greed.  My wife is a public school teacher and her current 403b is with Aspire and while they do offer Vanguard they still piss me off with their management fees.  In my experience, so many teachers are focused on their jobs and put their 403b's on auto-pilot not realizing the hefty fee structures that can exist.  None of the vendors offered by her school district are really appealing.

[Cathy]

If they balk, make sure they are aware of the Supreme Court decision in Tibble v. Edison. They have an ongoing fiduciary obligation to you and MUST offer low cost options.

The Supreme Court opinion in Tibble does not stand for the proposition that employers must "offer low cost options" in qualified retirement plans. It also does not stand for the proposition that an employer's ongoing fiduciary duty to monitor investments has the same content as their duty in initially choosing investments. Either of those propositions may or may not be accurate statements of law, but the Supreme Court Tibble opinion is not authority for either of them. In fact, the Court explicitly declined to evaluate those propositions. Tibble v. Edison, No 13-550 (slip op) (2015), p 7 ("The parties disagree, however, with respect to the scope of that responsibility. Did it require a review of the contested mutual funds here, and if so, just what kind of review did it require? ... We express no view on the scope of respondents' fiduciary duty in this case. We remand for the Ninth Circuit to consider [these claims]." (emphasis mine)).

[WorkingToBeFIREd]

Get the HR people to add Vanguard as an option. Explain how it's less expensive and it was available in [Old District Name] - so you're not used to seeing such high fees.

The delicious irony is that in my wife's district, they actually removed Vanguard and Fidelity in 2013 as approved 403b providers.  Allegedly (according to the "advisor" that had us in funds charging 2.79% ER) it was because Vanguard wouldn't comply with some new regulatory paperwork that was required?  Sounded and smelled like crap to me, but the end result was the same - the company the district uses for plan administration nuked the two best possible options and left teachers with the worst of the worst.  I'm pissed - if I would've opened my eyes before 2013, I could've gotten my wife directly into Vanguard versus the backdoor (at more cost) with Aspire - existing plans are grandfathered, but no new plans can be opened.

Ideally, other 403b plan administrators are more enlightened and still have Vanguard and/or Fidelity as options.

[Lski'stash]

You will have to see which firms let you invest in low-cost index funds with your employer's 403b, and what those costs are.

This.

We are in the process of moving my wife's 403b away from The Legend Group with it's facepunch worthy funds that have ERs between 0.9% and....wait for it....wait for it....2.79%.  Yes, that's right.  It's almost past a facepunch and closer to groin kick.

Anyway, we are dispatching that shit post haste and moving to Aspire.  They have an open platform and allowed her to add the Holy Trinity of Vanguard Admiral Share funds - VTSAX, VBTLX, and VTIAX (as well as VTABX, although we may not use that one).  Not quite as good as zdrave's experience, as Aspire charges a 0.15% (15 basis points) asset management fee, as well as $40/year management fee.  Compared to the prior ERs, though, even paying the asset fee will literally save us thousands of dollars per year in straight expense, and more if you count the potential gains by keeping that extra money invested.  I think other Mustachians have mentioned Valic as having a similar setup, but haven't researched them as they are not an approved provider for her district.

403b plans seem to be one of the last holdouts of nearly unregulated greed, so to an extent it's finding the least of the evils.  I'd look for anything that has low-cost index funds with no asset management fee (basis points/percentage) and, failing that, go for an "open brokerage" plan that will let you add funds a'la carte even if there's a small asset fee assigned. 

Best of luck...

I agree that 403b's seem to be one of the last holdouts of greed.  My wife is a public school teacher and her current 403b is with Aspire and while they do offer Vanguard they still piss me off with their management fees.  In my experience, so many teachers are focused on their jobs and put their 403b's on auto-pilot not realizing the hefty fee structures that can exist.  None of the vendors offered by her school district are really appealing.

Agreed. I have to pay Valic .6% expense fees just to have the Vanguard funds. They didn't do anything else for me except to set up the account. Bahh...It was at least better than paying AXA 1.13% and have no choice on top of it. They put 403b's into agressive, moderate, and conservative catagories with no choice in the actual mutual funds- at least that's how it was with mine.