Vangard: No Roth 403bs

[bobsmith]

I was all geared up to push my employer to list Vanguard as a vender, but I was very disappointed to learn that Vanguard does not do ROTH 403bs. Talked to a specialist at Vanguard and he said they have no plans to offer it, but they are keeping track of how many people ask about and request it, so next time you're chatting with the Vanguard people, maybe offer and encouraging word for 403b ROTHS. If you are someone who's fortunate enough to be able to make the max roth contribution on your own, the 403b ROTH lets you put an addition $17,000 under that tax free umbrella (provided you meet income guidelines).

My question to the folks here is, if you wanted to lobby your boss to have vender and you couldn't get Vanguard but you believed in the Vanguard philosophy, then who would you go with? Most of my experience is with Vanguard, but I know there are other no-load companies out there. I plan to call Fidelity and T. Rowe. Price. Maybe they do 403b ROTHS? Don't they offer no-load low fee solutions? Fidelity I know offers a 500 Index Fund with a TER of 0.10%

[skylar]

Is it Vanguard that doesn't offer Roth 403bs, or is it just your employer's 403b plan that doesn't allow them?

FWIW, I have a 403b through Fidelity, and we have an option for either traditional or Roth 403b contributions. There's lots of institutional Vanguard and DFA funds available, along with a brokerage window. It's actually a better deal than when we had the 403b directly with Vanguard, since we just had investor-class funds and no Roth available.

Skylar

[bobsmith]

Is it Vanguard that doesn't offer Roth 403bs, or is it just your employer's 403b plan that doesn't allow them?

Skylar

I can confirm that vanguard does NOT offer ROTH 403bs ANYWHERE. I just recently spoke with one of their people on the phone, one of their 403b specialists. (They have a department for 403bs).

FWIW, I have a 403b through Fidelity, and we have an option for either traditional or Roth 403b contributions. There's lots of institutional Vanguard and DFA funds available, along with a brokerage window. It's actually a better deal than when we had the 403b directly with Vanguard, since we just had investor-class funds and no Roth available.
Skylar

Well, in my case, my intention is to put all my 403b ROTH contributions into one 500 IN fund. Of course my 403b plan may vary from yours, but how do the fees work on your plan? As I mentioned I know Fidelity offers a 500 IN fund with a TER of 0.10% which I'd be quite happy with unless Fidelity let me get Vanguards 500 IN with the .05% rate. As you mention, Vanguard does NOT offer anything beyond investor shares INSIDE of a 403b that THEY host, but I've seen where you can get better than investor class shares if you go through someone else. However, I'm assuming Fidelity must be charging some kind of access fee for going outside their family of funds. In that case I'm probably be better off just going with Fidelity's .10% fund. Other than the fund TER, which I assume is no-load, what does Fidelity charge? Just some kind of $15-$30 flat yearly account fee?

Also, anyone else you think I should look at besides Fidelity and T.Rowe. Price? What other good no-load companies are out there that have low cost index funds?

[skylar]

Is it Vanguard that doesn't offer Roth 403bs, or is it just your employer's 403b plan that doesn't allow them?

Skylar

I can confirm that vanguard does NOT offer ROTH 403bs ANYWHERE. I just recently spoke with one of their people on the phone, one of their 403b specialists. (They have a department for 403bs).

Interesting. I would hope Vanguard would get on the bandwagon - I can't imagine that the overhead of maintaining a Roth 403b account would be much more than a regular 403b account, especially given that they're charging investor share ER for everything.

FWIW, I have a 403b through Fidelity, and we have an option for either traditional or Roth 403b contributions. There's lots of institutional Vanguard and DFA funds available, along with a brokerage window. It's actually a better deal than when we had the 403b directly with Vanguard, since we just had investor-class funds and no Roth available.
Skylar

Well, in my case, my intention is to put all my 403b ROTH contributions into one 500 IN fund. Of course my 403b plan may vary from yours, but how do the fees work on your plan? As I mentioned I know Fidelity offers a 500 IN fund with a TER of 0.10% which I'd be quite happy with unless Fidelity let me get Vanguards 500 IN with the .05% rate. As you mention, Vanguard does NOT offer anything beyond investor shares INSIDE of a 403b that THEY host, but I've seen where you can get better class investor shares if you go through someone else. However, I'm assuming Fidelity must be charging some kind of access fee for going outside their family of funds in which case. Other than the fund TER, which I assume is no-load, what does Fidelity charge? Just some kind of $15-$30 flat yearly account fee?

It's all flat fees. There's a $55 annual recordkeeping fee and a $5 annual fee for "other expenses", both charged quarterly. There's no other fees charged (aside from ER) for any of the funds in the plan. Oddly enough, there are no Fidelity funds in the plan, so Fidelity is merely the recordkeeper.

Skylar

[bobsmith]

Skylar,
Thanks for the info. More research to be done on Monday, but it sounds like Fidelity, for my purposes, might be the best bet.

[letsgobobby]

We have fidelity for our 403b, non Roth, and have access to some Vanguard signal and institutional funds, and we have no additional fees whatsoever. Our employer pays Fidelity any additional fees and none are passed on to the employees.

Good luck in your quest.

[emdoc]

I can confirm that vanguard does NOT offer ROTH 403bs ANYWHERE. I just recently spoke with one of their people on the phone, one of their 403b specialists. (They have a department for 403bs).

That is absolutely incorrect. Vanguard definitely allows folks to have a Roth 403b. I have had one with my employer since last year. We have investment options with Vanguard, Fidelity, TIAA-CREF and VALIC. For us, Vanguard is the only one that does Roth 403bs; all the rest are plain old regular 403bs.

[bobsmith]

I can confirm that vanguard does NOT offer ROTH 403bs ANYWHERE. I just recently spoke with one of their people on the phone, one of their 403b specialists. (They have a department for 403bs).

That is absolutely incorrect. Vanguard definitely allows folks to have a Roth 403b. I have had one with my employer since last year. We have investment options with Vanguard, Fidelity, TIAA-CREF and VALIC. For us, Vanguard is the only one that does Roth 403bs; all the rest are plain old regular 403bs.

Thanks for the post. I don't know what to tell you. I don't want to drop a name, but I got that directly from a member of Vanguard's 403b team. At one point in the conversation we were talking about why an employer might reject Vanguard as a vender for a traditional pre-tax 403b plan and he said that they might be willing to go beyond the basic bare bones services they provide IF the assets they managed were large enough, say in the 15-20 million range. But unless I was mistaken, he was only talking about a 403b pre-tax plan. He was very specific that they don't do Roth 403bs.

Are you sure you are actually using Vanguard as the vender and going through them as opposed to going through someone else and getting vanguard funds? If you're comfortable giving out information, can I ask the name of your employer? I'll like to call Vanguard back and ask about roths again using a specific reference. If you're right, I'd like to know.

[emdoc]

Are you sure you are actually using Vanguard as the vender and going through them as opposed to going through someone else and getting vanguard funds? If you're comfortable giving out information, can I ask the name of your employer? I'll like to call Vanguard back and ask about roths again using a specific reference. If you're right, I'd like to know.

Yup - 100% sure that it is through Vanguard. I only log in several times a week

I work for a large academic hospital in the "Athens of the South" and shares some letters with VANguard. Once you figure out the name, google my employer name followed by roth 403b and it will give you plenty of public information about our Roth 403b.

[DSInvestor]

I googled vanguard Roth 403(b) and found something from Vanderbilt University which seems to suggest that their Vanguard 403(b) has the Roth option:
http://hr.vanderbilt.edu/benefits/retirement/roth.php

The Vanderbilt retirement plan offers a Roth 403(b) after-tax option through Vanguard. If you're unfamiliar with the Roth option or how it may give you the potential for tax-free income in retirement, you can learn more by watching Vanguard's 10 minute presentation explaining Roth.

What if you understand how the Roth option works, yet still aren't sure if it's right for you? Vanguard's easy and convenient tool can help you decide by answering just a few quick questions. The IRS website also has helpful FAQs.

[wjo]

Too bad if Vanguard won't comply - but TIAA-CREF and Fidelity can both be good options. Both offer 403bs where I work and both include some Vanguard funds in the line up. So I would work with the options available to include Vanguard funds or desirable equivalents.

TIAA-CREF institutional funds -- available in my plan -- are pretty cheap and seem to be good index funds. There is large cap, small cap, and EAFE funds at low cost. Plus access to TIAA Traditional and RE -- these are attractive options that wouldn't be available in a Vanguard or Fidelity plan.

[bobsmith]

emdoc/DSInvestor,

I'll call Vanguard back on Monday. You guys obviously have ROTH 403bs. Vanguard even made a promotion video about it! Sorry for the bad info. I'm rather frustrated that their people at the "403b" team don't even know they offer roths. Again, maybe this had something to do with the 15 million and up criteria, but the guy I spoke to on the phone said they just weren't set up for it... Anyway, thanks for the correction.

[bobsmith]

Too bad if Vanguard won't comply - but TIAA-CREF and Fidelity can both be good options. Both offer 403bs where I work and both include some Vanguard funds in the line up. So I would work with the options available to include Vanguard funds or desirable equivalents.

TIAA-CREF institutional funds -- available in my plan -- are pretty cheap and seem to be good index funds. There is large cap, small cap, and EAFE funds at low cost. Plus access to TIAA Traditional and RE -- these are attractive options that wouldn't be available in a Vanguard or Fidelity plan.

Thanks. I'll check out TIAA-CREF too. Not sure if you're following the thread, but FYI, I may have been misinformed about Vanguard not offering Roths.

[bobsmith]

FYI: Called Vanguard back and mentioned the 403 VANGUARD roths above. They basically said those must be special circumstances, and they then went on to say that Vanguard doesn't do Roths.

That's too bad because Vanguard is going to lose a very serious chuck of money by not offering Roth 403b accounts. Not only from people funneling their savings into Roth accounts but from people converting their traditional 403bs into Roth 403bs. Huge transfers of money and Vanguard is caught flat footed.