What are all the fees associated with 403b accounts?

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katnok
Posts: 171
Joined: Fri Nov 11, 2011 8:36 pm

What are all the fees associated with 403b accounts?

Post by katnok »

At the beginning of the year, my employer changed our 403b provider, which at the time seemed awesome because average ERs of the funds went down from 1.65% to 0.35%. However, after the first quarter, I noticed some fees (0.9% of my acc balance) charged to my account. So, I promptly called the provider and was told that it was for advisory services and admin fees. While the advisory fees (0.5%) are fixed, admin fees (currently 0.4%) are variable depending on total plan assets.

The fees are still lower (for the most part), but it made me wonder why there are advisory fees. Please note that most are VG mutual funds and there is no active management. The previous provider did not charge any fees other than ERs of the funds that the participants chose.

I am fine with admin fees, but not with advisory fees. So, are advisory fees common for passively managed 403b accounts? What other fees have you come across?
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nedsaid
Posts: 13929
Joined: Fri Nov 23, 2012 12:33 pm

Re: What are all the fees associated with 403b accounts?

Post by nedsaid »

Your 403(b) might be invested in a variable annuity. If you see the words "separate account", that is a dead give away. 0.9% is a typical fee for these type of accounts. Is your provider an insurance company?
A fool and his money are good for business.
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