Great 403b for teachers?

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krow36
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Great 403b for teachers?

Post by krow36 » Sat Dec 26, 2015 4:18 pm

The National Education Association (NEA) is a nation-wide lobby and union organization representing 3M teachers and other workers in the education industry. The NEA receives compensation for allowing their name to be used (with implied endorsement) on various financial programs, including 403b retirement programs. Around 2007, it became known that the insurance companies Nationwide and Security Benefit were paying the NEA (an undisclosed) up to 2M a year for the right to offer financial offerings with the exclusive use of the NEA name. Nationwide had recently sold this NEA endorsement program to Security Benefit for 72M. Here’s a 2007 NYT article on a class action lawsuit brought against Nationwide, Security Benefit and the NEA: http://www.nytimes.com/2007/07/17/busin ... .html?_r=0
Does any know the outcome of this court case?

Security Benefit now has a 403b program called NEA/Direct Invest, which appears to me to an excellent choice for educators.
http://www.nearetirementprogram.com/#!enrollment/cc0q

Included with about 30 funds with higher expense ratios offered by various companies are 8 Vanguard Admiral class index funds. The other funds in the program are mostly managed funds, all with ER’s of about 0.50 to 1.00%.

Vanguard Total Stock Market Index ER 0.05%
Vanguard Total International Stock Index ER 0.14%
Vanguard Intermediate Term Bond Index ER 0.10%
Vanguard 500 Index ER 0.05%
Vanguard Growth Index ER 0.09%
Vanguard Mid Cap Index ER 0.09%
Vanguard Small Cap Index ER 0.09%
Vanguard REIT Index ER 0.12%
Although the funds all have a 12b-1 fee of 0.01%, I believe that it is included in the ER.

The fees listed in the Security Benefit Custodial Agreement seem reasonable:
An annual fee of $35 for accounts of less than $50,000.
A annual fee of $30 if the employee revokes their agreement to receive all communications by mail instead of electronically.
A $25 withdrawal fee for any withdrawal not requested through the employee’s online account.

I wonder if Security Benefit and NEA have established the NEA/Direct Invest program, with the Vanguard funds, as a result of the lawsuit? Of course Security Benefit offers other expensive 403b programs that use advisors and managed funds that they hope teachers will choose instead of the DIY NEA/Direct Invest 403b.

I’ve searched the BH forums for an up to date thread on this without success. The 403gwise.com website doesn’t seem to be aware this program.

A corysold recent thread brought the program to this forum’s attention. viewtopic.php?f=1&t=179286

I’m a retired teacher who had an expensive 403b, and if this program is as good as it looks to me, I’d like to get the word out. Have any Bogleheaders used it? mikew041 has a NJ school district that says he needs 15 individuals to sign up, although they listed NEA/Security Benefit as a choice. viewtopic.php?f=1&t=179734

spelling correction
Last edited by krow36 on Fri Jan 08, 2016 12:41 am, edited 1 time in total.

jeremyl
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Re: Great 403b for teachers?

Post by jeremyl » Sat Dec 26, 2015 5:25 pm

I called the nea to talk to one of their advisors because the site says to contact them if your school doesn't list them as a provider. Someone is supposed to get back with me (hoping beginning of the week).

If I can do this, it will be done ASAP. I sent this info to our union president and she supposedly relayed that info to others ( have no idea who "others" are).

I've brought our high fees options to the union and our fiduciary's attention. Allegedly they're hiring an independent person to evaluate our plan. Who knows what will happen after that.

The only potential downside may be if you have to be a union member to get the nea direct invest plan. As you can see, I know better than our union leaders in regards to our retirement options (thanks to the Bogleheads of course).

I think our union or corporation is getting some kind of compensation from the vendors. There is a contract with the vendors.

krow36
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Re: Great 403b for teachers?

Post by krow36 » Sat Dec 26, 2015 6:15 pm

jeremyl wrote:I called the nea to talk to one of their advisors because the site says to contact them if your school doesn't list them as a provider. Someone is supposed to get back with me (hoping beginning of the week).


jeremyl, I think that you called Security Benefit, not NEA? In any case it will interesting to know what they tell you. NEA may not like you in the program without being an NEA member, but your 403b is a contract between you and Security Benefit and your school district, not with NEA. NEA gets their cut from the program, but I doubt they have a say on which teachers, union or not, can participate. And Secure Benefit wants as many participants as possible.

I think our union or corporation is getting some kind of compensation from the vendors. There is a contract with the vendors.

Yes, as long as it's disclosed to customers, it's legal for NEA to receive money from Secure Benefit for the exclusive access to NEA's members. They both acknowledge the relationship. Security Benefit let slip that they paid NEA about $500k for one quarter a few years ago! That's about 2M/yr for access to 3M potential customers. They don't expect to make much on the NEA/Direct Invest 403b, but the other 403b programs with advisors using managed funds are another story, aren't they?

spelling correction
Last edited by krow36 on Fri Jan 08, 2016 12:42 am, edited 3 times in total.

jeremyl
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Re: Great 403b for teachers?

Post by jeremyl » Sat Dec 26, 2015 6:41 pm

jeremyl, I think that you called Secure Benefit, not NEA? In any case it will interesting to know what they tell you. NEA may not like you in the program without being an NEA member, but your 403b is a contract between you and Secure Benefit and your school district, not with NEA. NEA gets their cut from the program, but I doubt they have a say on which teachers, union or not, can participate. And Secure Benefit wants as many participants as possible.


You're correct, I called secure benefit. I doubt my school district will allow but we'll see what the advisor says when he/she calls back.

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Re: Great 403b for teachers?

Post by corysold » Sat Dec 26, 2015 7:43 pm

I found this when I set up my wife's 403(b). Seems to be the best option out there by far from what else I saw. The first deposit is scheduled for January, so hopefully it all works out and there are no hidden fees or anything.

Otherwise, it appears to be $35/year for accounts under $50,000 and nothing but the ER over that.

There was nothing on the application at all about being in the NEA or not, so that doesn't appear to be an issue as long as the district offers Security Benefit.

One note, the "adviser" listed for Security Benefit on my wife's district knew very little about the program and didn't seem too excited to try and learn more. You can do everything directly online, you get in contact with a Security Benefit rep via e-mail and the whole thing was set up in 8 days or so. My wife's district only allow changes every quarter, so Jan 14th will be the first deposit.

jeremyl
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Re: Great 403b for teachers?

Post by jeremyl » Sat Dec 26, 2015 8:05 pm

corysold wrote:I found this when I set up my wife's 403(b). Seems to be the best option out there by far from what else I saw. The first deposit is scheduled for January, so hopefully it all works out and there are no hidden fees or anything.

Otherwise, it appears to be $35/year for accounts under $50,000 and nothing but the ER over that.

There was nothing on the application at all about being in the NEA or not, so that doesn't appear to be an issue as long as the district offers Security Benefit.

One note, the "adviser" listed for Security Benefit on my wife's district knew very little about the program and didn't seem too excited to try and learn more. You can do everything directly online, you get in contact with a Security Benefit rep via e-mail and the whole thing was set up in 8 days or so. My wife's district only allow changes every quarter, so Jan 14th will be the first deposit.


My district has been really strict on what we have been allowed to do but if it's allowed I'll be on it immediately then tell many co-workers.

Do you know if you can rollover the prior 403b?

krow36
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Re: Great 403b for teachers?

Post by krow36 » Sat Dec 26, 2015 8:16 pm

In the enrollment process,
Step 3: If you have assets with another provider, you may want to transfer them to your new account by completing an Incoming Funds Request and using one of the two options (mail or fax) to submit your document to Security Benefit. There may be additional paperwork required by your current provider.


It looks like they are eager for your rollover. Why wouldn't they be?

jeremyl
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Re: Great 403b for teachers?

Post by jeremyl » Tue Dec 29, 2015 8:22 pm

I've called security benefit and they didn't have any experience with someone asking them if the direct invest program is available to those in a district that do not have them as an option as a vendor.

So, I've contacted our plan administrator asking if the direct invest is possible and attached the links to the info page and the enroll now page.

Just waiting to hear back. If I don't hear back, I may try to enroll online and take the salary reduction agreement to HR and see what happens.

Just giving an update for now.

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Re: Great 403b for teachers?

Post by sschullo » Wed Dec 30, 2015 9:24 am

krow36,
I would be very careful about entering into a agreement with any teacher's union sponsored 403(b). It certainly looks like you did your homework and those Vanguard fees and NEA Security Benefit fees look good. However, teacher's unions historically have done a terrible job. The only way you will find out all of the fees is to enroll in the plan and run the numbers after a year. Security Benefit is under no obligations to make 403b fees transparent.If you have another low cost option, I would select it.

Did NEA create the direct invest program because of the lawsuit? Hard to know. Interestingly, the NEA/direct invest program surfaced after the lawsuit. Does anyone know the out come of the case? NEA easily beat back the lawsuit against them because the plaintiffs argued, assuming that 403b plans were under ERISA fiduciary requirements--403b plans are not and will not be for another generation of teachers (http://www.lexology.com/library/detail.aspx?g=a3a3052f-9acc-4196-8b92-b67d9b68f8fe). The plaintiffs had horrible counsel, IMO. However, the argument was brilliantly written and showed how decisions were made to choose high cost funds when lower cost funds were available. If 403b plans were under ERISA, NEA would have lost, IMO.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: Great 403b for teachers?

Post by ResearchMed » Wed Dec 30, 2015 5:35 pm

sschullo wrote:krow36,
I would be very careful about entering into a agreement with any teacher's union sponsored 403(b). It certainly looks like you did your homework and those Vanguard fees and NEA Security Benefit fees look good. However, teacher's unions historically have done a terrible job. The only way you will find out all of the fees is to enroll in the plan and run the numbers after a year. Security Benefit is under no obligations to make 403b fees transparent.If you have another low cost option, I would select it.

Did NEA create the direct invest program because of the lawsuit? Hard to know. Interestingly, the NEA/direct invest program surfaced after the lawsuit. Does anyone know the out come of the case? NEA easily beat back the lawsuit against them because the plaintiffs argued, assuming that 403b plans were under ERISA fiduciary requirements--403b plans are not and will not be for another generation of teachers (http://www.lexology.com/library/detail.aspx?g=a3a3052f-9acc-4196-8b92-b67d9b68f8fe). The plaintiffs had horrible counsel, IMO. However, the argument was brilliantly written and showed how decisions were made to choose high cost funds when lower cost funds were available. If 403b plans were under ERISA, NEA would have lost, IMO.


Your statement that "...403b plans are not [under ERISA fiduciary requirements] and will not be for another generation of teachers..."
[emphasis added]

is too broad.

Did you mean to specify certain types of 403b plans?

Our 403b plan most definitely IS an ERISA plan.
We know this because DOL has looked into a complaint of ours relating to Vanguard's strange "power of attorney" rules (and this is separate from
Pennsylvania's 2014 requirement about accepting outside PoA docs, etc.), and after declining to deal with it, they called us back and decided that the situation *does* merit their oversight (good news indeed!).

But the point is that DOL themselves told us (previously and again about this) that our 403b plan was indeed an ERISA plan.

RM
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Re: Great 403b for teachers?

Post by sschullo » Wed Dec 30, 2015 7:06 pm

ResearchMed wrote:
sschullo wrote:krow36,
I would be very careful about entering into a agreement with any teacher's union sponsored 403(b). It certainly looks like you did your homework and those Vanguard fees and NEA Security Benefit fees look good. However, teacher's unions historically have done a terrible job. The only way you will find out all of the fees is to enroll in the plan and run the numbers after a year. Security Benefit is under no obligations to make 403b fees transparent.If you have another low cost option, I would select it.

Did NEA create the direct invest program because of the lawsuit? Hard to know. Interestingly, the NEA/direct invest program surfaced after the lawsuit. Does anyone know the out come of the case? NEA easily beat back the lawsuit against them because the plaintiffs argued, assuming that 403b plans were under ERISA fiduciary requirements--403b plans are not and will not be for another generation of teachers (http://www.lexology.com/library/detail.aspx?g=a3a3052f-9acc-4196-8b92-b67d9b68f8fe). The plaintiffs had horrible counsel, IMO. However, the argument was brilliantly written and showed how decisions were made to choose high cost funds when lower cost funds were available. If 403b plans were under ERISA, NEA would have lost, IMO.


Your statement that "...403b plans are not [under ERISA fiduciary requirements] and will not be for another generation of teachers..."
[emphasis added]

is too broad.

Did you mean to specify certain types of 403b plans?

Our 403b plan most definitely IS an ERISA plan.
We know this because DOL has looked into a complaint of ours relating to Vanguard's strange "power of attorney" rules (and this is separate from
Pennsylvania's 2014 requirement about accepting outside PoA docs, etc.), and after declining to deal with it, they called us back and decided that the situation *does* merit their oversight (good news indeed!).

But the point is that DOL themselves told us (previously and again about this) that our 403b plan was indeed an ERISA plan.

RM

RM,
I was responding to the OP, which looks like it isn't under ERISA because NEA has public school teachers as members.

Yes, I stand corrected. It is public k-12 school districts which are not under ERISA and just about the only employers who adhere 100% to whatever the insurance industry says. Its all about compliance. They care absolutely nothing about costs.

Many other 403b plan with state, county, cities, fire, hospital and police ignore the insurance industry scare tactics and offer decent low cost plans.

Ironically, NEA 401k plan for their own 700 employees is great.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

krow36
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Re: Great 403b for teachers?

Post by krow36 » Thu Dec 31, 2015 1:26 pm

sschullo, thanks for your input. I'm an admirer of your 403bwise.com.
I agree that the NEA has been at the feeding trough, working with the other feeders—most insurance companies, most mutual fund providers, many advisers, etc. And the NEA’s past poor performance in reducing the 403b’s costs to teachers is well documented isn’t it? It’s clear to me that the overall relationship between the NEA and Security Benefit is based on the latter’s programs, other than NEA/Direct. And even NEA/Direct has mostly managed, higher cost funds, (but no advisors). I don’t think Security Benefit would pay NEA millions per year unless their total profit with NEA investors made them even more millions. I suspect if all of Secure Benefit’s NEA customers switched to NEA/Direct Invest, the latter might disappear.

If teachers have access to a 403b provider directly, like Vanguard, Fidelity or other low cost providers, they are the fortunate few. But since the choice is often between insurance companies offering expensive annuities and managed funds with high ER’s and even loads, it seems to me the NEA/Direct deserves our attention. I posted in the hope that teachers using the NEA/Direct 403b would give us a report. With the Vanguard funds in NEA/Direct Invest, there certainly seems to be an insurance company 403b worth finding out more about.

I could be wrong, but these expenses look reasonable and straightforward to me. Very non-insurance!
From the Security Benefit “Custodial Account Agreement” for NEA/Direct:
http://www.nearetirementprogram.com/#!enrollment/cc0q
"X. ACCOUNT AND ACCOUNT DISTRIBUTION FEES AND PAYMENTS
1. The Custodian shall be entitled to receive an annual fixed dollar administration fee for partial payment for custodial services rendered to any Custodial Account with a balance less than $50,000. For accounts with a balance of less than $50,000, the fee shall be $35 per year. This fee will be determined and deducted on dates determined by the Custodian. The applicable fee will also be taken upon surrender of the contract if the contract value is less than $50,000 and the fee has not yet been taken for the year. This fee is subject to change by the Custodian upon notice to the Employee.

2. The Custodian may impose an annual paper document and mailing fee of $30.00 if the Employee revokes his or her consent to receive electronically prospectuses, confirmations, statements and other communications from the Custodian, SDI or SFR. This fee will be imposed on a day, or pro rata on such days, as are determined by the Custodian. Any remaining balance due on the fee will also be taken upon a full withdrawal of the account balance if the full fee has not yet been taken for the year. Withdrawal of the fee will be stopped if the Employee again consents to electronic delivery of communications. This fee is subject to change from time to time.

3. The Employee hereby grants to SDI a limited power of attorney to direct the sale of mutual fund shares from the Account to pay for the fees imposed hereunder. The Employee further authorizes the Custodian to retain sufficient assets in the account upon any request for full distribution or transfer of the account to pay such fees and charges.

4. A $25 withdrawal fee may apply to any withdrawal not requested through the participant account online at http://www.securityretirement.com.”


As I mentioned above, the above fees seem to amount to:
An annual fee of $35 for accounts of less than $50,000.
A annual fee of $30 if the employee revokes their agreement to receive all communications by mail instead of electronically.
A $25 withdrawal fee for any withdrawal not requested through the employee’s online account.

Let’s hope that users of NEA/Direct Invest 403b will come forward and give us a report!
Last edited by krow36 on Fri Jan 08, 2016 12:44 am, edited 1 time in total.

corysold
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Re: Great 403b for teachers?

Post by corysold » Thu Dec 31, 2015 1:46 pm

krow36 wrote:As I mentioned above, the above fees seem to amount to:
An annual fee of $35 for accounts of less than $50,000.
A annual fee of $30 if the employee revokes their agreement to receive all communications by mail instead of electronically.
A $25 withdrawal fee for any withdrawal not requested through the employee’s online account.

Let’s hope that users of NEA/Direct Invest 403b will come forward and give us a report!


Just as a note for what it is worth, the Vanguard funds I selected have a .01 12b(1) fee included in them, which regular Vanguard funds don't. So Security Benefit is earning a bit through that as well.

Though I still don't understand how it is worth it to them for an account with $50,001 in it. $5/year in earnings from such an account? There has to be other money coming in from somewhere, but I still haven't figured out where. It'll be a while before my wife's account hits 50K, but I'll report if anything changes then!

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Re: Great 403b for teachers?

Post by LadyGeek » Thu Dec 31, 2015 2:50 pm

This thread is now in the Personal Finance (Not Investing) forum (403(b)).

To keep this actionable, please focus on your own situation.
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Re: Great 403b for teachers?

Post by jeremyl » Thu Dec 31, 2015 4:40 pm

Update from my earlier post. I emailed our corporation fiduciary and asked if we would be allowed to do the direct invest from security benefit. He told me that they have an independent firm (white oaks financial-not a vendor) assessing our 403b options from our vendors.

Next phase will be deciding on changes if needed and a self directed option will be discussed at that time.

So nothing for our corporation yet.

I'm glad I was able to get them to re-evaluate our options. Hopefully something good will come of it.

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Re: Great 403b for teachers?

Post by otterpops » Mon Jan 04, 2016 5:35 pm

This is a really good discussion. As a teacher and the founder of www.403bwise.com we have been after NEA/Security Benefit for a long time. As Steve Schullo has pointed out this new program came out after the lawsuit (which as he also pointed out the NEA won). Frankly I just don't trust even this program because it is still administered by Security Benefit. If the NEA really cared about endorsing quality offerings they could have gone directly through Vanguard or another low-cost provider.

Given the pricing, what are the chances SB and their "advisors" — who are most likely of the non-fiduciary variety — support and/or promote this program? I think next to nothing. This comment by corysold encapsulates this: "One note, the "adviser" listed for Security Benefit on my wife's district knew very little about the program and didn't seem too excited to try and learn more."

I would urge teachers and others to continue to pound the NEA for any association with Security Benefit and to urge their employer to offer better vendors: Fidelity, TIAA-CREF, T. Rowe Price, USAA, and Vanguard. Anther option is Aspire Financial Services which is basically a brokerage window. This firm is in 3,500 school districts.

Fiduciary planner Scott Dauenhauer and I interviewed Scott Senseney of Fidelity for our Teach and Retire Rich podcast (#13) and Mr. Senseney offered tips for adding Fidelity as a vendor. We also interviewed Mark Luckinbill of Aspire (#11). You can listen to these interviews via iTunes or directly here: http://teachandretirerich.com/podcasts/

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Re: Great 403b for teachers?

Post by Joel L. Frank » Tue Jan 05, 2016 11:39 am

Lets not forget that the TR Price TD funds are also available. But the no-loads will only win out, as they should, when the commission based funds are removed from the menu. When a Security Benefit commission based representative enters the teachers' lounge is he armed with literature from Vanguard and TR Price or is he/she saturated with the funds that pay him/her a commission?

The NEA is sponsoring this program and needs to know the Supreme Court decision in Tibble v Edison International where the High Court ruled that it is a violation of fiduciary standards to place commission based funds on the plan's investment menu when identical no-load funds are readily available.

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Re: Great 403b for teachers?

Post by ResearchMed » Tue Jan 05, 2016 11:46 am

Joel L. Frank wrote:Lets not forget that the TR Price TD funds are also available. But the no-loads will only win out, as they should, when the commission based funds are removed from the menu. When a Security Benefit commission based representative enters the teachers' lounge is he armed with literature from Vanguard and TR Price or is he/she saturated with the funds that pay him/her a commission?

The NEA is sponsoring this program and needs to know the Supreme Court decision in Tibble v Edison International where the High Court ruled that it is a violation of fiduciary standards to place commission based funds on the plan's investment menu when identical no-load funds are readily available.


Unfortunately for these plans, IIRC, the Tibble (and a few similar) decision was based upon the ERISA requirements.

These particular 403b plans under discussion are not ERISA plans.

Um, why aren't they?

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Re: Great 403b for teachers?

Post by Joel L. Frank » Tue Jan 05, 2016 11:52 am

[Content in excess of copyright fair-use removed by admin LadyGeek

Here's the link: Shark Attack! », published at 403(b)wise]

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Re: Great 403b for teachers?

Post by LadyGeek » Tue Jan 05, 2016 3:58 pm

Please stay on-topic, which is to help the OP find a 403(b) plan.

General rants are off-topic.
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Re: Great 403b for teachers?

Post by cusetownusa » Tue Jan 05, 2016 4:44 pm

This thread sparked my interest since my wife is a teacher and invests in a 403b.

We are currently maxing out her 403b and putting all of it into the VOYA Fidelity VIP 500 Index. We chose this fund because it had the lowest ER out of all her options according to the prospectus...ER is equal to 0.10%.

However, because of this thread I decided to look at the year end statement in greater detail. I can't tell exactly how much they took out in fees as they only give the total return for the year (-.19%). On the statement they list all of VOYA's funds and the 1-year, 5-year, and 10-year performance as of 12/31/2015 and when I compare that with Fidelity's website for the same fund I notice that the difference in returns is over 1%...why wouldn't they be the same or near the same? Am I getting charged an additional 1% fee somewhere even though it isn't disclosed on the prospectus?

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Re: Great 403b for teachers?

Post by krow36 » Tue Jan 05, 2016 6:36 pm

cusetownusa wrote:This thread sparked my interest since my wife is a teacher and invests in a 403b.

We are currently maxing out her 403b and putting all of it into the VOYA Fidelity VIP 500 Index. We chose this fund because it had the lowest ER out of all her options according to the prospectus...ER is equal to 0.10%.

However, because of this thread I decided to look at the year end statement in greater detail. I can't tell exactly how much they took out in fees as they only give the total return for the year (-.19%). On the statement they list all of VOYA's funds and the 1-year, 5-year, and 10-year performance as of 12/31/2015 and when I compare that with Fidelity's website for the same fund I notice that the difference in returns is over 1%...why wouldn't they be the same or near the same? Am I getting charged an additional 1% fee somewhere even though it isn't disclosed on the prospectus?


cusetownusa, have you looked at the VOYA "Custodial Plan Agreement"? That's what Secure Benefit calls it, where they disclose the fees. Is the Prospectus issued by the fund provider or by VOYA? The fund's fees can be added to by VOYA, as you suspect but you should be able to confirm that in VOYA documents online.

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Re: Great 403b for teachers?

Post by cusetownusa » Tue Jan 05, 2016 8:22 pm

krow36 wrote:
cusetownusa wrote:This thread sparked my interest since my wife is a teacher and invests in a 403b.

We are currently maxing out her 403b and putting all of it into the VOYA Fidelity VIP 500 Index. We chose this fund because it had the lowest ER out of all her options according to the prospectus...ER is equal to 0.10%.

However, because of this thread I decided to look at the year end statement in greater detail. I can't tell exactly how much they took out in fees as they only give the total return for the year (-.19%). On the statement they list all of VOYA's funds and the 1-year, 5-year, and 10-year performance as of 12/31/2015 and when I compare that with Fidelity's website for the same fund I notice that the difference in returns is over 1%...why wouldn't they be the same or near the same? Am I getting charged an additional 1% fee somewhere even though it isn't disclosed on the prospectus?


cusetownusa, have you looked at the VOYA "Custodial Plan Agreement"? That's what Secure Benefit calls it, where they disclose the fees. Is the Prospectus issued by the fund provider or by VOYA? The fund's fees can be added to by VOYA, as you suspect but you should be able to confirm that in VOYA documents online.


The fund prospectus has VOYAs letterhead on top and says the ER is 0.10%. The participant disclosure document (which is what I think they are calling the custodial plan agreement for you) is unavailable on the website. Clicking the link just goes to an error page and says the document is unavailable.

When I originally set up the contributions to this fund I asked the account rep in multiple waya if there is any additional fees beyond the 0.10%. I will not be happy if that turns out to be untrue...but I don't know how else to explain the lower return of the fund compared to looking up the fund directly on the fidelity website.

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Re: Great 403b for teachers?

Post by Joel L. Frank » Wed Jan 06, 2016 8:46 am

An investment in a retirement savings plan incurs two fees: ONE FOR INVESTMENT MANAGEMENT AND ONE FOR PLAN ADMINISTRATION. All too often a participant quotes the ER as the total cost. You are overstating your investment return if you do not know what was taken out for PLAN ADMINISTRATION. The fund's prospectus gives you the ER while the plan administrator furnishes the cost of administration.

The Deferred Compensation 457(b) and 401(k) Plans of the City of New York is quite transparent. Their website tells the viewer that they charge an ER of 0.26 to invest in one of the Pre-Arranged Portfolios and 0.14 for plan administration. Thus it costs $400.00 per year per $100,000 of account value.

[OT info removed by admin LadyGeek]

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Re: Great 403b for teachers?

Post by cusetownusa » Wed Jan 06, 2016 9:05 am

Joel L. Frank wrote:An investment in a retirement savings plan incurs two fees: ONE FOR INVESTMENT MANAGEMENT AND ONE FOR PLAN ADMINISTRATION. All too often a participant quotes the ER as the total cost. You are overstating your investment return if you do not know what was taken out for PLAN ADMINISTRATION. The fund's prospectus gives you the ER while the plan administrator furnishes the cost of administration.

The Deferred Compensation 457(b) and 401(k) Plans of the City of New York is quite transparent. Their website tells the viewer that they charge an ER of 0.26 to invest in one of the Pre-Arranged Portfolios and 0.14 for plan administration. Thus it costs $400.00 per year per $100,000 of account value.
[OT info removed by admin LadyGeek]


Thanks...looks like my only issue is that the plan administration fee isn't very transparent. I will keep digging to see what I can learn...hopefully I can get a clear answer from the account rep this time if he calls me back.

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Re: Great 403b for teachers?

Post by jpelder » Wed Jan 06, 2016 9:30 am

On the note of choosing a 403(b) provider, my state (North Carolina) offers a state-sponsored 403b and 457 through TIAA-CREF and a 401k that teachers can use that's administered by the state treasurer. Both offer a full range of index funds with reasonable (~.2%) ERs, which is light-years better than all but TIAA's offering in my district. If you're a public employee, it's worth checking whether your state has a similar offering
Last edited by jpelder on Wed Jan 06, 2016 10:29 am, edited 1 time in total.

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Re: Great 403b for teachers?

Post by otterpops » Wed Jan 06, 2016 10:21 am

I too have heard good things about the North Carolina state plan through TIAA-CREF. In many ways it's a model plan. Good to see a state doing the right thing for employees.

Dan Otter

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Re: Great 403b for teachers?

Post by krow36 » Wed Jan 06, 2016 3:43 pm

cusetownusa wrote:This thread sparked my interest since my wife is a teacher and invests in a 403b.

We are currently maxing out her 403b and putting all of it into the VOYA Fidelity VIP 500 Index. We chose this fund because it had the lowest ER out of all her options according to the prospectus...ER is equal to 0.10%.

However, because of this thread I decided to look at the year end statement in greater detail. I can't tell exactly how much they took out in fees as they only give the total return for the year (-.19%). On the statement they list all of VOYA's funds and the 1-year, 5-year, and 10-year performance as of 12/31/2015 and when I compare that with Fidelity's website for the same fund I notice that the difference in returns is over 1%...why wouldn't they be the same or near the same? Am I getting charged an additional 1% fee somewhere even though it isn't disclosed on the prospectus?


cusetownusa, Like you, I couldn't find any mention of a 1% fee--just the ER of 0.10% for Fidelity VIP Index 500 Initial Class. There is a mention of a 0.25% per year "annuity fee". The Service Class has an ER of 0.20% and the Service Class 2 has an ER of 0.35%.

It looks like the fund is designed for use by insurance companies with their annuities based on the prospectus, and also this filing with the SEC. http://www.sec.gov/Archives/edgar/data/ ... ageabc.txt

When I compared the performance of the Fidelity VIP 500 Index fund with the Fidelity Spartan 500 Index fund, the VIP fund's 1, 3, 5 and 10 year performance is only about .23 to .29% less than the Spartan fund. It seems to me that you can probably live with this difference, considering your other choices?

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Re: Great 403b for teachers?

Post by cusetownusa » Thu Jan 07, 2016 8:47 am

krow36 wrote:
cusetownusa, Like you, I couldn't find any mention of a 1% fee--just the ER of 0.10% for Fidelity VIP Index 500 Initial Class. There is a mention of a 0.25% per year "annuity fee". The Service Class has an ER of 0.20% and the Service Class 2 has an ER of 0.35%.

It looks like the fund is designed for use by insurance companies with their annuities based on the prospectus, and also this filing with the SEC. http://www.sec.gov/Archives/edgar/data/ ... ageabc.txt

When I compared the performance of the Fidelity VIP 500 Index fund with the Fidelity Spartan 500 Index fund, the VIP fund's 1, 3, 5 and 10 year performance is only about .23 to .29% less than the Spartan fund. It seems to me that you can probably live with this difference, considering your other choices?


It looks like the performance difference is closer to 1% for me. Since this is my best option in the 403b (i think), is it still worth investing in to get the tax benefits? I already max out my SEP IRA, HSA, and my wifes backdoor Roth IRA...the 403b is the last tax advantage space we have available.

How do you determine if the tax benefits outweigh the additional fees (which looks like an additional 1%)?

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Re: Great 403b for teachers?

Post by cusetownusa » Thu Jan 07, 2016 2:15 pm

UPDATE:

Not sure if I should start a new thread as I have sort of hijacked/piggybacked onto this one.

I just got off the phone with the VOYA rep...turns out there is an additional 1.2% wraparound fee tacked onto the Fidelity 500 Index fund fee of 0.10%. A fee of 1.3% for a sp500 index fund seems pretty steep to me, but whatever.

So my options now are either:

1) don't contribute to the 403b...not a big fan of this option since I would lose the tax benefits. But if its the best option that is fine.
2) move to a different fund provider. Looks like the best options are either American Funds or Franklin Templeton or Putnam...all the other providers are insurance companies which would probably be similar to VOYA.
3) Voya has a fixed income account that pays out a guaranteed 3% (4% for people who have been in the fund since pre-9/1/2004...wish that was us but unforutately I didn't find this forum until way after that and pissed my 20's away :oops: )

I am really considering option 3 at this point. I could move all of the 403b money into the 3% fixed account and then re-balance my SEP IRA accordingly to keep our same 75/25% asset ratio. So essentially the fixed account funds would count towards my bonds.

Does this thinking make sense? Not sure if a guaranteed 3% is better than the total bond fund...I feel like it would be but I am not an expert.

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Re: Great 403b for teachers?

Post by corysold » Thu Jan 07, 2016 2:24 pm

cusetownusa wrote:UPDATE:

Not sure if I should start a new thread as I have sort of hijacked/piggybacked onto this one.

I just got off the phone with the VOYA rep...turns out there is an additional 1.2% wraparound fee tacked onto the Fidelity 500 Index fund fee of 0.10%. A fee of 1.3% for a sp500 index fund seems pretty steep to me, but whatever.

So my options now are either:

1) don't contribute to the 403b...not a big fan of this option since I would lose the tax benefits. But if its the best option that is fine.
2) move to a different fund provider. Looks like the best options are either American Funds or Franklin Templeton or Putnam...all the other providers are insurance companies which would probably be similar to VOYA.
3) Voya has a fixed income account that pays out a guaranteed 3% (4% for people who have been in the fund since pre-9/1/2004...wish that was us but unforutately I didn't find this forum until way after that and pissed my 20's away :oops: )

I am really considering option 3 at this point. I could move all of the 403b money into the 3% fixed account and then re-balance my SEP IRA accordingly to keep our same 75/25% asset ratio. So essentially the fixed account funds would count towards my bonds.

Does this thinking make sense? Not sure if a guaranteed 3% is better than the total bond fund...I feel like it would be but I am not an expert.


Might help to list all of your options and maybe someone knows something about one of them.

I found a good plan for my wife with Security Benefit which is discussed above, but otherwise Security Benefit seems to have a terrible reputation.

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Re: Great 403b for teachers?

Post by krow36 » Fri Jan 08, 2016 12:45 am

posted by mistake
Last edited by krow36 on Fri Jan 08, 2016 1:00 am, edited 1 time in total.

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Re: Great 403b for teachers?

Post by krow36 » Fri Jan 08, 2016 12:46 am

posted by mistake--sorry

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Re: Great 403b for teachers?

Post by krow36 » Fri Jan 08, 2016 1:29 am

cusetownusa wrote:How do you determine if the tax benefits outweigh the additional fees (which looks like an additional 1%)?


Have you checked “Expensive or mediocre choices” in the Wiki under 401k?
https://www.bogleheads.org/wiki/401(k)#Expensive_or_mediocre_choices

A reasonable rule-of-thumb is to consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds one and a half times your combined federal and state tax rates on qualified dividends over your working career.

I agree with you that 1.2% ER is probably too high and taxable investment might be better. I agree with Corysold that it wouldn’t hurt to post the other options. Security Benefit (only the NEA/Direct Invest) is a possibility if it's available I think.

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Re: Great 403b for teachers?

Post by LadyGeek » Fri Jan 08, 2016 3:24 pm

^^^ Here's the wiki link: Expensive or mediocre choices
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Re: Great 403b for teachers?

Post by harpgirl555 » Fri Jan 29, 2016 11:20 pm

krow36 wrote:The National Education Association (NEA) is a nation-wide lobby and union organization representing 3M teachers and other workers in the education industry. The NEA receives compensation for allowing their name to be used (with implied endorsement) on various financial programs, including 403b retirement programs. Around 2007, it became known that the insurance companies Nationwide and Security Benefit were paying the NEA (an undisclosed) up to 2M a year for the right to offer financial offerings with the exclusive use of the NEA name. Nationwide had recently sold this NEA endorsement program to Security Benefit for 72M. Here’s a 2007 NYT article on a class action lawsuit brought against Nationwide, Security Benefit and the NEA: http://www.nytimes.com/2007/07/17/busin ... .html?_r=0
Does any know the outcome of this court case?

Security Benefit now has a 403b program called NEA/Direct Invest, which appears to me to an excellent choice for educators.
http://www.nearetirementprogram.com/#!enrollment/cc0q

Included with about 30 funds with higher expense ratios offered by various companies are 8 Vanguard Admiral class index funds. The other funds in the program are mostly managed funds, all with ER’s of about 0.50 to 1.00%.

Vanguard Total Stock Market Index ER 0.05%
Vanguard Total International Stock Index ER 0.14%
Vanguard Intermediate Term Bond Index ER 0.10%
Vanguard 500 Index ER 0.05%
Vanguard Growth Index ER 0.09%
Vanguard Mid Cap Index ER 0.09%
Vanguard Small Cap Index ER 0.09%
Vanguard REIT Index ER 0.12%
Although the funds all have a 12b-1 fee of 0.01%, I believe that it is included in the ER.

The fees listed in the Security Benefit Custodial Agreement seem reasonable:
An annual fee of $35 for accounts of less than $50,000.
A annual fee of $30 if the employee revokes their agreement to receive all communications by mail instead of electronically.
A $25 withdrawal fee for any withdrawal not requested through the employee’s online account.

I wonder if Security Benefit and NEA have established the NEA/Direct Invest program, with the Vanguard funds, as a result of the lawsuit? Of course Security Benefit offers other expensive 403b programs that use advisors and managed funds that they hope teachers will choose instead of the DIY NEA/Direct Invest 403b.

I’ve searched the BH forums for an up to date thread on this without success. The 403gwise.com website doesn’t seem to be aware this program.

A corysold recent thread brought the program to this forum’s attention. viewtopic.php?f=1&t=179286

I’m a retired teacher who had an expensive 403b, and if this program is as good as it looks to me, I’d like to get the word out. Have any Bogleheaders used it? mikew041 has a NJ school district that says he needs 15 individuals to sign up, although they listed NEA/Security Benefit as a choice. viewtopic.php?f=1&t=179734

spelling correction


I'm a teacher in NJ and starter looking into 403(b) options at my school. Security Benefit is not currently one of the vendors on our list, but they are coming to our school to give a presentation (I will ask about the fees and will update).

Looking under NEA VALUEBUILDER MUTUAL FUND (https://securitybenefit.se2.com/#53&RID ... prodCat=RP) I see the following:

Account Charges
Option 1: 5.25% up-front sales charge; custodial account fee: 0.35% per year.
Option 2: Contingent Deferred Sales Charge (CDSC) ranges from 5% in year 1 to 0% in the seventh and following years; custodial account fee of 1.05% per year.
Option 3: CDSC is 1% in the first year; custodial account fee of 1.00% per year.
Administration Fee (for all applicable options)
$35 a year for accounts less than $50,000. No administration fee for accounts over $50,000.

I would appreciate anyone explaining what these mean in greater detail, but this doesn't look promising :(

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Re: Great 403b for teachers?

Post by MNGopher » Sat Jan 30, 2016 12:24 am

That sure looks like some sort of annuity.

I think teachers are starting to get more options and are beginning to realize that you don't need all the extra expenses of an annuity within your 403b. The 403b itself offers all the tax benefits itself at 1/10 the price of investing in equities through a variable annuity.

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Re: Great 403b for teachers?

Post by krow36 » Sat Jan 30, 2016 3:48 am

krow36 wrote:Harpgirl555, the link "you gave" (should read "I gave") will lead you to the complete list of funds, their ER’s and performance that are offered in the NEA Direct Invest 403b.
click on Retirement Plans
click on NEA Valuebuilder DirectInvest 403b7
click on Quarterly Product Performance

Notice the 8 Vanguard index funds.



edited to correct first sentence. Harpgirl555's link and the account charges she listed are for the NEA VALUEBUILDER MUTUAL FUND, OPTIONS 1, 2 AND 3, not the NEA Direct Invest mutual fund option.
Last edited by krow36 on Wed Apr 27, 2016 5:22 pm, edited 1 time in total.

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Re: Great 403b for teachers?

Post by FiveK » Sun Jan 31, 2016 2:51 am

cusetownusa wrote:I just got off the phone with the VOYA rep...turns out there is an additional 1.2% wraparound fee tacked onto the Fidelity 500 Index fund fee of 0.10%.

Good information, thanks. Were you able to find mention of the 1.2% fee in any paper or electronic written material, and if so where/how? Or was it only given verbally?

In other words, could you suggest how others might discover this in their own plans?

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Re: Great 403b for teachers?

Post by HurdyGurdy » Mon Feb 08, 2016 2:55 am

(Joel, would you care to share your views in a thread for a NJ teacher , viewtopic.php?f=1&t=183972&newpost=2792334)
Joel L. Frank wrote:..

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Re: Great 403b for teachers?

Post by betterfinances » Mon Feb 08, 2016 4:55 am

Question regarding title of thread (Great 403b for teachers)

Is there anything fundamental about a specific 403b that makes it better for teachers than it would be for other professions, say doctors, engineers, or office staff?

I can't think of any, except perhaps ease of a smaller employer (school district) in getting setup with one.

I see a lot of comments about profession-specific investment advice, but I'm not sure how investment advice that is great for one profession would not be great for another profession.

An exception would be made regarding tax planning advice as that is income specific in a lot of respects.

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Re: Great 403b for teachers?

Post by sschullo » Mon Feb 08, 2016 9:56 am

betterfinances wrote:Question regarding title of thread (Great 403b for teachers)

I see a lot of comments about profession-specific investment advice, but I'm not sure how investment advice that is great for one profession would not be great for another profession.



The investment "advice" for public k-12 profession has been in the form of insurance sales pitches for over 50 years. The Tax-shelter Annuity has been the most successful product sold to this profession. The TSA appears to fit the culture as educators believe the hype of safety and guarantees. And why not, the no-load mutual fund companies may be available on the 403b list of providers, but nobody either on the union side or the district benefits administration will talk about ALL of the options. This is where many state insurance codes are so ruthless that they mandate that any company who signs the hold-harmless, IRS and information sharing agreements MUST be made availabe or face legal threats! I kid you not. For decades this industry has frightened districts and school boards to not put anything on paper to give to the employees which list all of the options. Once again, I kid you not!

For decades teachers only got the TSA sales pitch because the sales force is on every inch of public school district property. They march right into classrooms during recess, they have a table in the cafeterias, in all district sponsored training programs offering free lunches, and in the union halls, also offering free refreshments and door prizes.

Of course there are other professions who are taken in to by the insurance industry. I read our Boglehead's excellent book, Jim Dahle, the White Coat Investor and learned that MD's also fall for these expensive and inappropriate retirement products. But not in the manner in which the public K-12 district employees experienced. These sales people are aggressive, persistent and simply ignore our district policy that no 403b sales will take place on district property (thats another story but only reinforces that this culture will capitulate to the insurance code 100%). BTW, almost all other professions here in California simply ignore our state insurance code, public protection employers, colleges and universities, hospitals, city, county and state 403bs all have excellent low cost retirement plans. UC System has an exceptional 403b plan. BUT NOT PUBLIC k-12 districts 403b plans here in California.

If interested, I wrote a free book on my experiences with the 2nd largest school district in the country https://www.bogleheads.org/forum/viewtopic.php?t=161747. Bottom line, the 403b will be a terrible plan for the next generation of teachers. Not enough teachers are complaining.

There are plenty of savvy investment educators around the country, but only a handful speak up. Some come here and others go to 403bwise. So its a numbers game. When enough complain, the system will improve quickly.

Steve
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: Great 403b for teachers?

Post by krow36 » Tue Feb 09, 2016 3:33 am

betterfinances wrote:Question regarding title of thread (Great 403b for teachers)

Is there anything fundamental about a specific 403b that makes it better for teachers than it would be for other professions, say doctors, engineers, or office staff?

I can't think of any, except perhaps ease of a smaller employer (school district) in getting setup with one.

I see a lot of comments about profession-specific investment advice, but I'm not sure how investment advice that is great for one profession would not be great for another profession.

An exception would be made regarding tax planning advice as that is income specific in a lot of respects.


The title of this thread was chosen because the SB NEA/Direct Invest 403b program is only available for teachers. The national teacher's union and the Security Benefit insurance company have an unusual 403b with very low fees. Sadly insurance company 403b's that are usually available to teachers are very expensive, as Steve has explained.

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Re: Great 403b for teachers?

Post by krow36 » Mon Oct 24, 2016 12:18 am

The NY Times has published an article focusing on the poor 403b plans often found in K-12 public schools. http://www.nytimes.com/2016/10/23/your- ... share&_r=0
The N.E.A.’s Member Benefits group, a subsidiary, exclusively endorses a set of products from Security Benefit, a financial services company with nearly $32 billion in total assets that creates fixed and variable annuities and offers mutual funds. (The union’s program for teachers receives at least $2.7 million from Security Benefit each year, according to regulatory filings, which it said it paid to operate the program.)

The products include an array of mutual funds, various annuities — and one lower-cost option in which investors can choose inexpensive index funds without a broker’s assistance. But most new money from school employees is invested in the mutual funds sold by brokers, according to Gary Phoebus, chief executive of N.E.A. Member Benefits.

Fees in that program range from 0.35 to 1.25 percent. But that doesn’t include another layer of expenses for the underlying investments, which run from 0.59 to 2.11 percent, according to Security Benefit, and in some cases additional sales or surrender charges.

The NEA's endorsement of very expensive 403b plans sold by Security Benefit is discussed. The “one lower-cost option” mentioned in the article is referring to the subject of this thread, the Security Benefit NEA Direct Invest 403b. Vanguard index funds expense ratios are 0.05 to 0.14% in the Direct Invest plan. (The other stated fees are very reasonable as discussed above.)

Steve and I are still hoping that a NEA Direct Invest user with a year or more of experience will come forward and give us a report of all the fees they paid.

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Re: Great 403b for teachers?

Post by sschullo » Mon Oct 24, 2016 6:51 am

Krow,
It's been a year and no NEA member has reported their experience here or at 403bwise.com with this self-directed plan.

Realizing that my brain is probably working overtime, but I wonder if NEA Security Benefit is scrambling around to enroll teachers in their low-cost alternative now that there is media attention.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: Great 403b for teachers?

Post by krow36 » Mon Oct 24, 2016 12:06 pm

sschullo wrote:Krow,
It's been a year and no NEA member has reported their experience here or at 403bwise.com with this self-directed plan.

I started this thread Dec 26 last year after corysold brought Direct Invest to the forum’s attention. corysold reported the following on May 5:
"My wife's 403b is with Security Benefit and the DirectInvest program. It hasn't been established for a year, yet, but since Jan. 1st of this year. There was a $8.75 fee charged April 1st, which matches up with the $35/year account fee they advertised. So far it has been smooth sailing. Contributions are made every other Friday and show up in the account by Saturday morning. I've been very please to this point. Hopefully there are no surprises after a full year."
viewtopic.php?f=1&t=183188

May 6, 2016 Teacher88, I learned about DirectInvest from an old thread on this forum. My district also uses OMNI and fortunately Security Benefits is one of the choices. Before I became "boglewise" I set up my 403b with AXA and MetLIfe. The problem was that when I learned about the high fees I had no options as to where I could move my money so I just stopped contributing. I set up a meeting with our business administrator and I was actually explaining to her how our 403b options work! Needless to say it went nowhere. I then begged them to adopt the 457b plan and they actually did. That allowed to me to start contributing again and Vanguard funds were an option for me. It was NOT an easy process moving my funds from AXA and MetLife to Security Benefits. It actually took a couple months to get all the paper work filled out. Whenever I called Security Benefits nobody I talked with had even heard of the NEA Direct Invest option. Eventually I did find someone who knew about the product and she was great to work with. After following this site for a few years now I feel somewhat knowledgeable about investing and it was difficult for me to move my money. I am not sure what someone with lesser knowledge would do. My money has only been with Security Benefits now since February 9th and so far there has been no fees on my account.

May 9, 2016 Teacher88, Just to clarify, yes I meant the early surrender fees that AXA had. From what I recall there would be diminishing surrender fees for 10 or 12 years. American funds did not have any surrender fees but I was not allowed to transfer the money to Vanguard or Fidelity like I wanted to. So I decided to simply stop contributing into my 403b until the magical day came that I could move my money elsewhere. That day came when I learned about the Security Benefit plan from this forum.

In order to transfer the money from both accounts into the Security Benefit plan I had to first open an account with SB. They have an online form that is awful. I ended up submitting it without realizing all the boxes had been filled out. Since all the boxes were not filled out the account was not created. When I called to fix it nobody at SB knew anything about the Direct Invest plan!! So after many phone calls and emails I finally got the account created. Then I had to fill out transfer forms for both AXA and American Funds. Lengthy forms that were fairly detailed in the questioning. I also had to fill out forms with OMNI my third party provider to allow the transfer to occur. You have to wait to get approval from OMNI before any of this can happen. I waited a few days and never heard back from them. When I called they played dumb and told me they sent me all the information needed even though they never did. It literally took me two months to finally make the transfer. Last I checked I was up about $8000 since March so it was worth the headache! viewtopic.php?f=1&t=183188

Mar 16, 2016 griffeyfan04 “We are going this route as well for my wife through NEA/Direct Invest via security benefit because of the offer of Vanguard funds. It has been a lengthy process so be forewarned. They are not exactly in a big hurry to help you. A little complicated filling the forms out and sending it to them but maybe after the ease of dealing with Fidelity I am a little biased Not saying if they are good or bad just has taken longer than I thought lol" viewtopic.php?f=1&t=186962

Several other posters have expressed interest in Direct Invest but haven’t confirmed that they are signed up and contributing yet. So Steve, it’s disappointing that more folks with only expensive 403b choices aren’t taking advantage of Direct Invest. But I don’t think it’s accurate to say that "no NEA member has reported their experience here or at 403bwise.com”. corysold has only been using Direct Invest less than 10 months, griffeyfan04 and Teacher88 for only about 8 months.
sschullo wrote:Realizing that my brain is probably working overtime, but I wonder if NEA Security Benefit is scrambling around to enroll teachers in their low-cost alternative now that there is media attention.

I think the CEO of NEA Member Benefits is probably satisfied that they have given their members a low cost DIY choice, and that members aren’t selecting it. So Security Benefits continues to take advantage of uninformed NEA members by selling them very high priced annuity and mutual fund based 403b plans. Of course no effort is made by the SB reps to inform NEA members of the availability and advantages of Direct Invest.

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Re: Great 403b for teachers?

Post by sschullo » Mon Oct 24, 2016 1:05 pm

krow,
You are a gentleman! :happy Okay, I'll remove the words "no members." I have been accused of black and white opinions since I was a kid. :- )

I just wonder how many members have enrolled in their SB self-directed plan. You mentioned four that we know of and they are all less than a year.

The jury is still out on the total fees.

Just one more thing. We have to be careful when complimenting a very tiny ethical part of a 99% corrupted and costly tax deferred plan, such as NEA's 403(b) Security Benefit. I fear that SB reps will see your comments as defending their entire plan against the so-called teacher advocates and take them out of context to use it to sell their high priced 403bs.

I know you are doing the right thing, but we are dealing with a financial institution associated with the NEA that is a lot smarter and more powerful than all of us and they are very good at making money off of NEA members. Never (oops! there I go again :oops: ) underestimate their influence.

I only trust that the worldwide stock and bond markets will go up over time.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

krow36
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Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Great 403b for teachers?

Post by krow36 » Thu Nov 03, 2016 12:10 am

sschullo wrote:I just wonder how many members have enrolled in their SB self-directed plan. You mentioned four that we know of and they are all less than a year.
I wonder also! NEA should be willing to tell us, don’t you think?

The jury is still out on the total fees.
I think it’s highly unlikely that Security Benefit would sneak in undisclosed fees in the NEA Direct Invest option. They want to quiet the small minority who are complaining about the high-fee annuity and MF offerings, and hiding an undisclosed fee in the plan agreement would not make sense, especially after the lawsuit. Two more months and corysold will have in a full year.

Just one more thing. We have to be careful when complimenting a very tiny ethical part of a 99% corrupted and costly tax deferred plan, such as NEA's 403(b) Security Benefit. I fear that SB reps will see your comments as defending their entire plan against the so-called teacher advocates and take them out of context to use it to sell their high priced 403bs.
I think that when the low-cost NEA Direct Invest is only being used by a minute fraction of K-12 SB users, NEA and SB and the financial industry in general will claim that there is little demand for a low-cost option. They “offer" it and very few choose it. Of course they offer it on their website, but the SB reps don’t actually talk about it or pass out printed information on it. Nor is it in SB’s offerings in 403bcompare.com. Selling only expensive annuity and MF based 403b’s without a mention of their low-cost option doesn’t mean that NEA and SB have met “the diverse needs and comfort levels of members”!

I know you are doing the right thing, but we are dealing with a financial institution associated with the NEA that is a lot smarter and more powerful than all of us and they are very good at making money off of NEA members. Never (oops! there I go again :oops: ) underestimate their influence.
They may be "smarter and more powerful than all of us", but they know they are going to loose this Wild West market and it’s just a matter of time. They will drag it out for as long as possible, until new laws and regulations finally end it. They know low-cost beats high cost, and fiduciary beats conflict of interest. That NEA chose Vanguard for their own employees’ 401k shows what they really think about their employees’ “diverse needs and comfort levels”.

I only trust that the worldwide stock and bond markets will go up over time.

sschullo
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Location: Rancho Mirage, CA
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Re: Great 403b for teachers?

Post by sschullo » Thu Nov 03, 2016 8:42 am

My response is in red.

krow36 wrote:
sschullo wrote:I just wonder how many members have enrolled in their SB self-directed plan. You mentioned four that we know of and they are all less than a year.
I wonder also! NEA should be willing to tell us, don’t you think? YEAH! Why don't they? Their silence a clear message that it's only there as a result of the lawsuit, and they don't want to publicize that low cost option because they will not make as much money. But we already know this.

The jury is still out on the total fees.
I think it’s highly unlikely that Security Benefit would sneak in undisclosed fees in the NEA Direct Invest option. They want to quiet the small minority who are complaining about the high-fee annuity and MF offerings, and hiding an undisclosed fee in the plan agreement would not make sense, especially after the lawsuit. Two more months and corysold will have in a full year. I am waiting....

Just one more thing. We have to be careful when complimenting a very tiny ethical part of a 99% corrupted and costly tax deferred plan, such as NEA's 403(b) Security Benefit. I fear that SB reps will see your comments as defending their entire plan against the so-called teacher advocates and take them out of context to use it to sell their high priced 403bs.
I think that when the low-cost NEA Direct Invest is only being used by a minute fraction of K-12 SB users, NEA and SB and the financial industry in general will claim that there is little demand for a low-cost option. They “offer" it and very few choose it. Of course they offer it on their website, but the SB reps don’t actually talk about it or pass out printed information on it. Nor is it in SB’s offerings in 403bcompare.com. Selling only expensive annuity and MF based 403b’s without a mention of their low-cost option doesn’t mean that NEA and SB have met “the diverse needs and comfort levels of members”! Okay, we already know this too. Not listing it on 403bcompare is another clear message

I know you are doing the right thing, but we are dealing with a financial institution associated with the NEA that is a lot smarter and more powerful than all of us and they are very good at making money off of NEA members. Never (oops! there I go again :oops: ) underestimate their influence.
They may be "smarter and more powerful than all of us", but they know they are going to loose this Wild West market and it’s just a matter of time. They will drag it out for as long as possible, until new laws and regulations finally end it. They know low-cost beats high cost, and fiduciary beats conflict of interest. That NEA chose Vanguard for their own employees’ 401k shows what they really think about their employees’ “diverse needs and comfort levels”. Again, we know this and I am hopeful too that NEA members will think twice before enrolling in their terrible 403(b) plan.

I only trust that the worldwide stock and bond markets will go up over time.


You and I seem to go around and around about NEA's SB low-cost option. You are trying to say something that goes over my radar.

I guess it boils down to trust. You wrote that "they know low-cost beats high cost, and fiduciary beats conflict of interest." I am not as trusting that they know. I refer to Sinclair's quote. I think it will be the numbers game. When enough members complain, then NEA will have to do something. I cannot image SB corporation changing. They have a clear business relationship with NEA because SB gives NEA $2.7 million. So, the evidence of not publicizing nor helping any member with their low-cost plan is very clear evidence that it's not in their business model.

Steve
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

corysold
Posts: 616
Joined: Mon Mar 24, 2014 12:58 pm

Re: Great 403b for teachers?

Post by corysold » Thu Nov 03, 2016 8:58 am

Thanks for the updates. Hasn't quite been a full year yet, but everything has been smooth and I don't have any issues with the plan at this point. I find the website easy to use and though I haven't changed anything with the plan, I've tried out the system all the way to the final confirmation and it seemed to work just fine.

My sign up experience wasn't as long or arduous as some of the others, perhaps it is a matter of who you speak to or which portal you use to sign up. Frankly, I don't remember exactly how I did it at this point, but I don't remember it being any more difficult than anything I've done at Vanguard.

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