Enrollment window for 403b

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Determined
Posts: 38
Joined: Sat Aug 12, 2017 7:43 pm

Enrollment window for 403b

Post by Determined » Wed Sep 13, 2017 8:17 pm

My school district allows 403b enrollments two times a year. This applies to new accounts and changes in elections. I never paid much attention to until this year. I have a 403b, but switched to a 457 when they dropped the provider I originally had. I can change anything at anytime with my 457 directly (Ohio Deferred Comp).

I am planning to write a letter to the administration through the local association about their reasoning. I was at a meeting this afternoon, I and that's what they want me to do. It's annoyance to my situation, but I feel the restriction is unfair and likely no reason for it other than it's what the former treasurer wanted. They parted ways last October. I imagine many teachers, myself included, have never thought that you might be able to enroll at anytime.

My particular situation is I am trying to max out both my 457 and my 403b to offset income from inheritance. I got the 457 taken care of last spring but missed the enrollment time for 403b. According to the enrollments windows, in 2018 I won't be able to make any changes until March so I can't take even elections for the year like I will in the 457.

I spoke with two of the five approved vendors, and they both assumed I could elect at anytime. I contacted the new HR person, and she wasn't aware of the rule. I pointed out that the last time they sent out an update was January 2016 (not her). She forwarded what she sent to new employees. It says new enrollments have to be turned in by September 15th and elections will start in the first pay in October. That's Oct. 13th this year. Meanwhile, we are all required to meet with the American Fidelity rep who can offer 403b among other products, except the at the meetings are all next week! They are the only vendor that ever comes to the school.

How do you suggest I craft this letter? I tend to get on a soap box about stuff like this. As I said, for my personal situation I am rightly annoyed, but I am looking at the bigger picture.

duuuuuude
Posts: 26
Joined: Mon Dec 12, 2016 11:42 pm

Re: Enrollment window for 403b

Post by duuuuuude » Thu Sep 14, 2017 1:26 am

Determined,

I feel your frustration! I was in the same situation last summer/beginning of the year. You should be able to enroll ANYTIME...it's just that American Fidelity comes round once or twice a year to sign up employees.

You should be able to get a list of "Approved Vendors" through the Third Party Adminstrator (TPA). My school district's TPA is a local credit union. American Fidelity is the one that comes to all the sites to sign people up, and everyone thinks that's the only option. American Fidelity has it great, as they take the additional 1.x% off employees as the annual fee because employees think that's their only option.

Once I saw that Vanguard was one of the approved vendors on my district's TPA list, I was able to sign up directly after obtaining our Vanguard Plan ID# from HR. A short phone call to Vanguard led to them sending me a link to open the account online. I can now manage my entire 403b via their website. A few colleagues of mine also signed up directly, but at very different times, which debunks this "twice a year" thing.

The only paperwork I needed to complete was the Salary Reduction Agreement that I printed and signed over to the TPA and/or Payroll.

I think the Sept 15th thing may be because it needs about 10 business days for them to process the paperwork to withdraw the money into your desired 403b account.

In my situation, after establishing the account with Vanguard, if I want to change the contribution each month, I can, as long as it's about 10 days before the end of the month when we're paid.

In my experience, lots of folks up in HR just go with American Fidelity by default. Most don't understand the whole expense ratio thing. They simply give their contributions to whoever is showing up to sell them a Tax Sheltered Annuity because they can save on some of their taxes today.

And I think you're smart for putting this money away to offset inheritance income. Genius!

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