ValuTeachers 403b

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Topic Author
trevorshhh
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Joined: Thu Jan 03, 2019 8:40 pm

ValuTeachers 403b

Post by trevorshhh » Wed Jul 22, 2020 12:39 pm

My wife is starting a new job soon at a public charter school. She has been told the only 403b provider they work with is ValuTeachers. She will be getting additional information soon, but I was wondering if anyone had any context on this company and what some good investment options are. We do a simple 3 fund portfolio (VTI/VXUS/BND and equivalents across existing accounts) and want to have option to low fee options.

I can report back when I get additional information, but wanted to go ahead and ask here.
"Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land." -Ecclesiastes 11:2 NIV

lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: ValuTeachers 403b

Post by lakpr » Wed Jul 22, 2020 12:56 pm

trevorshhh wrote:
Wed Jul 22, 2020 12:39 pm
My wife is starting a new job soon at a public charter school. She has been told the only 403b provider they work with is ValuTeachers. She will be getting additional information soon, but I was wondering if anyone had any context on this company and what some good investment options are. We do a simple 3 fund portfolio (VTI/VXUS/BND and equivalents across existing accounts) and want to have option to low fee options.

I can report back when I get additional information, but wanted to go ahead and ask here.
https://board.403bwise.com/topic/2657-a ... uteachers/

403bwise is THE SITE to head to, regarding anything related to 403b plans. HIGHLY recommend joining or reading there.

Topic Author
trevorshhh
Posts: 82
Joined: Thu Jan 03, 2019 8:40 pm

Re: ValuTeachers 403b

Post by trevorshhh » Wed Jul 22, 2020 1:56 pm

lakpr wrote:
Wed Jul 22, 2020 12:56 pm
trevorshhh wrote:
Wed Jul 22, 2020 12:39 pm
My wife is starting a new job soon at a public charter school. She has been told the only 403b provider they work with is ValuTeachers. She will be getting additional information soon, but I was wondering if anyone had any context on this company and what some good investment options are. We do a simple 3 fund portfolio (VTI/VXUS/BND and equivalents across existing accounts) and want to have option to low fee options.

I can report back when I get additional information, but wanted to go ahead and ask here.
https://board.403bwise.com/topic/2657-a ... uteachers/

403bwise is THE SITE to head to, regarding anything related to 403b plans. HIGHLY recommend joining or reading there.
That link was one of the only things I found when searching Google for this company -- the thread contains very little information of use and is 13 years old.
"Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land." -Ecclesiastes 11:2 NIV

lakpr
Posts: 5711
Joined: Fri Mar 18, 2011 9:59 am

Re: ValuTeachers 403b

Post by lakpr » Wed Jul 22, 2020 2:25 pm

Yes I see that you are right ... that thread has very little information about the 403b plan itself and more of two members arguing with each other.
Sorry

Topic Author
trevorshhh
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Re: ValuTeachers 403b

Post by trevorshhh » Fri Jul 31, 2020 9:45 am

Update: ValuTeachers is a reseller for National Life Group.

This is the only provider for my wife's school. They only offer annuities, with no option for any kind of mutual funds.

I was given the paperwork after a lot of prodding from an insurance salesman for "FIT Rewards Growth" in a "Flexible Premium Indexed Annuity." The salesman said it is "no risk" and "no fees". I can try to upload the document with personal info redacted later.

For contributions of $300/month over 33 years, it gives a floor of $134,640 and a potential growth of up to $178,751. the other annuity option I was offered was even worse.

I'm thinking that despite the tax benefit of contributing to a 403b (I'd be prepared to max it out at $19.5k/yr) that this is such a horrible investment option that I'd be better off just contributing this to a taxable account according to my AA.

Am I correct in thinking this? This is a very good school situation otherwise and if it works out, my wife would like to stay here long term. Higher pay than other schools in the area, great work environment, flexibility, close-to-home, etc. I don't want to bank on just transferring to an IRA in a few years.

My wife is going to advocate for a new 403b provider option with better funds, which it seems like there might be some receptivity to.
"Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land." -Ecclesiastes 11:2 NIV

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arcticpineapplecorp.
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Re: ValuTeachers 403b

Post by arcticpineapplecorp. » Fri Jul 31, 2020 10:01 am

trevorshhh wrote:
Fri Jul 31, 2020 9:45 am
Update: ValuTeachers is a reseller for National Life Group.

This is the only provider for my wife's school. They only offer annuities, with no option for any kind of mutual funds.

I was given the paperwork after a lot of prodding from an insurance salesman for "FIT Rewards Growth" in a "Flexible Premium Indexed Annuity." The salesman said it is "no risk" and "no fees". I can try to upload the document with personal info redacted later.

For contributions of $300/month over 33 years, it gives a floor of $134,640 and a potential growth of up to $178,751. the other annuity option I was offered was even worse.

I'm thinking that despite the tax benefit of contributing to a 403b (I'd be prepared to max it out at $19.5k/yr) that this is such a horrible investment option that I'd be better off just contributing this to a taxable account according to my AA.

Am I correct in thinking this? This is a very good school situation otherwise and if it works out, my wife would like to stay here long term. Higher pay than other schools in the area, great work environment, flexibility, close-to-home, etc. I don't want to bank on just transferring to an IRA in a few years.

My wife is going to advocate for a new 403b provider option with better funds, which it seems like there might be some receptivity to.
I'd ask the salesman to put in writing the bit about "no risk and no fees". If he won't do that, you know he's a liar. We know he's a liar. How? Every plan has fees. People can't get paid and run a business if they don't charge anything. So I'd call BS on that right away. But ask for it in writing. And then consider reporting him to the insurance commission because he's telling people things that aren't true in order to make a buck. That's called unscrupulous behavior. Unfortunately insurance companies are not regulated in the same way as mutual fund companies. Can you guess why?

Salesman often use the tactic of "Oh, you don't pay me. The company does." Well where do you think the company gets the money to pay the salesman? That's right. From you.

There are generally surrender fees if you cancel your plan before a certain time period. So while it's true that the company will pay the salesman a fat check for everyone s/he signs up...then the company will extract that back out of you either in the form of surrender charges if you terminate too soon and other fees over time (which are generally more expensive than other products).

Regarding the "no risk" part, s/he's assuming the insurance company s/he works for won't ever go out of business. That's a risk. Now an annuity might be protected per your state rules, but only up to a certain amount. And I'd make sure if I were you that you knew the amount of insurance through your state in the event this company goes belly up.

source: https://www.investopedia.com/articles/i ... e-fund.asp

An indexed annuity is one where the salesman says "You get the return of the market with none of the risk!" That's a lie. You get a part (small part) of the market. The rest goes to the insurance company. That's how they are able to continue paying you when the market's not good. There's usually a maximum amount you can earn. I've seen plans that can pay as high as 8% (in a single year, not every) but the market would have to go up 30% for you to get that 8% in one year. So where did the other 22% go? (it's like they assume there are no math teachers in their crappy insurance products). You guessed it. The company earned 22% and they gave you 8%. But you should be happy right because when the market goes down, you don't lose money, right? You'd be better off in the long run getting the return of the market and keeping the spoils for yourself instead of giving your wealth away. Why do you suppose insurance companies love these plans more than any other?

Clark Howard rants about this regularly...that teachers have their hearts in the right place and often aren't well compensated. And for that sacrifice what do they get? A lousy high cost annuity from an insurance company. The teacher's unions are to blame for this, as they're not advocating for the best interest of their members, the teachers.

Read more from Clark about the questions teachers should ask regarding their 403b and what options they may have:
https://clark.com/personal-finance-cred ... ment-403b/
https://clark.com/personal-finance-cred ... r-options/

here's another thing:
If you can’t get a straight answer about fees from your plan administrator, Otter told us that 403bCompare.com — a vendor registration site run by the state of California — keeps thorough fee information for all vendors selling 403(b) products in the state. Fortunately, Otter says it can also be used by out-of-state residents as a way to get clear disclosure on their plan’s 403(b) fees.

Note: To get total cost when using 403bCompare, you often have to look at the “Fees and Charges” section and at the “Investment Options” section. We’ve highlighted those in green below on a sample screenshot:

Once you have your plan information and figure out what kind of fees you’re paying, Otter encourages people to post that information on his own organization’s 403bWise Facebook Group. That way, the community can weigh in and others can benefit from your research.
Remember, we’re all in this together.

source: https://clark.com/personal-finance-cred ... s-it-work/
regarding Surrender Fees, here's what Clark says:
Should You Pay a Surrender Charge to Move Your Money?

Surrender charges are a nasty surprise you may find in your 403(b) when you go to move the money out of a high-cost plan. Some vendors charge rolling surrender charges, according to 403bWise.org. So each new contribution out of your paycheck starts a new surrender time frame.

What should you do if you’re paying too much in fees in your current plan and want to move your money?

“If you have a better vendor option, [then] stop contributions to the expensive vendor and direct all new contributions to the better vendor. That way your money is going to work right away in a lower cost product,” Otter says.

Next, figure out how much of your old account is subject to a surrender charge. Most plans typically allow you to roll over 10% of assets without penalty each contract year. That way, you can slowly transfer money out instead of paying a surrender charge.

“[But] some people are so mad when they learn the true cost of their 403(b) that they transfer the entire amount,” Otter notes. “It is really a personal decision.”

To help you decide about the best path for you, Otter offers the following formula:

Divide the surrender charge by the difference between the current product’s total expenses and the new product’s total expenses. This tells you how long it will take to break even.

For example, if you currently have a 5% surrender charge, but will save 2.5% annually in fees by moving your money, you have a two-year break even mark. That means you would be better off moving that money if the surrender period exceeds two years.

source: https://clark.com/personal-finance-cred ... s-it-work/
regarding campaigning for a better plan, not sure if you've seen it or not but here's some tips:
https://www.bogleheads.org/wiki/How_to_ ... 01(k)_plan

good luck. let us know how it goes. i like a good success story.
Last edited by arcticpineapplecorp. on Fri Jul 31, 2020 10:06 am, edited 2 times in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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UpsetRaptor
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Re: ValuTeachers 403b

Post by UpsetRaptor » Fri Jul 31, 2020 10:04 am

Is your wife a member of NEA? If so, research NEA DirectInvest, both here and 403bwise.

lakpr
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Re: ValuTeachers 403b

Post by lakpr » Fri Jul 31, 2020 10:14 am

UpsetRaptor wrote:
Fri Jul 31, 2020 10:04 am
Is your wife a member of NEA? If so, research NEA DirectInvest, both here and 403bwise.
That's not so straightforward. My wife is a school teacher in NJ, and we did go down that rabbit hole at some length a few years back. Bottom line: if Security Benefit is not an authorized vendor at the school, and at my wife's school it isn't, the NEA DirectInvest is *NOT* available to you. The school HR will NOT send your monthly contribution to an unapproved vendor, period, end of story.

The least-worst choice is AXA Equitable S&P500 fund with 0.58% fees (and mortality+expense fees of another 1.2%)

Get Security Benefit as an approved vendor at the school district, yes you will be able to use DirectInvest.

Topic Author
trevorshhh
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Joined: Thu Jan 03, 2019 8:40 pm

Re: ValuTeachers 403b

Post by trevorshhh » Fri Jul 31, 2020 10:30 am

@arcticpineapplecorp. Thank you for telling me about 403bcompare. I found the plan here. https://www.403bcompare.com/products/262#/fees

It sounds like if I can get No Fees, including No Surrender Fees in writing that it might be worthwhile. However, it looks like if I cannot even get out of it in a 403b after a few years, that this plan is entirely worthless.
"Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land." -Ecclesiastes 11:2 NIV

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arcticpineapplecorp.
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Re: ValuTeachers 403b

Post by arcticpineapplecorp. » Fri Jul 31, 2020 11:12 am

trevorshhh wrote:
Fri Jul 31, 2020 10:30 am
@arcticpineapplecorp. Thank you for telling me about 403bcompare. I found the plan here. https://www.403bcompare.com/products/262#/fees

It sounds like if I can get No Fees, including No Surrender Fees in writing that it might be worthwhile. However, it looks like if I cannot even get out of it in a 403b after a few years, that this plan is entirely worthless.
your welcome. I'm posting the image at the link below because many posters might not want to take the extra step, but if they see the picture, they might comment further:

Image

do you see how there are surrender fees each year...for 9 years. That means in order to not lose money you have to keep the money with them for at least 9 years.

I also see "The minimum term is 10 years but must start at least 5 years after issue to avoid surrender charges. The minimum term for annuitization is 10 years and may start at anytime."

"Guaranteed Minimum Interest Rate Used for Annuitization
1.00%"
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

ralph124cf
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Re: ValuTeachers 403b

Post by ralph124cf » Fri Jul 31, 2020 3:28 pm

Invest in taxable for now, and continue to advocate for a better, low cost provider.

Note: Most school HR departments do not know how bad these plans are. They are romanced by the insurance salesmen, and are not sophisticated enough to see the lies. In many cases, the salesman is related to one of the administrators.

Ralph

krow36
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Location: WA

Re: ValuTeachers 403b

Post by krow36 » Fri Jul 31, 2020 5:37 pm

Scott Dauenhauer, CFP and 403b reform leader, has written a lot about equity indexed annuities. Here is an example: http://teachersadvocate.blogspot.com/20 ... nuity.html

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