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403-B Question
Old 01-10-2009, 01:42 PM   #1
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403-B Question

My wife's employer just sent us notice that her current provider (Fidelity) is no longer an approved vendor for her 403-B. The new choices are:

Ameriprise
AXA
American Fidelity
MetLife
Great American
Horace Mann
ING

Of course, no information concerning investment options or expense costs have been provided. Does nay one have any experience with any of these provider's and can make a suggestion for the best choice? To me they appear to be insurance companies for the most part and i fear high expenses and lousy investment choices.

Thanks for your help.
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Old 01-10-2009, 02:15 PM   #2
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You are right to be afraid, since they will likely be high fee investments. Look closely at the expense ratios of the investment offerings and see if you can find something under 1%. I would probably contribute just enough to get the full match and invest elsewhere. Your wife could also campaign internally for them to include Fido or TIAA-CREF, but it might take a while.
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Old 01-10-2009, 02:15 PM   #3
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My nephew has AXA as his work account choice - getting blasted by 3+% expense ratio. Ouch.

Search Ameriprise here, as several threads have explored their expenses & practices.

Good luck!
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Old 01-10-2009, 02:30 PM   #4
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I have a 457b with ING and the fees are mostly in the .5% neighborhood.
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Old 01-11-2009, 10:15 AM   #5
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Sadly, changes in 403b rules by our very own Fed Gummint are to blame. New requirements calling for FA type services to contributors caused the low cost brokerage houses to drop out of being providers leaving only insurance company/annunity outfits and loaded fund providers.

For example, in DW's school district, until 12-31-2008 you could have your 403b with Vanguard or Fidelity along with the usual cast of insurance company - anuuity houses. Now, Vanguard dropped out all together and Fidelity switched from the Fidelity brokerage house to Fidelity Advisors which offers only load funds complete with a FA to "provide guidance."

Apparently the Fed govt folks felt 403b contributors weren't very smart and were making dumb decisions with their investments so they changed the rules to require that plans offer FA-type services. Therefore the low cost brokerage houses dropped out leaving only insurance-annuity folks and load fund folks.

The only work around we've been able to find is to have DW contribute to Fidelity Advisors and avoid the loads by using only the MM which is load free. She only plans to work 1.5 more years (and even that's part time) and when she's done, she'll roll it to an IRA.

The good news? They now have Roth 403b's. We've never qualified for Roth, so this gives her a chance to do some contributing into that category.

Go here and do some reading......

http://www.403bwise.com/

Particualarly this article.....

New 403(b) Regulations Now
in Effect
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Old 01-11-2009, 12:54 PM   #6
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I guess I shouldn't complain to much about the changes to my plan. Until 1/1/09 Vanguard was our 403b provider, now it is Fidelity with their target funds and a handfull of other funds and one annuity . Fortunately the latter include 2 index equity funds and a total bond market index. We can also use their brokerage services with "free" purchases of expensive MF's or expensive purchases of cheap index funds...

Maybe Obama will add fixing retirement accounts to his ever growing list of tasks.

DD
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Check out ING
Old 01-12-2009, 03:06 PM   #7
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Check out ING

My husband teaches in the school system and has his 403b in an annuity with ING (offered through Reliastar). It's not as bad as it sounds. It is a 5 year annuity (be careful or they will stear you into a 12 year) There is a guarenteed .03% interest (that has actually avereged 3 1/2 to 4%) with an additional .02% for the first year on new money. The annuant doesn't pay any fees. You can transfer out your original contributions into an IRA after 5 years even if still employed with the system (in year 6 you can transfer out year 1 contributions; in year 7 you can transfer out year 2, etc.) This works out very well if you are in a 25% tax bracket. You trade lower returns in years 2-5 but save a significant amount in taxes.
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Old 01-13-2009, 09:22 AM   #8
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Quote:
Originally Posted by potto0213 View Post
My wife's employer just sent us notice that her current provider (Fidelity) is no longer an approved vendor for her 403-B. The new choices are:

Ameriprise
AXA
American Fidelity
MetLife
Great American
Horace Mann
ING

Of course, no information concerning investment options or expense costs have been provided. Does nay one have any experience with any of these provider's and can make a suggestion for the best choice? To me they appear to be insurance companies for the most part and i fear high expenses and lousy investment choices.

Thanks for your help.
Get ahold of the plan document (Called an SPD, or Summary Plan Description). It is required to list all the expense ratios of the funds, etc. Most 403B plans are administered by insurance companies.

I would invest up the match, and then fund something else.
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Old 01-13-2009, 11:47 AM   #9
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Our 403b is ING and it sucketh...expense ratios range from .5 (very few, usually fidelity funds or index) and rest are much higher - we also have a 1.5 percent "wrap around fee" for the annuity party - booooo!

i've posted our options before - and our employer provides pretty much the full list from ING, my SO has his 401k from ING and they offer far fewer options - like one or two per category. so it depends on the employer...
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