403(b) choices?

[elise_hoffman]

Hi everyone! I'm new to this forum. I found my way here reading a few threads abuot 403(b) plans. I'm a teacher (7th year in the classroom) but new to the public school system, so I'll be starting my 403(b) plan this year. My district offers three choices:

-VALIC
-Lincoln Financial
-ING

Does anyone have any insight into if one of these companies is better or preferable than the others? I have contacted the companies directly to get more information into what they offer, but I know it's a lot to expect a salesperson to make an unbiased comparison to other programs, so I thought I'd ask here!

According to the comparison chart provided by my school district, each charges between .27%-.50% of assets plus "underlying fund charges" that are not specified. This doesn't seem like a huge difference to me, which is why I'm struggling to choose.

A little background on me if it's helpful: I'm 30, single-income, and I hope to buy a house in the next year so I will be making very conservative contributions to whichever fund I end up choosing.

Thank you for your help and insight!

 

[ERD50]

We probably need a bit more information. VALIC, Lincoln Financial, ING appear to be companies - but what products do they offer? It's kind of like saying 'Should I buy this Ford, or this Chevy or this Honda, w/o knowing what vehicles were being offered, or what your needs are.

Unfortunately, these are probably companies that only offer annuities, which are probably not the best match. It seems to be rare for 403B plans to include any low cost providers, like Vanguard or Fidelity. And if they do, they are buried and marginalized.

I'd love to know why this is the case. Somebody must be getting a kick-back somewhere, or they simply buy the annuity sales pitch. But shouldn't teachers be the ones most likely to educate themselves on these matters (being educators themselves)? Shouldn't the Union be looking out for them?

Something seems fishy that this is so common - but hopefully, there are some good choices buried in there, if you can find them.


-Good Luck - ERD50

 

[target2019]

The difference between the e/r's is not huge, but measured over 20-30-40 years it is very significant.

Once you see the actual funds and associated expenses it will be clearer which to choose. An educated guess is ING coming in as best choice. Still, that's a guess.

 

[steelyman]

I had an unpleasant time dealing with VALIC (before the 2008 mess they were AIG-VALIC) on behalf of a parent. The 403(b) plan was opaque (opposite of transparent) and limited. I agree about options closer to Vanguard and Fidelity if available.

 

[elise_hoffman]

Thank you for the insights - I'm obviously a beginner at this stuff! The information out there is very overwhelming so it's helpful to have real folks to chat with.

Out of my three choice companies, I see that only ING offers Vanguard Target Retirement, while the others offer T. Rowe Price Retirement. This is making me think that ING may be a good choice for me to get started with.

 

[ERD50]

... ING offers Vanguard Target Retirement, while the others offer T. Rowe Price Retirement.

Ahhh, you might have some nice choices then - good! I think you'll find the Vanguard fund to likely have the lowest expenses, assuming ING doesn't throw some exorbitant fees on top of that. Then at least more of your money is working for you.

-ERD50

 

[target2019]

Thank you for the insights - I'm obviously a beginner at this stuff! The information out there is very overwhelming so it's helpful to have real folks to chat with.

Out of my three choice companies, I see that only ING offers Vanguard Target Retirement, while the others offer T. Rowe Price Retirement. This is making me think that ING may be a good choice for me to get started with.

Just need the e/r for the company (ING, for instance) and the fund. ING may be .27 and the target fund is

There are probably other fund choices, but this is how enlightenment begins.

Somewhere your employer has a comparison, and the fees must all be revealed. Sometimes they forget.

 

[elise_hoffman]

Hi everyone! I've been researching the Vanguard funds that ING offers and so far I've got:

Total Bond Market Index Fund
Short-Term Bond Index Fund
Vanguard 500 Index
Vanguard Wellington Fund
Vanguard Extended Market Index Fund
Target Retirement Funds

Does anyone recognize any of these as being better than any of the other options? Any red flags or ones to avoid?

Also, Vanguard assesses an annual 0.50% fee and a 0.20% mutual fund fee. Is this pretty standard?

Thanks again, everyone, for your help and patience as I learn more about this!!

 

[steelyman]

I have the equivalent of some of these (not all in Vanguard, because my plan doesn't offer them but they're much the same).

There's a "live" thread now about investing books that people like. Maybe you could park your money for now split between the S&P fund and total bond and check those recommendations out (it's summer, you can have iced tea too!).

 

[segfault]

Also, Vanguard assesses an annual 0.50% fee and a 0.20% mutual fund fee. Is this pretty standard?

That doesn't sound right. Most of Vanguard's index mutual fund expense ratios are in the 0.10-0.20% range, but I'm not aware of Vanguard charging a 0.50% of assets annual fee on top of that. ING, as the plan custodian, may be the one assessing that.

 

[MRG]

That doesn't sound right. Most of Vanguard's index mutual fund expense ratios are in the 0.10-0.20% range, but I'm not aware of Vanguard charging a 0.50% of assets annual fee on top of that. ING, as the plan custodian, may be the one assessing that.

+1

Check out the fund prospectus it will have the fund's fee. I'm guessing the plan description would list out the custodians fee.

 

[pb4uski]

I think your best alternatives would be Wellington or a 65%/35% mix of the 500 and Extended Market Index funds or a target retirement fund that is almost all equities (stocks). Look at the expenses of those three combinations and select the one with the lowest cost.

 

[Another Reader]

These fees suggest this may be an annuity product with some investments tied to it. Please read the product information carefully, as this is likely the reason for all the fees. Vanguard is not imposing the fees, ING is.

I would make sure I funded my IRA before I bought into an annuity product in a 403b plan.