Government Plan Provider Options?

[Zoraster]

I'm a manager of a small city (60 FTE employees) that has a defined benefit pension. I'm the only employee that is outside of the pension plan and I receive a contribution to a 457(b) plan through ICMA-RC. Other employees voluntarily put in a small amount through payroll deduction but I basically am the 457(b) plan.

Long story short, I'm getting killed on fees (my annual expense ratio was 1.42%) in a target date fund because the employer plan balance is so small since its just me in it. I'm looking at other options, including going to a 401(a) maybe through fidelity or nationwide. I've also found a 457(b)/401(a) provider through my state's city association that offers vanguard target date and index funds (which is all I'm really looking for at this point) that charges a 0.4% fee plus the 0.18% Vanguard fee. Not as good as going directly to Vanguard but a lot better than the almost 1.5% I'm paying now.

I'm the plan administrator and can basically make any changes that I want.

If I add a new provider can I rollover my account to the new provider (or to an IRA; probably not from what I've read)? Do I have to close out the ICMA-RC provider to do it?

Can I do an in-service roll over to an IRA from a 457(b)? What about a 401(a)? (I know you can do this with a 401(k) but a 401(a) is slightly different).

I've asked other city managers and even people in my state association but can't get any real answers; any insights would be greatly appreciated.

Should I be looking at a Roth up to the max before contributing the rest to the 457(b)/401(a). My employment agreement gives me discretion as to where I put my contribution but the pre-tax contributions have to go to a 457(b) or 401(a). Did I miss anything? Are there other questions I should be asking?

 

[gauss]

There is an interesting thread over here: (Mega Backdoor Roth In Solo 401k: Control Your Own Destiny) about how to roll your own 401k with whatever terms you like. This is more flexible than the off the shelf offerings of solo 401ks from the major providers. You could plug in whatever "investment only" option that you like. I think that you could use whatever fund/brokerage company(s) that you like as long as they accept ownership by a trust.

I have been toying with the idea of setting one of these up without actually being self employed, (well maybe I could become an "ebay seller" business if needed) with the intent to roll existing 401k assets into it.

Of course I would not be able to make annual new contributions without 1099-misc earned income.

Depending on the size of your 401k and how much you outsource you may not end up saving anything on the fees however. YMMV.

There are probably much simpler ways to accomplish your goals, but again I was intrigued by the ability to have a completely custom plan based on hand picked providers.

-gauss

 

[FUEGO]

That Vanguard target date fund option (plus the 40 bp fee) sounds decent.

Any way you can piggyback on your state's pension/401k/457 plans' management through a memo of understanding with whoever administers those (State Treasurer in my state). Basically add an account to their ledger books for your municipality's 457 plan. Could be an innovative way to get a lot of purchasing power for smaller municipalities.