403(b) plans for teachers, unfortunately, don’t offer most of the same protections that 401(k) plans do for other professionals. Here’s what to look for before choosing a 403(b).
First, look at your district’s approved vendor list. If they‘re all insurance companies, it means you’re facing an uphill fight. These kinds of structures are the worst, but prevalent in many districts today.
If there’s only a single approved vendor, it may mean good things, but if it’s an insurance company, you need to check on the second important factor - is it an annuity?
Annuities are routinely sold to teachers in their 403(b)s, but due to their high fees and poor investment choices, should be avoided. If the only choices available are annuities, it’s time to lobby your district to do better, which brings up the third important factor… making sure you and your district are working with a fiduciary.
A fiduciary is a financial advisor that is legally and morally bound to put his clients’ best interests first. Unfortunately, most of the advisors that are connected with school districts today are not fiduciaries.
Knowing these factors can help you avoid trouble and make the most of your 403(b).
If you’d like to learn more about bringing a better 403(b) to your district or figuring what to do with your own account, give us a call or send us an email.