As we've covered in previous Knowledge Center articles, the difference between a good 403(b) and a bad 403(b) can mean tens of thousands of dollars more in your pocket come retirement. Many of the providers on district approved lists are companies more interested in charging you as high a fee as possible, than truly looking out for helping you maximize your savings. And unfortunately, many districts remain blissfully ignorant to this reality or stay silent on the matter, keeping these providers on their lists without a mention to how their practices hurt you.
However, because this problem is so large, a concerted effort has been made by several organizations to develop resources to help shine a light on 403(b) providers so you can identify who is truly your friend and who is really a wolf in sheep's clothing. My two favorite resources that are doing a great job of this are 403bwise.com and 403bcompare.com, and I truly believe you and all of the teachers you know should be using them. There are better options available and these two resources can help you identify them or fight for them to be included in your district's plan.
403bwise.com does a great job of providing a broad spectrum of information on information on 403(b)s and everything surrounding them. They've been spearheading the campaign for better 403(b) options with lower fees, more choices, and better retirement guidance across the entire space covering K-12, higher education, and healthcare. They have great information and ideas on 403(b) reform and are staunch advocates of helping teachers share their 403(b) experiences with each other and the world through articles and a great discussion board, books, and podcast, Teach and Retire Rich.
403bcompare.com was developed by the State of California to help teachers objectively evaluate their options. Since technically, providers bad 403(b) options aren't illegal, they couldn't ban them, so instead they decided to do their best to make the market in their state as transparent as possible. So now, all 403(b) providers available in California are required to register all their products and options with the state, who then publishes them on 403(b)compare.com in an easy to search and understand format.
This makes it so much easier to evaluate fees, investment options, and other important information rather than having to dig through each options prospectus, which can be hundreds of pages of legal-ese to decipher. It's important to remember that the information listed is for each company's California options, which can be different than what they offer in other states, but is typically pretty close. And one of the best features, it clearly tells you whether the providers' options are annuities or not, so you can easily keep an annuity out of your 403(b)!
We’d love to hear from you and provide more information on how we can help with your 403(b), planning for retirement, or other important financial matters.
Mychal Eagleson, CFP®, AAMS® is the President of An Exceptional Life Financial, a firm that specializes in financial planning for teachers and families with special needs. He frequently writes and speaks on personal finance topics relating to these clients. Mychal also serves on the board of the Financial Planning Association of Greater Indiana as the Director of Public Relations & Social Media. To read more of his articles or learn about An Exceptional Life Financial please visit: www.anexceptionallifefinancial.com.