Low cost 403b vendor

[Benefits 101]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

[mbozek]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

Not exactly.

403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%.

Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants.

You may be able to get some leads by going to 403bwise.com and asking your question there.

[Benefits 101]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

Not exactly.

403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%.

Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants.

You may be able to get some leads by going to 403bwise.com and asking your question there.

Thanks. But it is ERISA exempt in public schools (i.e no discrimination testing, no 5500)... they have a separate TPA they pay (just for loan tracking), they have separate accountants they pay, etc... the vendor... does NOTHING besides recordkeeping and custody. Essentially, it is no different than the work they would do with a TPA . The vendor does NO compliance in these ERISA exempt accounts. But the fees stay in there.

[Benefits 101]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

Not exactly.

403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%.

Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants.

You may be able to get some leads by going to 403bwise.com and asking your question there.

Thank you! The 403bwise tip was great. I found exactly what I'm looking for... a flat $40 per year + 15 basis points isn't bad for a 403b plan.

[joel]

What are the expense ratios of the investment funds?

[joel]

large plans ($1 billion +) charge their investors from about a low of 40 basis points for expense ratios and administrative costs i.e. NYC Deferred Compensation Plans to 200-300 basis points i.e. New Jersey State Employees Deferred Compensation Plan. This is a national scandal.

[Benefits 101]

Yes it is. I often wonder who is getting "hooked up" in those situations. I found an open platform... so employees can invest in any of the nearly 26,000 mutual funds in existence as well as ETF's.

[joel]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

Not exactly.

403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%.

Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants.

You may be able to get some leads by going to 403bwise.com and asking your question there.

Thank you! The 403bwise tip was great. I found exactly what I'm looking for... a flat $40 per year + 15 basis points isn't bad for a 403b plan.?

[joel]

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

Not exactly.

403b or any employer retirement plans are more expensive to maintain than IRAs because of the compliance requirements, IRC, Sec rules that apply. All plans need TPAs , tax advisors and some ERISA plans need accountants to prepare annual repoorts. Minimum admin cost are about .50%.

Problem is that low cost providers such as VG and TIAA/CREF are only interested in plans that have minimum assets of more than $1M because they need to generate enough fees to pay for the cost of compliance and TPA. Ins co will take plans with smaller amounts of assets because they charge higher fees which are passed along to participants.

You may be able to get some leads by going to 403bwise.com and asking your question there.

Thank you! The 403bwise tip was great. I found exactly what I'm looking for... a flat $40 per year + 15 basis points isn't bad for a 403b plan.?

What are the expense ratios for the funds in your line-up?

[Benefits 101]

Any one of the 26,000 available mutual funds as well as ETFs. You should be able to look the expense ratios on Morningstar. If the fund exists, you can invest in it.

[joel]

Are you telling us that your core line-up is twenty six thousand mutual funds?

[Benefits 101]

Are you telling us that your core line-up is twenty six thousand mutual funds?

Yes. The plan sponsor didn't want me to limit the menu.

[Flyboyjohn]

How are you providing ETFs as an investment option in a 403b, are they still considered mutual funds (registered investment companies)?

[Benefits 101]

How are you providing ETFs as an investment option in a 403b, are they still considered mutual funds (registered investment companies)?

ETF's register as unit investment trusts and therefore are eligible in 403b's. Most TPA's don't allow for intra-day trading though, or charge the client extra for that feature.

[joel]

Are you telling us that your core line-up is twenty six thousand mutual funds?

Yes. The plan sponsor didn't want me to limit the menu.

My jaw has dropped to the floor. A menu of just 30-40 choices has been cited to reduce the rate of participation. Participants become overwhelmed and turn away.

Having said that, in my opinion such a menu should not be allowed. If one is inclined to invest outside of the major asset classes let them do so outside of an employer sponsored plan.

[Benefits 101]

I plan to give a "recommended list" to people or "funds to consider". Mostly Vanguard index funds and some smaller funds I like. But the options are there for people who want them. I tend to define freedom as options... and I don't like eliminating people's freedom.

[QDROphile]

You should be very careful about distinguishing some options from the rest of the 26,000 unless you are already intending to treat the favored options as designated options and are comfortable with the implications under ERISA section 404(c ).

[joel]

I plan to give a "recommended list" to people or "funds to consider". Mostly Vanguard index funds and some smaller funds I like. But the options are there for people who want them. I tend to define freedom as options... and I don't like eliminating people's freedom.

Let's not conflate individual freedom with the plan sponsor's fiduciary responsibility.

[Benefits 101]

Actually Joel, QDROphile is right. Remember, this is an ERISA exempt organization. By doing what you seem to feel is "right" (i.e. make an investment menu"); the plan sponsor would be subject to my state's fiduciary laws (i.e. PA), which really do not apply to ERISA exempt plan sponsors unless an attorney wants to practice some legal theory and extend the degree of care section. But I think that would be a stretch. By NOT making a menu, it is more prudent if you are considering fiduciary responsibility. Furthermore, Joel, I think you are forgetting some of the requirements for ERISA exemption... including NOT directing participants to any particular investment. Which the creation of a menu would entail.

However, I am comfortable with the big F, but I will probably avoid making a formal menu. Why add liability, as remote as it may be.

[joel]

I plan to give a "recommended list" to people or "funds to consider". Isn't this just another phrase for "menu"?

For a non-ERISA plan there is no such thing as being exempt from state law fiduciary standards. These plans are not covered under ERISA because they are covered under state fiduciary laws.

I am not aware of any non-ERISA 403(b) plan that comes close to offering one hundred funds let alone twenty six thousand. Are you saying these non-ERISA plans would be wise to increase their offering to twenty six thousand funds lest they invite a lawsuit in state court alleging breach of fiduciary duty for offering only 25 funds?

[Benefits 101]

I think we've gotten off topic.

There is a difference between the advisor providing recommendations and the Plan Sponsor creating a menu of choices. Many non-ERISA plans run "open platforms". Joel, if you'd like more info about this subject, I recommend you open up another thread. I also think you should read the Fiduciary standards code for the state you work in as well if you are interested in working with Non-ERISA plans.

[joel]

Benefits 101: If I begin another thread will you then be responsive?