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Understanding the OMNI 403b P3 Plan Providers

In this post we aim to provide objective, trustworthy information about OMNI® and their 403(b) P3 Providers. As of this publish date, there are 35 providers available for school districts to add to their retirement plans.

Who is OMNI?

OMNI® is a Third-Party Administrator (TPA) of 403(b) plans. They work with school districts to help ensure compliance with IRS regulations governing the operation of 403(b) plans. OMNI® also helps your employer remit 403(b) contributions to participating service providers.

If your TPA is OMNI, then your school district may offer any of the 35 OMNI P3 Preferred Providers, each with their own account options, pricing structures, fees and investment products for you to choose from.

If you see an OMNI P3 provider that is not currently available to your school district, go ahead and contact your HR department and request to add that provider. Most times it’s just a flip of a switch. Many of these providers also offer a ROTH 403b option that you can request to ‘turn on’ as well.

What is 403bCompare?

Where possible, we have linked to vendor details on 403bcompare.com. The 403bCompare web site is a database of free, objective information about 403(b) vendors and the products they offer. The site was created to help employees of California’s local school districts, community college districts or county offices of education make better-informed investment decisions.

Suprisingly, neither NY (nor Omni 403b) have a comparable, objective resource but the vendor information is still relevant and accurate for NY’s K-12 school employees.

We hope the below links will serve as a great resource when making your initial 403(b) selection or if you are trying to make a change.


PROVIDERProduct TypesROTH eligibleProvider Details
American CenturyMutual FundsROTH eligible403b provider details
American Fidelity* Mutual Funds403b provider details
Ameriprise Financial / River Source Annuities
403b provider details
Aspire Financial ServicesMutual FundsROTH eligible403b provider details
403b product review
AXA Equitable 
Life Insurance Company
Annuities
ROTH eligible403b provider details403b product review
Brighthouse Life Ins. / MetLife AnnuitiesROTH eligible403b provider details
Chemung Canal Trust Co.403b provider details
Confidential Financial Planning / Multichoice
Mutual Funds
403b provider details
403b product review
Faculty Services Corp
Annuities & Mutual Funds
ROTH eligible403b provider details
Foresters Financial 
(First Investors)

Mutual Funds
ROTH eligible403b provider details
FTJ Fundchoice
Mutual Funds ROTH eligible403b provider details
Global Atlantic Financial Group
403b provider details
GLP & Associates
Mutual FundsProvider details
Great American Insurance Group
Annuities403b provider details
GWN/Employee Deposit program
Mutual Funds
ROTH eligible403b provider details
Horace Mann Life
AnnuitiesProvider details
Kades Margolis
Provider details
The Legend Group, Inc / Adserv
Annuities & Mutual Funds
ROTH eligible403b provider details
Lincoln FinancialAnnuities403b product details
Lincoln Investment Planning, Inc. Annuities & Mutual Funds ROTH eligible403b provider details
Mass MutualAnnuities & Mutual Funds 403b provider details
Mutual Inc/Plan Member Services Corporation Annuities & Mutual Funds ROTH eligible403b provider details
National Life Group (LSW)
Annuities
403b provider details
New York Life Ins. & Annuity Corp.
Annuities
403b provider details
Oldham Resource Group
Mutual Funds
ROTH eligible403b provider details
Oppenheimer Funds Distributors, Inc Mutual Funds ROTH eligible403b product details
Primerica Financial Services
Mutual Funds
ROTH eligible403b provider details
Security Benefit Annuities & Mutual Funds ROTH eligible403b provider details
Sgroi Financial403b product details
TEG Federal Credit UnionAnnuities & Mutual Funds
403b provider details
Thrivent Financial for LutheransAnnuities & Mutual Funds
403b provider details
TIAA-CREFAnnuities / Mutual Funds
403b provider details
VALICAnnuitiesROTH eligible403b provider details
Voya (formerly ING) AnnuitiesROTH eligible403b provider details
Waddell & Reed, IncMutual Funds403b provider details

How do you narrow down a list of 403(b) Providers?

Comparing providers, analyzing the pricing structures and finding hidden fees is no small task…and neither your school district, nor OMNI® can recommend any specific provider.

But is essential to make an informed decision about 403(b) providers because your selection WILL affect your retirement account in the future.

We can help.

Free Guide: What Every K-12 Employee Should Know About Their 403B Plan

Retirement investing for teachers can be confusing. This guide is an excellent source of information about the various options available to you as a school district employee answering important questions.

  • Read our recent post on How to Select a Suitable 403(b) Vendor
  • Download our user-friendly 5-step Teachers Shopping Guide that covers the basics of narrowing down your Provider options.
  • Check out our (b)informed blog dedicated entirely to K-12 teacher retirement plan topics.
  • Ask us to host an informative school seminar for your district employees.
  • Schedule a complimentary portfolio review at school friendly hours. This is where we look over your plan, discuss your needs, and identify the investments that are suitable for you.

If you’re still suffering from the paradox of too much choice, or if you have specific questions about your plan or the fees you might be paying, please get in touch.

Warwick Valley Financial Advisors aims to help teachers make the most of their money and utilize their finances to live exceptional lives. We’d love to hear from you and provide more information on how we can help with your financial planning whether it be retirement, insurance, student loans, or other important financial matters.

I am an independent advisor committed to the fiduciary standard, and I don’t earn commissions from the recommendations that I make to clients.


Investing in mutual funds and variable annuities involves risk, including possible loss of principal.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Warwick Valley Financial Advisors and LPL Financial are not affiliated with or endorsed by OMNI 403b.

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Warwick Valley CSD 403(b) Plan Review

Before You Sign On The Dotted Line, Do Your Homework

A 403(b) plan can be an excellent way to save money for retirement. It can serve as a supplement to your NYSTRS pension plan. But choosing the right 403(b) retirement plan can be overwhelming especially if you work in a school district.

In this article, we aim to provide a comprehensive overview of Warwick Valley CSD’s 403(b) Plan & Provider options. The article is broken into two parts:

1403(b) BASICS
Click and expand these sections below to learn more about each topic.

2403(b) PLAN REVIEW
Warwick Valley CSD’s 403(b) providers and their products.

Let’s get started!


403(b) BASICS

What is a 403b plan?

A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan provided by certain employers. Employers such as public educational institutions (public schools, colleges and universities), certain non-profits, and churches or church-related organizations may offer 403(b) plans.

Similar to 401(k) plans, 403(b) plans allow you to contribute pre-tax money from your paycheck to your 403(b) plan to invest in certain investment products.

The 403(b) is named after the section of the IRS code governing it.

How does a 403(b) plan work?

School district employees make contributions to a 403(b) on a pre-tax basis through a Salary Reduction Agreement.

This is an arrangement where the participating employee agrees to take a reduction in salary. The amount by which the salary is reduced is directed to investments offered through the employer and selected by the employee. These contributions are called elective deferrals and are excluded from the employee’s taxable income.

These pre-tax contributions and any investment earnings will not be taxed until you withdraw the money, typically after you retire.

What are the benefits to contributing to a 403(b) plan?
There are three main benefits to contributing to a 403(b) plan.

  • The first benefit is that you don’t pay income tax on allowable contributions until you begin making withdrawals from the plan, usually after you retire. Allowable contributions to a 403(b) plan are either excluded or deducted from your income. However, if your contributions are made to a Roth contribution program, this benefit doesn’t apply. Instead, you pay income tax on the contributions to the plan but distributions from the plan (if certain requirements are met) are tax free.
  • The second benefit is that any earnings and gains on amounts in your 403(b) account aren’t taxed until you withdraw them. Any earnings and gains on amounts in a Roth contribution program aren’t taxed if your withdrawals are qualified distributions. Otherwise, they are taxed when you withdraw them.
  • The third benefit is that you may be eligible to take a credit for elective deferrals contributed to your 403(b) account.
Contribution & Catchup Limits

Participants may contribute up to $19,000 for 2019.

Participants age 50 and older at any time during the calendar year are permitted to contribute an additional $6,000 in 2019, for a total of $25,000.

Also the plan offers the 15-years of service catch-up provision. Employees with 15 years of service with their current employer and an annual average contribution of less than $5,000 per year are eligible for an additional $3,000 contribution per year up to a lifetime maximum catch up of $15,000. This is known as the 15-year rule.

Source: Omni 403b

Catch-ups under the Plan

  • 15 Years-of-Service Catch-up Elective Deferral Contributions: Yes
  • Age 50 Catch-up Elective Deferral Contributions: Yes

Contributions to the Plan

  • Direct Rollovers Into the Plan: Yes
  • Employer Contributions Allowed: Yes
  • Employer Post Severance Contributions Allowed: Yes
  • Exchanges Within the Plan: Yes
  • Roth Contributions: Yes

Other Plan Transactions

  • Hardship Distributions: Yes
  • In-service Distributions After Age 59-1/2: Yes
  • In-service Distributions From Rollover Accounts: Yes
  • Loans: Yes
  • Permissive Service Credit Transfers: Yes
  • Plan-to-Plan Transfers To the Plan: Yes
  • Plan-to-Plan Transfers From the Plan: Yes
Roth Contributions Available

MWCSD allows Roth 403(b) Contributions. Roth contributions are deferred from paychecks to investment accounts on an after-tax basis, as opposed to Traditional 403(b) which are deferred on a pre-tax basis.
The Roth 403(b) offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Withdrawals prior to age 59 ½ or prior to the
account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth accounts.

For more details read: The Roth 403(b)

Note: Roth 403(b) accounts are not available from all P3 Providers. Please review the information listed on the Warwick Valley CSD 403(b) Providers page for providers that show “403(b) Roth Account Available” after the provider name where applicable, then follow the Enrollment Steps to begin participation.

How do I enroll in the plan and start contributions?
To enroll in a 403(b) Retirement Plan, you must do 3 things:

  1. Select the provider you wish to invest with from the OMNI’s list of approved providers on its Web site.
    Employees should contact each provider for information about the 403(b) products and services it offers. This is often the biggest and most important hurdle!
  2. Establish an account with your chosen provider. Application forms can be obtained from the representative of, or the investment provider you select. The application is submitted to the investment provider for processing.
  3. Make contributions by completing the “OMNI Salary Reduction Agreement” (SRA) form*, which authorizes OMNI to withhold the amount you elect to contribute to your 403(b) via payroll deduction. The Omni SRA
    form is used to establish, change, or cancel salary reductions withheld from your paycheck and contributed to the 403(b). Your employer will forward the contribution to the investment company on your behalf.

*Important- You MUST establish an account with your selected provider prior to the date you begin the Salary Reduction. If the account has not been properly established, your contributions will be returned to you and will be taxable. Verifying that account has been established before submitting the SRA will expedite the process and help to avoid having funds returned to you.

What are the investment options in a 403(b) Plan?

As a participant in a 403(b) plan, you may need to choose among different types of investments. Typically, 403(b) plans offer two types of investment products – annuities and mutual funds.

An annuity is a contract between you and an insurance company that requires the insurer to make payment to you, either immediately or in the future. There are three basic types of annuities:

Fixed annuity.

The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments. Fixed annuities are regulated by state insurance commissions. Please check with your state insurance commission about the risks and benefits of fixed annuities.

Variable annuity.

The insurance company allows you to direct your annuity payments to different investment options, usually mutual funds. Your payout will vary depending on how much you put in, the rate of return on your
investments, and expenses. The SEC regulates variable annuities. For more information about their benefits and risks, please read our Investor Bulletin: Variable Annuities – An Introduction.

Indexed annuity.

This annuity combines features of securities and insurance products. The insurance company credits you with a return that is based on a stock market index, such as the Standard & Poor’s 500 Index. Indexed annuities are regulated by state insurance commissions. Please check with your state insurance commission about the risks and benefits of indexed annuities.

Mutual Fund

A mutual fund is the common name for an open-end investment company. Like other types of investment companies, mutual funds pool money from investors and invests the money in stocks, bonds, short-term debt or money market instruments, or other securities. Mutual funds issue redeemable shares that investors buy directly from the fund or
through a broker for the fund.

IMPORTANT! Vendors may use different names for these investment products. After reviewing the vendor’s plan materials, if you are uncertain about what type of investment product a vendor offers, contact the vendor and ask them to explain it to you.

For more information about annuities and mutual funds, please read our descriptions on Investor.gov (annuities,mutual funds).

Things to consider before selecting a provider
First, do not assume that your employer has endorsed any vendor. Neither your employer nor Omni 403b can offer any investment advice or market investment products.

Determining which investment products best meet your financial objectives and identifying a vendor who sells those products is very important. Different vendors sell different types of products, and some vendors only offer a limited number of choices. Before selecting a vendor you should:

  • Read your employer’s 403(b) documents to learn the basic rules for how your plan operates.
  • Read each vendor’s 403(b) plan materials. A vendor’s plan materials generally may include:
    • A background description of the vendor
    • A description of the vendor’s investment products and services, including information related to product fees and past investment performance
    • Information related to the vendor’s fees for administering and operating the 403(b) plan (“vendor fees”), including: brokerage fees, advisor fees, account transfer or closure fees, record-keeping or custodial fees, and general administrative fees
    • Any additional information the vendor may need to provide as required by applicable federal or state laws.
  • Research each vendor’s background, credentials and experience. For tips on researching a vendor registered with the SEC or state securities regulators, please read the SEC’s Investor Bulletin: Top Tips for Selecting a Financial Professional. Vendors that are insurance companies generally register with your state’s insurance commission. For information on how to research insurance companies in your state contact your state insurance commission.
  • Understand how much you’ll pay for the vendor’s investment products and services, including any fees or commissions. Ask each vendor if it provides this information in a simple form that you can easily compare to similar information from other vendors.

You may want to consult with your own stock broker, tax advisor, financial consultant, or insurance agent before making your decision.


Warwick Valley CSD 403(b) Plan Review

Warwick Valley CSD is part of OMNI’s Preferred Provider Program (P3) which allows you to choose your 403(b) provider from a list of pre-selected Providers / Investment Companies.

Who/what is the Omni Group?
OMNI® is a Third-Party Administrator (TPA) of 403(b) plans. They work with your school districts to help ensure compliance with IRS regulations governing the operation of 403(b) plans. OMNI® also helps your employer remit 403(b) contributions to participating service providers. OMNI® is NOT an investment company/ service provider- they do not offer and cannot recommend any specific investment vehicle.

Warwick Valley CSD currently has 15 different Providers listed at OMNI, each with their own account options, pricing structures, fees and investment products for you to sift through.

Generally, Providers offer access to their investment products in three different ways:

  1. Via In-House Professionals:
    The investment products offered by these Providers are accessed through a financial professional. Typically to access an annuity or mutual fund from these Providers you would work with a financial professional that is an employee of the Provider. Most these companies only offer their proprietary investment products.
  2. Via Independent financial professionals:
    The investment products offered by these Providers are accessed through a financial professional like Warwick Valley Financial Advisors. These Providers typically do not sell through in-house employees but rely on independent financial professionals to market their annuities and/or mutual fund products. Independent financial professionals often have relationships and experience with multiple, but not all, Providers.
  3. Direct to Plan Participants (DIY):
    The investment products offered by these Providers generally are accessed directly by plan participants. Typically, participants work directly with these Providers and do not work through a financial professional.

Below, are Warwick Valley’s 15 Providers with links to provider details. We have tried to provide more informative links about each Provider than is currently available on OMNI’s 403(b) Plan Detail page.


PROVIDERProduct TypesROTH eligibleProvider Details
Ameriprise Financial / River Source Annuities
403b provider details
Aspire Financial ServicesMutual FundsROTH eligible403b provider details
403b product review
AXA Equitable 
Life Insurance Company
Annuities
ROTH eligible403b provider details403b product review
Brighthouse Life Ins. / MetLife AnnuitiesROTH eligible403b provider details
Confidential Financial Planning / Multichoice
Mutual Funds
403b provider details
403b product review
Foresters Financial 
(First Investors)

Mutual Funds
ROTH eligible403b provider details
FTJ Fundchoice
Mutual Funds ROTH eligible403b provider details
GWN/Employee Deposit program
Mutual Funds
ROTH eligible403b provider details
Lincoln Investment Planning, Inc. Annuities & Mutual Funds ROTH eligible403b provider details
The Legend Group, Inc / Adserv
Annuities & Mutual Funds
ROTH eligible403b provider details
Lincoln Investment Planning, Inc. Annuities & Mutual Funds ROTH eligible403b provider details
New York Life Ins. & Annuity Corp.
Annuities
403b provider details
Oppenheimer Funds Distributors, Inc Mutual Funds ROTH eligible403b product details
VALICAnnuitiesROTH eligible403b provider details
Voya (formerly ING) AnnuitiesROTH eligible403b provider details

Effective July 1 2014, the following Service Providers are no longer authorized to establish new 403(b) accounts for this plan. Please note, Employees contributing to one of these service providers as of July 1, 2014 may continue their contributions without interruption:
Fidelity Management Trust Co.,   Mass Mutual VA,   MetLife (FC), Paul Revere Insurance Group, Putnam Investments,   T. Rowe Price Trust Co., Vanguard Fiduciary Trust Co.


So how do you choose a 403(b) Provider that’s right for you?

Comparing 15 Providers, analyzing the pricing structures and finding any hidden fees is no small task. But it is essential to make an informed decision because your selection WILL affect your retirement account in the future.

Our 5-step Teachers Shopping Guide is a user-friendly guide that covers many of these topics. Visit our (b)informed blog for more informative 403(b) articles.

There is no cost or obligation to ask a question about your options. Call 845-981-7300.

We can help.

Warwick Valley Financial Advisors aims to help teachers make the most of their money and utilize their finances to live exceptional lives. We’d love to hear from you and provide more information on how we can help with your financial planning whether it be retirement, insurance, student loans, or other important financial matters.

If you’re suffering from the paradox of too much choice, or if you have questions about your plan and the fees you might be paying, please drop us a note.

If you have recently retired or are terminating employment with the Warwick Valley Central School District, then you have some important decisions to make about your investment allocations. Contact us today to get started on your complimentary portfolio review.

I am an independent advisor committed to the fiduciary standard, and I don’t earn commissions from the recommendations that I make to clients.

My firm has agreements with FTJ Fundchoice & Aspire financial who are available on the Warwick Valley CSD Omni Provider list and I offer prospective clients a complimentary portfolio review. This is where we look over your plan, discuss your needs, and identify the investments that are the right fit for you.


Investing in mutual funds and variable annuities involves risk, including possible loss of principal.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

Equity Indexed Annuities (EIAs) are not suitable for all investors. EIAs permit investors to participate in only a stated percentage of an increase in an index (participation rate) and may impose a maximum annual account value percentage increase. EIAs typically do not allow for participation in dividends accumulated on the securities represented by the index. Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Withdrawals prior to 59 ½ may result in an IRS penalty, and surrender charges may apply. Guarantees are based on the claims paying ability of the issuing insurance company.

None of the third party service providers mentioned are affiliated with Private Advisor Group, Warwick Valley Financial Advisors or LPL Financial.

Warwick Valley Financial Advisors and LPL Financial are not affiliated with or endorsed by the Warwick Valley CSD.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

An Independent Review of Aspire Financial 403(b) retirement plan platform

Dear Reader,

If you are like many school district employees, there is a good chance you are using a 403(b) plan as a supplement to your pension in order to build a healthier retirement.  Many of you probably signed up with a sales rep or agent that came to visit your school offering their proprietary product. Perhaps they bought you lunch in the teacher’s lounge and gave a short presentation about the 403(b) basics. You listened and absorbed as much as you could, but there is a chance that all your other provider options were not fully presented to you.

Aspire does not employ or compensate a sales staff to go into school districts and solicit participants. Aspire mainly derives new business by either a participant contacting them directly or through independent investment advisors, so many school district employees probably have never had a chance to learn about the benefits of using Aspire Financials’ 403b platform.

This is a detailed review of Aspire Financial, a lesser known 403(b) retirement plan provider.  If you work in a K-12 school district with a 403(b) option, there is a chance you have access to Aspire Financial on your district’s 403(b) provider list. 

About this Review

The world of investments can be intimidating, but really it’s like any other shopping experience.  You want to compare prices and features and understand exactly what you’re buying. This review will help you do that.

My goal is to make my review of this company platform as impartial and objective as possible. The review will cover the following information on Aspire Financial:

How will this product review help you?

In this review you will:

  • Learn about a lesser known provider that may be an available option at your school district.
  • Familiarize yourself with the advantages of an open architecture structured 403b plan  
  • Make you aware of one of few “do it yourself” retirement plan options that could help you reduce your fees and expenses vs. other advisor directed plans.
  • Understand how to compare this product’s fees, features, and benefits against other available 403(b) investments options to determine if it is priced competitively.

About Me

For readers who have found my website and don’t know much about me, I am a fee-only financial planner held to the Fiduciary Standard . I am legally obligated to make recommendations that are in the best interest of my clients. I’m also on a mission to inform teachers and other school district employees about the companies and products that are offered in the 403b marketplace. I have clients that use this company & I am a financial advisor who is approved to manage accounts at this Aspire Financial. 

Legal Disclosure

This is a review, not a recommendation to buy or sell a mutual fund or variable annuity. Aspire has not endorsed this review in any way, nor do I receive any compensation for this review. This review is meant to be an independent review at the request of a client so they can see my perspective when breaking down the positives and negatives of this an open architecture platform company.  Before purchasing any investment product, be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances.

This information was gathered from Aspire Financial’s website and is not a substitution for individual tax or legal advice. I’m just reporting on the main facts; to find answers specific to your situation may require a review of the full plan for applicable details.

Let’s get started.


Aspire Financial 403(b)(7) Plan Review

Platform Overview

Aspire Financial is a company that offers a multi-fund family platform in the 403b marketplace.   Aspire is an open-Architecture retirement recordkeeping platform currently acting as a provider in over 3,500 school districts in the United States.  They have been in the 403(b) marketplace since 2012.

Product NameAspire Financial 403(b)(7)
Type of productMutual Funds
Platform TypeOpen Architecture
Phone Number866-634-5873
Websitewww.aspireonline.com

Investment Options Overview

Aspire is one of the few companies that offers an open architecture mutual fund program which allows plan participants to manage their own accounts or to work with the advisor of their choosing, the investments of their choosing, and money managers or investment strategists of their choosing.

Aspire Financial offers a wide range of investment options inside their platform. Investors have access to over 10,000 investment options including numerous equity and fixed income portfolios as well as various risk based asset allocation and target date portfolios.

They offer access to thousands of no-load, no-transaction fee mutual funds on their 403(b) FundSourceSM program.  Participants can customize the 403(b) FundSourceSM program to construct an investment portfolio based on your needs or overall financial plan. At any time, you may request to add (or delete) funds to your account based on availability at the 403(b) FundSourceSM custodian.

Aspire gives you access to some of the leading mutual fund families such as:

Vanguard, Fidelity, Blackrock, Invesco, DFA, American, MFS, Oppenheimer, PIMCO, Franklin Templeton and  T Rowe Price (500 in total)

They also offer a guaranteed interest option and professional money management.

Mutual Funds – FundsourceSM
Prudential Guaranteed Interest Option*
Professional Money Management
Aspire makes available a selection of more than 10,000 mutual funds from over 500 fund families.
This includes those share classes available from the associated fund family. Some funds may require certain minimum contribution levels in order to meet institutional share class availability. Aspire does not have proprietary mutual funds.
Aspire partnered with Prudential to develop an unallocated fixed-annuity that trades like a mutual fund. All money receives the same rate of return, making it easier for a participant to understand the crediting rate.
There are no transfer restrictions associated with the option. There are also no surrender charges. The option is not available in every state and is only offered through advisors who are insurance-licensed and have an appointment with Prudential.
*May not be available in all states.
By using third-party investment managers (Strategists), participants—and, if applicable, their advisors—are able to select from portfolios designed by professionals, instead of picking individual funds. The money manager is responsible for monitoring the performance and rebalancing or changing funds to help meet the performance objective.

Fees & Expenses

Direct fees vs. Indirect fees

When working with Aspire or other custodial brokerage firms you will encounter administration fees and costs that are assessed to your account which will be direct as well as indirect. Direct fees are the contractual fees that are visible to the plan participants and generally include an annual custody fee and a participant fee charged by Aspire. Indirect fees are fees charged by the mutual fund families that are netted against the value of that you have invested in each investment fund as part of the funds overall expense ratio and are not visible to you the participant. So your fees may differ from other participants depending on multiple factors.

Direct Fees:

Administration Custodial fee:  0.15% 
Aspire charges a custody fee of 15 basis points (0.15%) of the account value annually for its recordkeeping services. These fees are assessed against the participant’s accounts monthly.

In most cases, up to $20 of the account fee is used to offset some or all the
TPA’s fees.

Other Applicable, Transparent Plan & Participant-Level Fees:

  • $100 loan initiation
  • $75 per distribution processing
  • $10 recurring distributions
  • $25 check replacement
  • Surrender fees: None

Indirect Fees:

Underlying Portfolio Operating Expenses: 
This is another ongoing fee charged for the investments inside of the mutual funds. The internal expenses of mutual funds range from 0.05% to 2.09%.

Investment Expense
Reflected in the mutual funds selected.

Withdrawal Charges: 
Some share class mutual funds may have surrender charges. Please check each funds prospectus for more details.

Professional Money Management//Strategist Services
If you choose to use money managers, fees specific to the strategist are deducted from participant account balances.

Features & Benefits of Aspire Financial 403(b)

Plan Benefits:

  • Traditional and Roth for 403(b) and 457 are available
  • Loans available up to  50% of your account value  with a $50,000 maximum
  • Third-Party Money Manager services are available
  • Participants can enroll directly and invest at their own direction, or work with an advisor of their choice. (see more on Self-Directed or Advisor-Directed below)

Investment Benefits:

  • No proprietary fund requirements
  • A guaranteed interest option is available, without surrender charges or restrictions
  • Dollar cost averaging

Fee Benefits:

  • Transparent fee structure
  • 403(b)7 custodial account platform offers access to low-cost mutual funds

Customer Service Benefits:
A wide range of account and investment data is available on Aspire’s website, including links with prospectus, annual reports, semi-annual reports, and SAI.

  • Within online accounts, participants have links to educational videos, FAQs, white papers, and several calculators from S&P and other sources.
  • Links to Morningstar® reports a leading fund analysis source
  • Rebalance investments based on new investment election percentages.
  • Required Minimum Distribution Services
  • Customer Service Support – Representatives are available Monday – Friday, 8:00 a.m. – 8:00 p.m.
  • Paper statements are mailed quarterly; however, statements can be accessed at any time and for custom time periods via this portal.

Self-Directed vs Advisor Directed Option:

Self-Directed Account Option

Many investors feel comfortable putting their investment decisions in their own hands. Self-directed brokerage accounts enable the participant to set up, pick funds and manage their account without an advisor. Being a self-directed investor has its advantages, as it allows you to take more control over your money.

More control begets two main benefits:

  1. Lower costs — investors who use to use self-directed option avoid any advisory fees that might be charged when working with a financial professional on Aspire’s platform. Also participants can choose from hundreds of no-load, lower-cost mutual funds choices that are available.
  2. Fewer conflicts — Hiring a financial advisor could invite conflict of interest. Many advisors are paid more to sell certain products that carry higher fees. Some less ethical advisors will steer you toward products where they get the largest commission when you invest in them. Self-directed investors eliminate many of the conflicts of interest that can work against them.

Advisor-Directed Account Option

If the participant chooses to work with an advisor, they should be aware of the various ways in which the adviser can be compensated. When working with an advisor or Registered Rep there are a few layers of fees that you will need to be aware of.

  1. Direct Fees: Aspire’s fees are still the same.  0.15% fee on assets & $40 a year.
  2. Indirect Fees: Investment fees will be the same. An expense ratio is the cost investment mutual fund companies charge investors to manage a mutual fund. The expense ratio represents all of the management fees and operating costs of the fund.
  3. Advisor / Sales Rep Compensation: Aspire 403(b) accounts can be set up and managed by Registered Reps or Investment Advisor Reps.  The way advisors are paid can lead to some big differences between the two and the services you receive from them.
    • Commission-based advisors: Advisors on Aspire’s platform that are paid by commission receive their compensation from their clients purchasing mutual funds with a “load”. A load fund is a mutual fund that comes with a sales charge or commission. The fund investor pays the load, which goes to compensate a sales intermediary, such as a broker, financial planner or investment advisor, for his time and expertise in selecting an appropriate fund for the investor. For a commission-based advisor, the more transactions they complete or the more accounts they open, the more they get paid.  Participants should familiarize themselves with the various Mutual Fund share classes that Aspire offers. Each share class differs in what type of load or compensation their advisors will receive up-front & in the future
    • Fee-based advisors: Fee-only financial planners are registered investment advisors with a fiduciary responsibility to act in their clients’ best interest. They do not accept any fees or compensation based on product sales. Fee-only financial advisors are paid directly by clients for their services, be it a flat fee, hourly rate or a percentage of assets under management, typically around 1% of a client’s portfolio’s value each year.

Advantages Of Aspire Financial 403(b)

  • Aspire has one of the most extensive open architecture platforms in the 403b marketplace.
  • Retirement investors can select their own mutual fund investment or work with the assistance of a Financial Advisor Representative.
  • Aspire has some industry leading technology that enables you the manage your retirement account through their web-based platform.
  • Very competitive fee structure vs other providers (0.15% custodial fee & $40 annual maintenance fee)
  • Whatever your investment philosophy,  passive index investing  to socially responsible investing  Aspire provides funds that could potentially fit your needs?

Disadvantages

  • Aspire’ customer service may be slower than some participants expectations and what they may be accustomed to with providers.
  • As an example, processing time for opening a new account is 7 – 10 business days.
  • Having to choose from mutual funds with multiple loads schedules can be confusing. Make sure you read each mutual fund’s prospectus that you plan on investing in in order to understand the load & fees of each fund
  • If you chose to “do it yourself” be aware that you will need to build knowledge regarding investing, spend time managing your own account & hopefully have the desire to do this on your own.

Conclusions on The Aspire Financial 403(B)

Let’s recap:

Aspire Financial is a company that offers one of the most diverse multi-fund family platforms in the 403b marketplace.

Aspire is one of the few companies that offers an open architecture mutual fund program which allows plan participants to manage their own accounts or to work with the advisor of their choosing, the investments of their choosing, and money managers or investment strategists of their choosing.

Selecting a 403b provider that only sells their proprietary products may not offer all the financial products a client needs or that are in a client’s best interests. Open architecture makes it possible for investors and their advisors to select the best funds available and obtain the best potential investment performance given their needs and risk tolerance. Open architecture also helps investors obtain better diversification and possibly reduce risk by not placing their entire future investment returns in the hands of a single investment firm and its approach.

Many companies offer school district employees their proprietary mutual fund products but if the participant is unhappy with any component (fee/performance) of the plan, it is forced to close their accounts and transfer to another vendor.

At Aspire you have access to 500 different families of mutual funds so there is a good chance that you can invest in  the same funds that is being offered at any of the other 403b companies and possibly at a lower cost.

Things to consider about this company’s platform:

Avoidable vs un-avoidable fees:

  • Aspire’ unavoidable fees are their custodial fees charged by Aspire are 0.15% of your account value. $40 annually
  • Other unavoidable fees are the investment fund fees, but these will vary depending on which funds are selected. Aspire gives you access to some of the lowest cost funds available in the industry, so do your homework.
  • If you choose to work with an advisor, then there is a good chance there will be an additional fee which is negotiable with would be negotiated between you and the advisor.  Aspire has no policy for determine what advisers charge for there services.
  • There are no Surrender Charges to leave Aspire’s platform but some funds may have surrender charges.
  • No death benefit fees are charged on any on the investment options on the platform.

When this investment might make sense:

If you don’t currently use Aspire Financial or another open architecture platform now may be a good time to take a look and evaluate these types of companies to see if they would be a good fit for your long-term goals.  If you are interested in a more detailed analysis specific to your situation, feel free to contact me.

THANK YOU

Thanks for reading this review. It’s always satisfying for me to provide some clarity on how they really work.

If you have an annuity or other financial product you’d like to see an in-depth review on just let me know,  I’d be happy to take a stab at it. If you know a teacher or someone who is thinking about an annuity and might benefit from this post, feel free to forward it on to them via email. If you have a Facebook account, one of the best ways to spread this message around is by “sharing” the post by using the Facebook icon below (it’s a blue square with a white F on it).

Thanks again for reading, and as always, if you have any questions or would like to have your retirement portfolio reviewed, don’t hesitate to reach out and schedule your no-obligation consultation.


None of the third parties referenced in this communication are affiliated with Warwick Valley Financial Advisors, Private Advisor Group or LPL Financial. 

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. 

No investment strategy, including asset allocation and diversification, assures a profit or protects against loss.

Mutual fund investing involves risk, including possible loss of principal. 

The target date is the approximate date when investors plan to start withdrawing their money.  The principal value of a target fund is not guaranteed at any time, including at the target date.

4 Questions Teachers Should Ask a Financial Advisor

Both public and private school teachers have special financial considerations that a high-quality financial advisor should address and incorporate into a financial plan for their clients. But is this happening?

Below are 4 questions that teachers should ask when they are choosing a financial advisor.

1. Are you a fiduciary? What are your certifications?

Your very first question should determine whether the financial advisor you are considering has a fiduciary responsibility to you. Simply put, fiduciaries must place your interests above their own, rather than providing recommendations that will make the “advisor” the most money. Fiduciaries must disclose any conflicts of interest and make a good faith effort to provide all relevant information to aid you in making your financial decisions.

Believe it or not, not everyone who calls themselves a financial advisor follows a fiduciary standard. Consider working with a financial advisor who is in fact a fiduciary.

Financial advisors with fiduciary obligations are held to a higher standard than the financial professionals who are required to meet only the “suitability” standard, which only obligates them to provide “suitable” recommendations that match the client’s general needs and risk profile, rather than acting in the client’s best interest.

Some insurance agents, broker-dealers and personal bankers must only meet the suitability standard. A financial advisor with an advisory relationship with you can help you determine your insurance and investment needs, and as a fiduciary, is obligated to act solely on your best interest.

You should also find out the certifications of the financial advisor with whom you are considering working.

2. What financial planning services do you provide?

Many financial advisors provide a range of financial services beyond investment management, including retirement and estate planning, tax and insurance advice, and budgeting and cash flow recommendations.

You should also ask whether the financial advisor you are considering has advised teachers before. In particular, retirement planning is a particularly salient issue for teachers, who are unique in being one of few careers that still pays pensions to retirees after they have completed a certain number of years of service and reached retirement age. Financial advisors who specialize in working with teachers and school district personnel can personalize your overall financial plan in the context of a teacher’s financial needs, life goals and income and spending projections.

In New York, most public school teachers are part of either the New York State Teachers Retirement System or the New York City Teachers Retirement System, meaning teachers contribute a small percentage of their salary to the pension plan in return for receiving a guaranteed monthly income upon reaching retirement age.

Financial advisors can also advise teachers on their 403(b) retirement account investment options and contribution rates, as well as provide guidance on how much, if any, the client should also consider contributing to a traditional or Roth IRA.

Experienced advisors will also be able to advise teachers on other financial considerations, including potential tax deductions for student loan interest, national and state loan forgiveness programs and deductions for unreimbursed classroom expenses.

3. What are your fees and expenses?

Financial advisory firms differ in how they charge clients, but a good financial advisor will not make this process difficult to understand and will readily answer any questions you have about management and advising fees.

In many instances, you will pay either a fixed fee as a dollar amount or as a percentage of your assets invested with the firm. Some firms might charge a retainer fee for ongoing access to a financial advisor in addition to charging clients for portfolio management.

Be sure you understand what you will be charged and how often.

For every financial planning firm that you consider, you should understand which services you will be able to access. There may be a tiered system for services, such that you will have more access to guidance or contact with your financial advisor if you pay for a higher tier service. These more extensive services may be more extensive than you need, or they may be useful to you, especially if you would prefer regular feedback on your financial plan.

For example, will you just receive investment advice or portfolio management, or will your fees cover other financial services? Advisors differ on the services they offer, but these other domains could include estate plan suggestions, retirement projections and insurance needs assessments.

One of the advantages of working with a financial advisor who has a fiduciary duty to advisory clients is that they often provide competitive and negotiable fees for services for you when they are recommending an investment. In a brokerage relationship, clients typically pay a commission on each transaction in the account.

You can use a pre-written outline that I’ve created on my website to get this conversation started. That resource can be found here.

4. What is your investment and financial planning philosophy?

Finally, the best financial advisors are aware of the limitations of planning – namely, that the future is impossible to predict, and no plan can be perfect. However, different advisors have different philosophies on how they approach the overall process of preparing financially for the future.

Clients should also consider their own investment philosophy and the degree of risk they are willing to incur as they explore potential financial advisors.

The client’s own investing preferences should match the approach used by the financial advisor he or she decides to work with.

Conclusion

Approaching a prospective financial advisor or financial-advisory firm might seem intimidating, but reputable advisors should be happy to answer your questions about their process and the services they provide.

In an industry based heavily on the strength of a financial advisor’s reputation for providing high-quality services, it is in the advisor’s best interest to understand your needs, and both the client and the advisor should communicate their expectations clearly to ensure that they will be a good fit for each other for years to come.

Warwick Valley Financial Advisors is a comprehensive financial-services firm that specializes in wealth management for teachers, school district executives and their families. Contact me directly to see how we can help you.

Monroe-Woodbury 403b Plan Review

Monroe-Woodbury CSD 403(b) Plan Review

Before You Sign On The Dotted Line, Do Your Homework

A 403(b) plan can be an excellent way to save money for retirement. It can serve as a supplement to your NYSTRS pension plan. But choosing the right 403(b) retirement plan can be overwhelming especially if you work in a school district.

In this article, we aim to provide a comprehensive overview of Monroe-Woodbury CSD’s 403(b) Plan & Provider options. The article is broken into two parts:

1403(b) BASICS
Click and expand these sections below to learn more about each topic.

2403(b) PLAN REVIEW
Monroe-Woodbury’s 403(b) providers and their products.

Let’s get started!


403(b) BASICS

What is a 403b plan?

A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan provided by certain employers. Employers such as public educational institutions (public schools, colleges and universities), certain non-profits, and churches or church-related organizations may offer 403(b) plans.

Similar to 401(k) plans, 403(b) plans allow you to contribute pre-tax money from your paycheck to your 403(b) plan to invest in certain investment products.

The 403(b) is named after the section of the IRS code governing it.

How does a 403(b) plan work?

School district employees make contributions to a 403(b) on a pre-tax basis through a Salary Reduction Agreement.

This is an arrangement where the participating employee agrees to take a reduction in salary. The amount by which the salary is reduced is directed to investments offered through the employer and selected by the employee. These contributions are called elective deferrals and are excluded from the employee’s taxable income.

These pre-tax contributions and any investment earnings will not be taxed until you withdraw the money, typically after you retire.

What are the benefits to contributing to a 403(b) plan?
There are three main benefits to contributing to a 403(b) plan.

  • The first benefit is that you don’t pay income tax on allowable contributions until you begin making withdrawals from the plan, usually after you retire. Allowable contributions to a 403(b) plan are either excluded or deducted from your income. However, if your contributions are made to a Roth contribution program, this benefit doesn’t apply. Instead, you pay income tax on the contributions to the plan but distributions from the plan (if certain requirements are met) are tax free.
  • The second benefit is that any earnings and gains on amounts in your 403(b) account aren’t taxed until you withdraw them. Any earnings and gains on amounts in a Roth contribution program aren’t taxed if your withdrawals are qualified distributions. Otherwise, they are taxed when you withdraw them.
  • The third benefit is that you may be eligible to take a credit for elective deferrals contributed to your 403(b) account.
Contribution & Catchup Limits

Participants may contribute up to $19,000 for 2019.

Participants age 50 and older at any time during the calendar year are permitted to contribute an additional $6,000 in 2019, for a total of $25,000.

Also the plan offers the 15-years of service catch-up provision. Employees with 15 years of service with their current employer and an annual average contribution of less than $5,000 per year are eligible for an additional $3,000 contribution per year up to a lifetime maximum catch up of $15,000. This is known as the 15-year rule.

Source: Omni 403b

Catch-ups under the Plan

  • 15 Years-of-Service Catch-up Elective Deferral Contributions: Yes
  • Age 50 Catch-up Elective Deferral Contributions: Yes

Contributions to the Plan

  • Direct Rollovers Into the Plan: Yes
  • Employer Contributions Allowed: Yes
  • Employer Post Severance Contributions Allowed: Yes
  • Exchanges Within the Plan: Yes
  • Roth Contributions: Yes

Other Plan Transactions

  • Hardship Distributions: Yes
  • In-service Distributions After Age 59-1/2: Yes
  • In-service Distributions From Rollover Accounts: Yes
  • Loans: Yes
  • Permissive Service Credit Transfers: Yes
  • Plan-to-Plan Transfers To the Plan: Yes
  • Plan-to-Plan Transfers From the Plan: Yes
Roth Contributions Available

MWCSD allows Roth 403(b) Contributions. Roth contributions are deferred from paychecks to investment accounts on an after-tax basis, as opposed to Traditional 403(b) which are deferred on a pre-tax basis.
The Roth 403(b) offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Withdrawals prior to age 59 ½ or prior to the
account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth accounts.

For more details read: The Roth 403(b)

Note: Roth 403(b) accounts are not available from all P3 Providers. Please review the information listed on the Monroe-Woodbury CSD 403(b) Providers page for providers that show “403(b) Roth Account Available” after the provider name where applicable, then follow the Enrollment Steps to begin participation.

How do I enroll in the plan and start contributions?
To enroll in a 403(b) Retirement Plan, you must do 3 things:

  1. Select the provider you wish to invest with from the OMNI’s list of approved providers on its Web site.
    Employees should contact each provider for information about the 403(b) products and services it offers. This is often the biggest and most important hurdle!
  2. Establish an account with your chosen provider. Application forms can be obtained from the representative of, or the investment provider you select. The application is submitted to the investment provider for processing.
  3. Make contributions by completing the “OMNI Salary Reduction Agreement” (SRA) form*, which authorizes OMNI to withhold the amount you elect to contribute to your 403(b) via payroll deduction. The Omni SRA
    form is used to establish, change, or cancel salary reductions withheld from your paycheck and contributed to the 403(b). Your employer will forward the contribution to the investment company on your behalf.

*Important- You MUST establish an account with your selected provider prior to the date you begin the Salary Reduction. If the account has not been properly established, your contributions will be returned to you and will be taxable. Verifying that account has been established before submitting the SRA will expedite the process and help to avoid having funds returned to you.

What are the investment options in a 403(b) Plan?

As a participant in a 403(b) plan, you may need to choose among different types of investments. Typically, 403(b) plans offer two types of investment products – annuities and mutual funds.

An annuity is a contract between you and an insurance company that requires the insurer to make payment to you, either immediately or in the future. There are three basic types of annuities:

Fixed annuity.

The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments. Fixed annuities are regulated by state insurance commissions. Please check with your state insurance commission about the risks and benefits of fixed annuities.

Variable annuity.

The insurance company allows you to direct your annuity payments to different investment options, usually mutual funds. Your payout will vary depending on how much you put in, the rate of return on your
investments, and expenses. The SEC regulates variable annuities. For more information about their benefits and risks, please read our Investor Bulletin: Variable Annuities – An Introduction.

Indexed annuity.

This annuity combines features of securities and insurance products. The insurance company credits you with a return that is based on a stock market index, such as the Standard & Poor’s 500 Index. Indexed annuities are regulated by state insurance commissions. Please check with your state insurance commission about the risks and benefits of indexed annuities.

Mutual Fund

A mutual fund is the common name for an open-end investment company. Like other types of investment companies, mutual funds pool money from investors and invests the money in stocks, bonds, short-term debt or money market instruments, or other securities. Mutual funds issue redeemable shares that investors buy directly from the fund or
through a broker for the fund.

IMPORTANT! Vendors may use different names for these investment products. After reviewing the vendor’s plan materials, if you are uncertain about what type of investment product a vendor offers, contact the vendor and ask them to explain it to you.

For more information about annuities and mutual funds, please read our descriptions on Investor.gov (annuities,mutual funds).

Things to consider before selecting a provider
First, do not assume that your employer has endorsed any vendor. Neither your employer nor Omni 403b can offer any investment advice or market investment products.

Determining which investment products best meet your financial objectives and identifying a vendor who sells those products is very important. Different vendors sell different types of products, and some vendors only offer a limited number of choices. Before selecting a vendor you should:

  • Read your employer’s 403(b) documents to learn the basic rules for how your plan operates.
  • Read each vendor’s 403(b) plan materials. A vendor’s plan materials generally may include:
    • A background description of the vendor
    • A description of the vendor’s investment products and services, including information related to product fees and past investment performance
    • Information related to the vendor’s fees for administering and operating the 403(b) plan (“vendor fees”), including: brokerage fees, advisor fees, account transfer or closure fees, record-keeping or custodial fees, and general administrative fees
    • Any additional information the vendor may need to provide as required by applicable federal or state laws.
  • Research each vendor’s background, credentials and experience. For tips on researching a vendor registered with the SEC or state securities regulators, please read the SEC’s Investor Bulletin: Top Tips for Selecting a Financial Professional. Vendors that are insurance companies generally register with your state’s insurance commission. For information on how to research insurance companies in your state contact your state insurance commission.
  • Understand how much you’ll pay for the vendor’s investment products and services, including any fees or commissions. Ask each vendor if it provides this information in a simple form that you can easily compare to similar information from other vendors.

You may want to consult with your own stock broker, tax advisor, financial consultant, or insurance agent before making your decision.


Monroe-Woodbury CSD 403(b) Plan Review

Monroe-Woodbury is part of OMNI’s Preferred Provider Program (P3) which allows you to choose your 403(b) provider from a list of pre-selected Providers / Investment Companies.

Who/what is the Omni Group?
OMNI® is a Third-Party Administrator (TPA) of 403(b) plans. They work with your school districts to help ensure compliance with IRS regulations governing the operation of 403(b) plans. OMNI® also helps your employer remit 403(b) contributions to participating service providers. OMNI® is NOT an investment company/ service provider- they do not offer and cannot recommend any specific investment vehicle.

Monroe-Woodbury currently has 24 different Providers listed at OMNI, each with their own account options, pricing structures, fees and investment products for you to sift through.

Generally, Providers offer access to their investment products in three different ways:

  1. Via In-House Professionals:
    The investment products offered by these Providers are accessed through a financial professional. Typically to access an annuity or mutual fund from these Providers you would work with a financial professional that is an employee of the Provider. Most these companies only offer their proprietary investment products.
  2. Via Independent financial professionals:
    The investment products offered by these Providers are accessed through a financial professional like Warwick Valley Financial Advisors. These Providers typically do not sell through in-house employees but rely on independent financial professionals to market their annuities and/or mutual fund products. Independent financial professionals often have relationships and experience with multiple, but not all, Providers.
  3. Direct to Plan Participants (DIY):
    The investment products offered by these Providers generally are accessed directly by plan participants. Typically, participants work directly with these Providers and do not work through a financial professional.

Below, are Monroe-Woodbury’s 24 Providers with links to provider details. We have tried to provide more informative links about each Provider than is currently available on OMNI’s 403(b) Plan Detail page.


PROVIDERProduct TypesROTH eligibleProvider Details
American CenturyMutual FundsROTH eligible403b provider details
Ameriprise Financial / River Source Annuities
403b provider details
Aspire Financial ServicesMutual FundsROTH eligible403b provider details
403b product review
AXA Equitable 
Life Insurance Company
Annuities
ROTH eligible403b provider details403b product review
Brighthouse Life Ins. / MetLife AnnuitiesROTH eligible403b provider details
Confidential Financial Planning / Multichoice
Mutual Funds
403b provider details
403b product review
Faculty Services Corp
Annuities & Mutual Funds
ROTH eligible403b provider details
Foresters Financial 
(First Investors)

Mutual Funds
ROTH eligible403b provider details
FTJ Fundchoice
Mutual Funds ROTH eligible403b provider details
GWN/Employee Deposit program
Mutual Funds
ROTH eligible403b provider details
Lincoln Investment Planning, Inc. Annuities & Mutual Funds ROTH eligible403b provider details
Mutual Inc/Plan Member Services Corporation Annuities & Mutual Funds ROTH eligible403b provider details
New York Life Ins. & Annuity Corp.
Annuities
403b provider details
Oldham Resource Group
Mutual Funds
ROTH eligible403b provider details
Oppenheimer Funds Distributors, Inc Mutual Funds ROTH eligible403b product details
Primerica Financial Services
Mutual Funds
ROTH eligible403b provider details
Security Benefit Annuities & Mutual Funds ROTH eligible403b provider details
TEG Federal Credit UnionAnnuities & Mutual Funds
403b provider details
The Legend Group, Inc / Adserv
Annuities & Mutual Funds
ROTH eligible403b provider details
Thrivent Financial for LutheransAnnuities & Mutual Funds
403b provider details
VALICAnnuitiesROTH eligible403b provider details
Voya (formerly ING) AnnuitiesROTH eligible403b provider details
Waddell & Reed, IncMutual Funds403b provider details

Effective July 1 2012, the following Service Providers are no longer authorized to establish new 403(b) accounts for this plan. Please note, Employees contributing to one of these service providers as of July 1, 2012 may continue their contributions without interruption:
Cadaret, Grant & Co., Capital Bank & Trust, Diversified Investment Advisors, Fidelity Management Trust Co., Mass Mutual VA, MetLife (FC), Phoenix Home Life Ins. Co., Putnam Investments, T. Rowe Price Trust Company, Vanguard Fiduciary Trust Co., Wilton Reassurance Life Co of NY


So how do you choose a 403(b) Provider that’s right for you?

Comparing 24 Providers, analyzing the pricing structures and finding any hidden fees is no small task. But it is essential to make an informed decision because your selection WILL affect your retirement account in the future.

Our 5-step Teachers Shopping Guide is a user-friendly guide that covers many of these topics. Visit our (b)informed blog for more informative 403(b) articles.

There is no cost or obligation to ask a question about your options. Call 845-981-7300.

We can help.

Warwick Valley Financial Advisors aims to help teachers make the most of their money and utilize their finances to live exceptional lives. We’d love to hear from you and provide more information on how we can help with your financial planning whether it be retirement, insurance, student loans, or other important financial matters.

If you’re suffering from the paradox of too much choice, or if you have questions about your plan and the fees you might be paying, please drop us a note.

If you have recently retired or are terminating employment with the Monroe-Woodbury School District, then you have some important decisions to make about your investment allocations. Contact us today to get started on your complimentary portfolio review.

I am an independent advisor committed to the fiduciary standard, and I don’t earn commissions from the recommendations that I make to clients.

My firm has agreements with FTJ Fundchoice & Aspire financial who are available on the Monroe-Woodbury Omni Provider list and I offer prospective clients a complimentary portfolio review. This is where we look over your plan, discuss your needs, and identify the investments that are the right fit for you.


Investing in mutual funds and variable annuities involves risk, including possible loss of principal.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Warwick Valley Financial Advisors and LPL Financial are not affiliated with or endorsed by the Monroe-Woodbury CSD.

403b podcast

Podcast: Bruce McNutt and Ken Ford discuss 403b’s

Ken Ford and Bruce McNutt discuss 403(b) plans. This podcast is for teachers, superintendents, and teachers union reps.

Links mentioned in podcast:
Model Disclosure Form

AXA annuity review

Sources for statistical data:

1. AON Hewitt – How 403(b) Plans are Wasting Nearly $10 Billion Annually, and What Can Be Done to Fix It.  January 2016
2. AXA Equitable Life Insurance Company is the #1 provider of retirement plans for K-12 schools, serving more than 820,000 participants in over 17,000 plans.” from AXA annuity review
3. “Your variable annuity has a mortality and expense risk charge at an annual rate of 1.25%”
4. “On average Vanguard have mutual funds with fees at .1% – .2%…”

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

Mutual fund investing involves risks, including the loss of principal.

S&P 500 Index is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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An Independent Review of: The AXA EQUI-VEST® (Series 201) contract for employer-sponsored 403(b) retirement plans

Dear Reader,

This is a detailed post about a popular 403(b) annuity product. As a participant in a 403(b) account, you have the choice to invest in either mutual funds or annuities. If you work in K-12 school and participate or plan to participate in a 403(b), there is a good chance you may get pitched the AXA EQUI-VEST variable annuity. In 2017, the North American Securities Administrators Association listed “variable annuity sales practices” as one of its top investor threats. If you own this annuity, or you’ve been pitched this by an agent/advisor and want an independent, objective review—then you’re in the right place.

For readers who have found my website and don’t know much about me, I am a fee-only financial planner held to the Fiduciary Standard. I am legally obligated to make recommendations that are in the best interest of my clients. I’m also on a mission to inform teachers about this commonly available variable annuity.

About this Review

Today I’m going to break down an annuity that is issued by AXA Equitable Life Insurance Corporation. Unlike other fee-only planners, I find that some annuities may be a part of a comprehensive financial plan when used correctly. My goal is to make my review of annuities as impartial and objective as possible.

This independent review will cover the following information on the AXA Equi-Vest Annuity:

  • Product type
  • Investment Options
  • Contribution Limits
  • Fees
  • Benefits
  • Features
  • Advantages
  • Disadvantages
  • Conclusions/Opinion

How will this AXA annuity product review help you?

If you are like many school district employees, there is a good chance you are using a 403(b) plan as a way to supplement your pension in order to build a healthier retirement. Many of you probably signed up with a sales rep or agent that came to visit your school. Maybe they bought you lunch in the teacher’s lounge and gave a short presentation about the basics of the 403(b) plan. You listened and absorbed as much as you could, but there is a chance that some of the facts were not fully understood during the sales process.

The world of investments can be intimidating, but really it’s like any other shopping experience. You want to compare prices and features, and understand exactly what you’re buying. This review will help you do that.

In this review you will:

  • Learn facts/information you need to know about one of the most popular products being sold in school districts around the country today so that you can decide whether or not it is a good fit for you.
  • Get familiar with the various types of fees so that you’ll know exactly what you’ll be charged by the AXA Equi-Vest variable annuity.
  • Understand how to compare this product’s fees, features, and benefits against other available 403(b) investments options in order to determine whether this product is reasonably priced.
  • Gain a much clearer sense of whether this annuity fits your individual savings needs so that you can make an informed decision.

LEGAL DISCLOSURES

This is a review, not a recommendation to buy or sell a variable annuity. AXA has not endorsed this review in any way, nor do I receive any compensation for this review. This review is meant to be an independent review at the request of a client so they can see my perspective when breaking down the positives and negatives of this particular annuity model. Before purchasing any investment product, be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances.

This information was gathered from their prospectus dated May 1st 2018 and is not a substitution for individual tax or legal advice. I’m just reporting on the main facts; to find answers specific to your situation may require a review of the full prospectus for applicable the details.

So let’s get started.

 

AXA Equitable Life Insurance Company Variable Annuity Review

AXA Equitable Life Insurance Company is the #1 provider of retirement plans for K-12 schools, serving more than 820,000 participants in over 17,000 plans.

The AXA EQUI-VEST® 201 series for 403(b) plan is a deferred annuity contract that is designed for school district employees.

Product NameAXA EQUI-VEST® 201
Type of ProductVariable Annuity
IssuerAXA Equitable Life Insurance Company
Standard & Poor's Rating A+ (Strong)*
Phone Number(800) 628-6673
Websitehttps://us.axa.com

*Standard and Poor’s Rating Service provides ratings which measure the claims-paying ability of an insurer. These ratings are the opinions of an operating insurance company’s financial capacity to meet the obligations of its insurance policies in accordance with their terms.


Product Type:  Variable Annuity

Investment Options:  AXA EQUI-VEST variable annuity offers a wide range of investment options inside this contract. It offers Structured Investment Options (SIO) that enables you to invest for growth with some downside protection for a set period of time. Personal Income Benefit investment options give you the ability to turn your retirement savings into an annual withdrawal benefit. Investors have access to over 80 variable investment options including numerous equity and fixed income portfolios as well as various asset allocation and target date portfolios.

AXA has entered into sub-advisory agreements with Fidelity, Goldman Sachs, Invesco, Ivy Funds, Lazard, MFS, Oppenheimer, PIMCO, Franklin Templeton and Van Eck. (12b1)

Summary of Fees

  • Administration charge: 2% or $30
  • Separate Account Charges: 1.20 % (Mortality & Expense charge 0.95% + other expenses 0.25%)
  • Underlying Portfolio Operating Expenses: 1.03% (average fund expense)
  • Personal Income Benefit Charge: 1%
  • Withdrawal Charges: 5%

If you’re not familiar with variable annuity products and how they work, fees can be confusing to decipher. With a variable annuity, in order to get the investment selection combined with the income options, you pay two types of fees:

  • Fees to the insurance company associated with risk protection
  • Fees associated with the investment funds inside the contract

This is something you want to look very closely at if you are still working and making contributions to your retirement plan. For someone trying to save for a retirement, fees are an important consideration.  Let’s examine each fee and how they stack up against other investment options.

Administration Charge: This fee is charged on the insurance side and it will be the lower of either 2% or $30 of your account value plus any amounts withdrawn. They won’t charge you the $30 fee if your account value is $25,000 or more. This fee is pretty standard for annuity contracts of this nature.

Separate Account Charges: This is what the AXA Variable Annuity calls the M&E or mortality and expense fee at 0.95%, and they add another 0.25% for a total fee of 1.20%. This fee comes right out of your account annually for the life of the investment, whether your investments earn money or not. It compensates the insurance company for the risk it assumes under this particular annuity contract, and it applies to all variable investment options.

This charge is common for variable annuities, but it’s not something you have to pay with all annuities. A variable annuity is the only type of annuity that charges the M&E fee. Mutual funds typically do not charge you this fee.

While 1.20% might not sound like that much, this fee can make a significant difference to the value of your portfolio when you retire. The SEC’s Office of Investor Education and Advocacy has issued bulletins warning investors how much fees can impact the growth potential of a portfolio. While the difference between .25% and 1% might not sound like a lot, assuming a hypothetical investment of $100,000 earning a 4% annual return, in 20 years’ time, that difference could reduce your portfolio by nearly $30,000. That could mean the difference between retiring early or late. Once you do retire, the difference between paying 1% or 2% could mean running out of money sooner.

Underlying Portfolio Operating Expenses: This is another ongoing fee charged for the investments inside of the variable annuity.  Detailed information about these fees can be found by digging through the prospectus. I did that for you. The internal expenses of the sub-accounts for this particular variable annuity range from 0.61% to 2.09% and average around 1.03%.

Personal Income Benefit Charge: This is the charge for Income Rider, an optional fee common for deferred annuities. This fee is charged by the life insurance side to cover the cost of providing the “Personal Income Benefit.” For this benefit, you will pay 1% annually, based on the value of your Personal Income Benefit account. One percent is a pretty standard charge for income riders, but do you need it?

For the younger investor in their 40s or 50s, paying the additional 1 percent for an income guarantee now may not make sense, especially when you consider that the income rider fee is assessed for the life of the policy. I’ll be going into the details when we get to the benefits and features section.

Withdrawal Charges: In addition to all the fees listed above, the AXA Equi-Vest variable annuity also charges a surrender fee (sometimes known as a withdrawal charge). Typically speaking, a surrender fee is only assessed when an investor makes a withdrawal prior to a specified time.

Deferred annuities are long-term contracts and most annuities of this type charge surrender fees during the first 5 to 10 years of the contract. They also typically allow a 10% free withdrawal amount subject to federal income tax withdrawal restrictions.

In this case, AXA charges its contract holders a 5% penalty on any funds withdrawn that exceed the free withdrawal amount, but the duration of this fee starts over when you make a contribution. AXA states in the prospectus: “. . . the amount of the withdrawal charge deducted is equal to 5% of any contribution withdrawn attributable to contributions made within the current and five prior contract years, measured from the date of the withdrawal.”

It’s very common for people to withdraw money from their retirement plans. One in four workers currently in a qualified plan will take some form of an early withdrawal from a 401(k) or similar plan (according to the 17th annual Transamerica Center for Retirement Studies (TCRS) report). One thing to be aware of with this particular annuity is that the surrender charge is based on how long your contributions have been in the contract.

For example, if you are contributing $1,500 a month to your retirement plan, and 10 years into your contract you want to make a small withdrawal to pay off your home, you would have to pay 5% to AXA on any contributions made during the five previous years. Furthermore, withdrawals may “significantly reduce” the future income payments of the Personal Income Benefit for which you’re paying that additional 1%.

There are situations when the withdrawal charge is waived—for example, if you are confined to a nursing home for more than 90 days—and they no longer apply after the completion of 12 contract years.

How do the fees in this particular annuity stack up against the fees inside other investment options? According to one analysis from the independent investment research company Morningstar, the most popular version of the AXA Equi-Vest annuity has total annual operating costs that can range from 1.81% to 2.63%. By contrast, the average investment fees for mutual funds inside a 401(k) retirement plan cost investors 0.88%, according to a 2015 BrightScope report. However, variable annuities offer features and benefits that may not be available with other investment options.  Whether the higher fees make sense for you will depend on your specific needs and situation.


BENEFITS & FEATURES AS ADVERTISED BY THE AXA EQUI-VEST ANNUITY:

Contribution Limits

  • $18,500 / year (same as with a 401(k))
  • $6,000/ year allowed for catch-up contributions if over 50

Features

  • Tax-deferred Growth
  • Guaranteed Death Benefit
  • Personal Income Benefit
  • Structured Investment Option
  • Target Date Allocation Portfolios
  • Guaranteed Investment Option
  • Dollar cost averaging
  • Required Minimum Distribution Services
  • Roth Eligible

HOW IS AXA PAYING THE AGENT?

The salespeople who come out to your workplace and present you with investment options typically earn a sales commission whenever they get someone to buy into their annuity. AXA Equitable pays contribution-based and asset-based compensation to their agents.

Brokers generally receive an up-front commission when they sell a variable annuity.

This annuity also gives the agent commissions based on your contributions.

AXA pays agents 1.5% to 2% commissions on every future dollar you contribute to your 403(b) annuity. This creates ongoing compensation for your broker.

If you’re contributing the maximum 2018 amount of $18,500 to your plan and, if over 50, also taking advantage of $6,000 catch-up contributions, then AXA could be paying as much as $490 a year to your broker.

HOW AN AGENT MIGHT TRY TO SELL YOU THIS POLICY

EQUI-VEST® is a deferred annuity contract issued by AXA Equitable. This product is marketed as a solution to help supplement your retirement income needs. Its benefits include providing for the accumulation of retirement savings via tax-deferred growth. The contract also offers death benefit protection and, as discussed earlier, it offers a Personal Income Benefit for an additional cost.

A variable annuity is a type of deferred annuity, so there are two phases to your contract: the growth phase, and the income phase.

During the growth phase, you can invest on a tax-deferred basis in one or more of AXA’s variable investment options or guaranteed interest options (GIO) or structured investment options (SIO). There is no charge to move among the investment options. The sales agent may also tell you that these investments all benefit from tax-deferred growth.

Here’s what you may not realize:

If you have a 403(b) plan, then you’re already getting tax-deferred growth.  It’s a perk that comes with the plan. Buying this variable annuity or any annuity cannot give you double tax-deferral because there’s no such thing. Furthermore, any investment that you purchase inside your 403(b) account can give you tax-deferred growth.

There is no additional tax benefit to you when you buy this annuity inside a 403(b) or retirement plan.

On AXA’s website it will tell you this:

An annuity contract that is purchased to fund an employer-sponsored retirement savings plan should be done so for the annuity’s features and benefits other than tax deferral. For such cases, tax deferral is not an additional benefit for the annuity.”

AXA also reminds you that you should buy this annuity based on its features and benefits, so let’s take a look at those.


ADDITIONAL BENEFITS AND FEATURES OF THE AXA VARIABLE ANNUITY

The Guaranteed Death Benefit Feature

Variable annuities invest directly in the market, and as such, they can lose money just like stocks and mutual funds. The death benefit is often sold as a way to guarantee that even if the market goes down and your contract loses money, a death benefit would still be paid. In this case, the AXA Equi-Vest variable annuity agrees to pay out your total contributions even if your account takes a terrible market hit.

Here are 3 things to keep in mind:

  • First, the death benefit is only paid out if you die. It does not guarantee that your account won’t lose money.
  • Second, this benefit doesn’t come free. You’re paying for it with the M&E fee we talked about earlier.
  • Third, you really have to ask yourself, what are the chances that you will die during the same year as a big market downturn?

Let’s say hypothetically you’ve contributed $100,000 over a 15-year period, and the investment performance helped it grow to $150,000 over that time period. Then the market takes a turn for the worse and drops by 30%. You basically lose all the returns you’ve gained. You see a $45,000 drop in your total account value, and your new account balance is now $105,000. You have a heart attack and go into the hospital. But you remember you have a death benefit! So, even if you die, you’ve been paying that 1.25% M&E fee all this time to guarantee that your beneficiary (in this case, your spouse,) will still get all the money you paid into this account. Then, you do the math and realize, you’ve only paid in $100,000. Even if you do die, your account didn’t drop below your total contributions, so the death benefit guarantee did not provide any guarantee in this example.

Statistically speaking, the chances of meeting with an untimely death when the market is down AND when you’ve lost a portion of your contributions may be relatively low. Yes, it could happen. But you should consider whether the cost of this feature is worth the potential benefits you could receive.

Case in point: A class action lawsuit brought against Hartford Life on behalf of about 24,000 municipal employees in San Diego County and Los Angeles CA illustrates one potential outcome: The plaintiff’s lawyers asked Hartford Life during the discovery process how much in death benefits the company had paid in the 17 years that both the San Diego and Los Angeles plans had existed. The answer: $119.[1]

Income Rider Benefits: Personal Income Benefit

The Personal Income BenefitSM is a “pension-like” plan benefit, available through the Retirement Gateway® group annuity, which the company says provides guaranteed withdrawal payments and helps employees be more confident about retirement. The Personal Income Benefit investment option is available to plan participants between the ages of 45 and 85.

Annual fee: 1% of the participant’s Personal Income Benefit account value.

Features: The amount of your income withdrawals under this feature will never decrease—unless of course you make early or excessive withdrawals as specified by the contract. 

Benefits: Once your Personal Income Benefit withdrawals start, they continue for as long as you (or you and your spouse) live, even if your Personal Income Benefit account value drops to zero

These are pretty standard features that typically come with most income riders sold on annuities, and you can get them for less cost. What’s different about this annuity is that you remain invested in the stock market even while you are taking income withdrawals, which is why you have those additional fees. Does that mean you get to earn higher returns?

The one rider I analyzed had a 1% fee and it locked in returns at the high-water mark. Some annuities that offer this fee add a guaranteed income base growth rate that typically range from 4.5-5.5% on top of the locked-in watermark. This annuity does not offer that. It locks in your account value at the high-water mark, which is a crediting method based on the highest level attained by the reference index over a given period of time. Says AXA:

The percentage varies depending on the type of contribution (e.g., payroll, rollover, or direct transfer) and the date of the contribution or transfer. The percentage can be as high as 7% and never less than 2.5%.”

For the investor who is age 65 and near the time of retirement, this might give you a layer of protection, but keep in mind that with this type of annuity, you’ll be paying over 2.5% annually just to get this benefit, and these fees negatively impact your return potential.

And speaking of return potential, selecting the income benefit rider will restrict your investment options. Once a contract owner selects a Personal Income BenefitSM, they will be limited to one of these five allocation models:

  • AXA Moderate Growth Strategy,
  • AXA Balanced Strategy,
  • AXA Conservative Growth Strategy,
  • AXA Conservative Strategy, and
  • EQ/AB Dynamic Wealth Strategies.

EQUI-VEST® Structured Investment Options, Target Date Allocation, and Guaranteed Interest Option

AXA also gives you other options if you don’t want to pay the income rider fee. In fact, that’s one thing this annuity does have—a lot of choices.

If you’re looking for protection from market risk, you may select the Structured Investment Option (SIO) available within certain EQUI-VEST variable annuities. The SIO enables you to seek growth, up to a limit, with some downside protection. But how good is the protection?

The EQUI-VEST overview states: “There is risk of substantial loss of principal because you would
agree to absorb all losses to the extent they exceed the protection provided by the SIO at maturity. If you
want a guarantee of principal, you should consider other investment options or products that provide
such guarantees
.”

Okay. So, then you might select a Target Date Allocation Portfolio. This option gives you different investment strategies designed to adjust with you as you move through the phases of your life and become more conservative. Does being more conservative inside this variable annuity mean you won’t lose money right before your retirement date?

Says AXA: “The Target Date Allocation Portfolios are not guaranteed at any time, including the target date.”

How about the Guaranteed Interest Option (GIO)? This offers a guaranteed rate of interest and a guarantee of principal. That might sound good for someone who is nearing retirement and wanting to protect their nest egg. But how much can you protect?

25%. What if you know you need more money than that? Says AXA: “No more than 25% of any contribution can be allocated to the GIO.”

Let’s recap: As a participant in a 403(b) account, you have a choice to invest in either annuities or mutual funds. As previously noted, mutual funds may be less expensive, but do not offer the same features and benefits.

However, in general, variable annuities will add at least 1% in costs just for the M&E fee alone, not to mention the fees for the variable sub-accounts and income riders that can (and often are) added on.  Over time, these additional costs can negatively impact your return potential.

POTENTIAL CONSIDERATIONS

Tax-deferred Growth: One of this annuity’s main advantages is that the investments inside this product give you tax-deferred growth. Investments growing tax-deferred can accumulate and compound untouched by federal, state, or local income taxes until you begin making withdrawals, which is usually after retirement. This is a good thing. But you’re probably already getting this benefit.

All deferred annuities provide tax-deferred growth potential, not just this one. Any investment inside a 403(b), 401(k), IRA, or tax-qualified retirement plan has the potential to grow tax-deferred, even if they aren’t inside an annuity.

A variable annuity in a 403(b) does not give you any additional tax benefits.

Overall Fees: There are additional fees associated with variable annuities that are not found in other types of annuities or mutual funds. If you don’t need the benefits of an annuity at this time, then paying for these fees for the next 10 to 20 years may not be in your best interest. Over time, higher fees can negatively impact your return potential.

 The variable annuity carries additional fees that should be considered.

You may annuitize your money

Deferred annuity contracts such as EQUI-VEST® provide for conversion to payout status at or before the contract’s “maturity date.” This is called annuitization. When your contract is annuitized, your money is converted into payouts (this being the payout phase). During this phase, you may receive periodic payments for life or for a specified period of time.

 The contract may be annuitized.


Conclusions on the AXA Equi-Vest Variable Annuity

Before buying into an annuity, it’s important to understand how it works, what benefits it may provide, the cost to you in fees, and perhaps most importantly, the role it can help play in your overall retirement plan. If the annuity doesn’t help move you toward your retirement goals, then it might not be the right choice for you.

Things to consider about this policy:

  • Overall fees including a Mortality and Expense Risk charge
  • Surrender Charges based on ongoing contributions
  • Agent commissions and compensation based on ongoing contributions
  • Income rider features that limit investment options for a lifetime fee
  • Annuitization of the contract may be required
  • Death benefits
  • No additional tax benefits when part of a 403(b)

When this investment might make sense: If you have already maxed out all your qualified retirement accounts and would like to put aside more money into a tax-deferred account, then a variable annuity might be an appropriate option. However, think carefully about whether or not this specific variable annuity with the structure of its surrender fees, agent commissions, and income rider options would best support your retirement goals. You may also want to consider the relative features, benefits, and costs against or with any other investment that you may use in connection with your retirement. Be sure to read carefully the marketing materials and prospectus, and if you don’t understand what you’re paying for, ask questions and receive a full disclosure before making a decision.

If you currently own this annuity: Now may be a good time to take another look and evaluate this product in light of your long term goals.  If you are interested in a more detailed analysis specific to your situation, feel free to contact me.

Thank you

Thanks for reading this review. It’s always satisfying for me to break down complicated financial products out there to try and provide some clarity on how they really work.

If you have an annuity or other financial product you’d like to see an in-depth review on just let me know, I’d be happy to take a stab at it. If you know a teacher or someone who is thinking about an annuity and might benefit from this post, feel free to forward it on to them via email. If you have a Facebook account, one of the best ways to spread this message around is by “sharing” the post by using the Facebook icon below (it’s a blue square with a white F on it).

Thanks again for reading, and as always, if you have any questions or would like to have your retirement portfolio reviewed, don’t hesitate to reach out and schedule your no-obligation consultation.


FREE GUIDE: WHAT EVERY K-12 EMPLOYEE SHOULD KNOW ABOUT THEIR 403B PLAN

Retirement investing for teachers can be confusing. This guide is an excellent source of information about the various options available to you as a school district employee answering important questions.

Get your FREE 403b GUIDE.


[1] “Can Annuities Pass Muster?” The Free Library. 2000 A.M. Best Company, Inc. 20 Apr. 2018

None of the third parties referenced in this communication are affiliated with Warwick Valley Financial Advisors, Private Advisor Group or LPL Financial. 

Variable annuities are long term, tax-deferred investment vehicles designed for retirement purposes and contain both an investment and insurance component. They have fees and charges, including mortality and expense risk charges, administrative fees, and contract fees.   They are sold only by prospectus. Guarantees are based on the claims paying ability of the issuer. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. The investment returns and principal value of the available sub-account portfolios will fluctuate so that the value of an investor’s unit, when redeemed, may be worth more or less than their original value.

Asset allocation does not ensure a profit or protect against a loss.

The target date is the approximate date when investors plan to start withdrawing their money.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Investing in mutual funds involves risk, including possible loss of principal. 

Riders are additional guarantee options that are available to an annuity or life insurance contract holder.  While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing.  Guarantees are based on the claims paying ability of the issuing insurance company.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.  The MSCI EAFE Index consists of the following developed country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. 

Securities offered through LPL Financial, Member FINRA/SIPC.  Investment advice offered through Private Advisor Group, a registered investment advisor.  Private Advisor Group and Warwick Valley Financial Advisors  are separate entities from LPL Financial.

Investors should consider the investment objectives, risks, charges and expenses of the variable annuity contract and sub-accounts carefully before investing. The prospectus and, if available, the summary prospectus contains this and other important information about the variable annuity contract and sub-accounts. You can obtain contract and sub-account prospectuses and summary prospectuses from your financial representative or by clicking on the prospectus link within this article. Read prospectuses carefully before investing.

403b death benefit

Teachers: Is the Death Benefit Killing Your Retirement Plan?

How One Fee Might Be Draining Your Nest Egg

As a teacher, knowing facts is part of the job. But when it comes to 403(b) plans, many teachers and educational administrators will readily admit that they don’t have all the facts.

As a financial advisor, it’s my job to present facts to clients so they can make informed decisions. Over the past few years I’ve discovered that many of my 403(b) clients were paying for insurance benefits to protect their retirement savings and getting charged exorbitantly for it. The goal of this article is to shed some light on Variable Annuities and one fee that can take a significant chunk out of your savings.

One of the most important things to know if you participate in a 403(b) retirement account is that you have the choice to invest in either Annuities or Mutual Funds. If you aren’t sure what the difference is yet, we highly recommend you first read our Teacher’s 5-step 403b Shopping Guide.

If you have been sold a Variable Annuity, it’s imperative to find out which fees you are being charged for and if they can be avoided. There are many additional insurance related fees associated with Variable Annuities that are not found in Mutual funds. These fees pay for insurance guarantees that are automatically included in the annuity, and the selling and administrative expenses of the contract. The one that often goes unnoticed is known as the Mortality and Expense Charge (aka the M&E fee or the Death Benefit). The death benefit is one of the highest fees incurred in association with insurance-based retirement accounts, and statistics show that almost nobody “benefits” from its presence, except for the insurance company charging you for it.

Death Benefit 101

The death benefit feature is found in variable annuity products that are sold by many insurance companies. 

This benefit guarantees that if you die, your beneficiaries will receive the greater of two values: The current value or the total amount you contributed over the lifetime of the account.

This feature is being sold to prospective buyers as an attractive benefit. They assert that it will protect the money that you contributed to your account, should the market cause the annuity to lose money at the time of your death. This might seem like a comforting safety feature to have, but let’s weigh the costs and see if they are worth it.

Know Your Odds

So what are the statistical probabilities of this death benefit paying off?

A class action lawsuit brought against Hartford Life on behalf of about 24,000 municipal employees in San Diego County and Los Angeles CA illustrates the probabilities: The plaintiff’s lawyers asked Hartford Life during the discovery process how much in death benefits the company had paid in the 17 years that both the San Diego and Los Angeles plans had existed. Hartford claimed it had paid only a single death benefit totaling just $119 in San Diego and no death benefits in Los Angeles. ¹

HOW MUCH IS THIS COSTING YOU? 

Now that you know the odds of receiving this “benefit”, it’s time to figure out how much it is costing you. Death benefit fees on average are usually 1.25% of the total value of the account per year ². This may not seem like a lot, but as the years go by, it becomes much more significant. Imagine what you pay in this fee alone over 30 years as your investment grows. I can tell you that it will probably be much more than the amount your beneficiary could lose on your contributions, were you to die young, unexpectedly, and in a time of a market low.

WHAT’S THE SOLUTION?

If you participate in a 403(b) plan, you have the choice to either invest in annuities or mutual funds. Mutual funds don’t carry the insurance based fees that annuity companies charge for.

Both Mutual Funds and Variable Annuities have investment related fees. These fees can range from high to low and you can choose to invest in lower fee investment choices in order to keep your expenses low.

You want to make sure that you are getting good value for every dollar of investment expenses you pay. This is because every dollar you save from fees & expenses (i.e. the death benefit fee) is one more dollar that has the potential to grow in your 403(b) account.

NEXT STEPS: Get the Facts on Your Current Investments…

Hopefully after reading this article you will look at your own investment product and answer these questions:
• Is my 403(b) invested in annuities or mutual funds?
• Do I currently pay a fee for the Mortality and Expense (M&E) Charge (aka death benefit)?
• How much am I paying in total fees and can some of these be avoided?
• Is my current 403(b) vendor competitive with the other options available at your school district?

If you need help finding answers to the questions, please contact us. One phone call could have big impact on how you save for your future!

¹ “Can Annuities Pass Muster?.” The Free Library. 2000 A.M. Best Company, Inc. 20 Apr. 2018
² Morningstar M&E Risk, 2018

Investing involves risk including loss of principal.

Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of
the issuing company. Withdrawals made prior to age 59 are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

All illustrations are hypothetical and are not representative of any specific situation. Your results will vary.

Warwick Valley Financial Advisors and LPL Financial are not affiliated with any of the other referenced entities.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

 

Teachers 5-Step 403b Retirement Shopping Guide

Savvy Shopping – The New Past-time for Teachers

Download and print the guide:

 

When you begin working as a teaching professional, your school district will likely offer you an opportunity to save for retirement, known as a 403b Retirement Plan.

What you might not know is that you can shop around for your plan, just like any other shopping trip. Think of it this way: A little retail therapy can improve mood, boost confidence, and relieve stress, so shopping for a 403b retirement plan shouldn’t be different. You may be surprised at the release of endorphins you get when you ultimately choose a low-fee, tax deferred retirement plan! However, before you begin your shopping experience, get to know the options on the shelf; there are a lot of choices, some with missing price tags and others with confusing language and offers. It can be overwhelming, and you may opt for a word-of-mouth recommendation without knowing the facts, that ends up reducing your nest egg in the future. But by making an informed choice, you can get the satisfaction from the sale, and take control of your financial future.

So, grab your bag, and let’s explore the 403(b) marketplace. Read on for super shopper tips that could potentially set you on track for higher returns and higher security in later years. If you get overwhelmed, don’t just close your eyes and grab the same product your friend chooses. Always seek out professional guidance and do your homework in comparing the products, because here, it’s the savvy shopper that earns the deal!


Shopper Tip #1: Find your TPA

 If OMNI is your TPA, visit www.omni403b.com:
• Click on the ‘Participants’ button.
• In the bottom left corner find where it says Employer Plan Info and then select your state.
• Type in your employer name and select it.
• Click submit. BOOM! You just found your menu of participating providers!

Step #1 – Finding Your TPA ( 403b Marketplace )

Where to start? Imagine the TPA as your mall with a map of all the shops—or providers—that your district has made available to you.

A TPA (Third Party Administrator) aggregates the 403b plan provider choices for the district clients, much like a mall that has a variety of stores for you to shop in.

OMNI is one of the largest TPAs that organizes 403(b) options for teaching professionals. It provides a site in which to manage the initial designations you’ll make when you sign up for an account. New York and some other states use OMNI. As a client, you will go to the OMNI site to set up your account.


Step #2 – Compare Providers

Once you find your TPA (403b marketplace) you can look at the list of participating providers your district has made available to you.

Shopper Tip #2: Take your Time
Take your time determining which providers are insurance companies offering insurance products (called annuities), and which providers are custodial retirement accounts offering mutual funds. Note that some are hybrids.

Which store to hit first?

Neither your school district, nor TPA, can tell you which provider to use. You must comparison shop on your own. Just as a mall contains stores, but doesn’t tell you which to go into, OMNI does the same. OMNI is a TPA that prides itself on the variety of providers it offers and can have over twenty in one district.

There are names you might recognize from ads or from friends who’ve invested, and some you don’t. These are some of the companies you may see on the list: AXA, Voya, Metlife, Vanguard, FTJ Fundchoice, Aspire Financial and Fidelity.

Do bigger brands or recognizable names mean better quality products? Not necessarily. You may be surprised to know that many of the recognizable names might be the ones with the least amount of savings.

The important thing to takeaway here is there are two main types of providers

  1. Insurance companies offering annuities.
  2. Custodial retirement accounts offering mutual funds.

Now let’s talk products!


Step #3 – Compare Products

Shopper Tip #3 – Don’t Be Pressured
Do not just choose a product because the salesman bought you lunch at the teacher’s lounge. As with any purchase, be wary of relentless sales pitches that pressure you into buying a product quickly or a deal that seems too good to be true.

403b Products

After you have perused the menu of providers, you should brush up on what kind of products they offer. Putting in the research and work now will reap better rewards in the years to come. Remember, like anything else, the product choices are NOT equal, and this is not one size fits all. If you aren’t sure, consider consulting an independent financial professional —aka “personal shopper” to help you weed through the racks.

There are two main types of 403(b) products available for you to consider.

  1. MUTUAL FUNDS (also called a 403(b)(7) custodial account): This type of product allows participants to invest their contributions in mutual funds. The account is not an annuity or a life insurance product. Returns on contributions depend on the performance of the mutual funds selected.
  2. ANNUITIES:
    An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. You buy an annuity either with a single payment or a series of payments called premiums.Annuities are often marketed as tax-deferred savings products and come with a variety of fees and expenses, such as surrender charges, mortality and expense risk charges and administrative fees. Annuities also can have high commissions, reaching seven percent or more. These are the three common annuity products:

    Variable Annuity Product
    A variable annuity is a contract with an insurance company under which you contribute into a tax–deferred account. In return, the insurer agrees to make periodic payments at retirement or some future date. You can choose to invest contributions in a range of investment options, which are typically mutual funds. The value of the account in a variable annuity will vary, depending on the performance of the investment options chosen. In this sense, it is similar to a mutual fund product except it is offered as a life insurance product and involves a contractual agreement.

    Fixed Annuity Product
    A fixed annuity is a contract with an insurance company that guarantees a minimum rate of return during the time that your account is growing. The insurance company also guarantees that the periodic payments in retirement are guaranteed for an established amount of time. Details of the minimum rate of return and payout schedule are established when the contract is signed. In some instances, the insurance company will charge additional fees for features and guarantees.

    Equity Indexed Annuity Product
    A specific type of fixed annuity contract between you and the insurance company. During the period of time where you make contributions, the insurance company credits a return that is based on changes in an equity index, such as the S&P 500 index. The insurance company sometimes also guarantees a minimum rate of return. In retirement or on a future date, the insurance company will make periodic payments to you under the terms of your contract. In some instances, insurance companies will charge additional fees for features and guarantees.

Before you commit to a product, ask yourself some of these general questions:

  • What is the difference between investing in an annuity versus a mutual fund?
  • Are you aware of all the fees or commission involved, including all costs of mutual funds or variable annuity sub accounts?
  • Do you know how you your financial advisor and the investment company you’re working with are being compensated?
  • Does your financial advisor accept fiduciary responsibility?
  • Are my investments being monitored by my financial advisor or someone else?
  • How do I know if my account is properly balanced?

Step #4 – Compare Fees

Shopper Tip #4:  Find the Price Tags

There are potentially three layers of fees and charges that participants should be aware of.
• 403(b) product fees (vendor fees)
• Investment fees
• Employer/third-party administrator fees


You are so close — but wait, did you take a closer look at the price tag? Before you hit the register, you must determine what it will cost to invest in your future. And it’s not always easy uncover what your future costs will be, especially when fees can be hard to find.

You can’t escape investment fees. The average mutual fund fees and expense ratio is 1.02% a year, according to the Investment Company Institute. On the other hand, the annual fees on variable annuities usually start at 2% and vary up to 3%, according to FINRA. And that’s in addition to the fees that are charged by that product’s mutual funds that make up your sub-accounts.

If you can’t picture that in terms of how much the fees are costing you, consider this example: Jane Smart decides to invest in a variable annuity with a 2.25% fee cost. She contributes $250 steadily for over 35 years, with an 8% average of annual return. Upon retirement, Jane has built a nest egg of $336,320. Jane is happy. But look at the numbers closer — had Jane shopped around and done her research at the time of purchase, she would have found lower cost plans that would have lower fees. If Jane had chosen a 1.40% fee plan with the same average of annual return, she would have $73,265 more in her savings. The moral of this story? Do your homework!

Get out your magnifying glass and ask to see the prospectus or contract. All mutual funds and variable annuities are required to produce a document called a prospectus, which details specific information about investment cost, objective, risk, performance, and operating rules. Fixed-annuity products do not have a prospectus. Instead, they have a contract that details operation of the annuity. If you can’t make heads or tails of it then ask an independent financial professional before you sign on the dotted line.

It is important to understand all fees associated with your plan before you begin contributing to any 403(b) investments. Additionally, some investments impose surrender charges or restrictions on withdrawals.

To learn more about fees and what they mean for you, check out these websites which compare the different plans:  http://403bwise.com/k12/content/61
https://www.403bcompare.com/Fundamentals403bAnd457b#Fees


Step #5 – Contribute Paycheck %

Shopping tip #5: Buyers Remorse?
Did you already choose a plan but now have buyer’s remorse? Don’t worry, just like shopping, there is the possibility to exchange a product. You will need to determine if there are any surrender charges or fees before doing so.

Ask a Question

Once you have done your research, selected a provider, and shopped a plan—the smart way—you can begin contributing a part of your paycheck to start your nest egg. You can access a Salary Reduction Agreement through your TPA. No amount is too small, and the fact is, you are doing something great for your future by making savings a priority.

Because the income funneled into your account is tax-deferred, the IRS does set a capped amount for 403b contributions each year. There are other options for increased savings though, based on age and employment. If you can, go ahead, and max out your savings! What you do now will have higher payoff in the future.

 

 

403b Teachers Shopping Guide

If Shopping Isn’t Your Thing, Don’t Go It Alone!

Everyone knows, shopping is much better with a friend! Going alone can be time-consuming, sometimes confusing, and what’s more, the mistakes can be costly. Working with a financial advisor (aka personal shopper) is an option to consider carefully. If you have any questions, we are here to help.

Download our printer-friendly 403b Shopping Guide >>

 

 

 

 

 

 

 

 

 

 

 

 

 


Investing involves risk including loss of principal.

Investing in mutual funds involves risk, including possible loss of principal.

Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. They are not suitable for all investors. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value. Equity Indexed Annuities permit investors to participate in only a stated percentage of an increase in an index (participation rate) and may impose a maximum annual account value percentage increase. EIAs typically do not allow for participation in dividends accumulated on the securities represented by the index.

Warwick Valley Financial Advisors and LPL Financial are not affiliated with any of the other referenced entities.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice.

The Roth 403(b)

Some employers offer 403(b) plan participants the opportunity to make Roth 403(b) contributions. If you’re lucky enough to work for an employer that offers this option, Roth contributions could play an important role in maximizing your retirement income.

What is a Roth 403(b)?

A Roth 403(b) is simply a traditional 403(b) plan that accepts Roth 403(b) contributions. Roth 403(b) contributions are made on an after-tax basis, just like Roth IRA contributions. This means there’s no up-front tax benefit, but if certain conditions are met, your Roth 403(b) contributions and all accumulated investment earnings on those contributions are free from federal income tax when distributed from the plan. (401(k) and 457(b) plans can also allow Roth contributions.)

Who can contribute?

Once you’re eligible to participate in a 403(b) plan, you can make Roth contributions regardless of your salary level. (This is in contrast to a Roth IRA where your contributions may be reduced, or you may not be eligible to contribute at all, if your income exceeds certain amounts.)

How much can I contribute?

There’s an overall cap on your combined pretax and Roth 403(b) contributions. In 2017, you can contribute up to $18,000 of your pay ($24,000 if you’re age 50 or older)1 to a 403(b) plan. You can split your contributions any way you wish. For example, you can make $10,000 of Roth contributions and $8,000 of pretax 403(b) contributions. It’s up to you.

But keep in mind that if you also contribute to a 401(k), SIMPLE, SAR-SEP, or another 403(b) plan, your total contributions to all of these plans–both pretax and Roth–can’t exceed $18,000 (plus catch-up contributions) in 2017. It’s up to you to make sure you don’t exceed these limits if you contribute to plans of more than one employer.

If you also participate in a Section 457(b) plan, any pretax contributions you make to the 457(b) plan are in addition to your 403(b) contributions. This means you can contribute up to $18,000 of pay, Roth or pretax, to the 403(b) plan and an additional $18,000 pretax to the 457(b) plan in 2017 (plus catch-up contributions)–a significant savings opportunity.

Can I also contribute to a Roth IRA?

Yes. Your participation in a Roth 403(b) plan has no impact on your ability to contribute to a Roth IRA. You can contribute to both if you wish (assuming you meet the Roth IRA income limits). You can contribute up to $5,500 to a Roth IRA in 2017, $6,500 if you’re age 50 or older (or, if less, 100% of your taxable compensation).2

Should I make pretax or Roth 403(b) contributions?

When you make pretax 403(b) contributions, you don’t pay current income taxes on those dollars. But your contributions and investment earnings are fully taxable when you receive a distribution from the plan. In contrast, Roth 403(b) contributions are subject to income taxes up front, but qualified distributions of your contributions and earnings are entirely free from federal income tax.

Roth contributions could play an important role in maximizing your retirement income.
1 Special Section 403(b) catch-up rules may also apply.
2 If you have both a traditional IRA and a Roth IRA, your combined contributions to both cannot exceed $5,500 ($6,500 if age 50 or older) in 2017.
3 You can avoid tax on the non-Roth portion of your distribution (any pretax contributions, employer contributions, and investment earnings on these contributions) by rolling that portion over to a traditional

The better option depends on your personal situation. If you think you’ll be in a similar or higher tax bracket when you retire, Roth 403(b) contributions may be more appealing, since you’ll effectively lock in today’s lower tax rates. However, if you think you’ll be in a lower tax bracket when you retire, pretax 403(b) contributions may be more appropriate. Your investment horizon and projected investment results are also important factors. A financial professional can help you determine which course is best for you.

Are distributions really tax free?

Because your Roth 403(b) contributions are made on an after-tax basis, they’re always free from federal income tax when distributed from the plan. But the investment earnings on your Roth contributions are tax free only if you meet the requirements for a “qualified distribution.”

In general, a distribution is qualified only if it satisfies both of the following requirements:

  • It’s made after the end of a five-year waiting period
  • The payment is made after you turn 59½, become disabled, or die

The five-year waiting period for qualified distributions starts with the year you make your first Roth contribution to the 403(b) plan. For example, if you make your first Roth contribution to your employer’s 403(b) plan in December 2017, then the first year of your five-year waiting period is 2017, and your waiting period ends on December 31, 2021.

But if you change employers and roll over your Roth 403(b) account from your prior employer’s plan to your new employer’s plan (assuming the new plan accepts Roth rollovers), the five-year waiting period starts instead with the year you made your first contribution to the earlier plan.

If your distribution isn’t qualified (for example, you receive a payout before the five-year waiting period has elapsed or because you terminate employment), the portion of your distribution that represents investment earnings on your Roth contributions will be taxable and subject to a 10% early distribution penalty unless you’re 59½ or another exception applies.

You can generally avoid taxation by rolling your distribution over to a Roth IRA or to another employer’s Roth 401(k), 403(b), or 457(b) plan, if that plan accepts Roth rollovers. (State income tax treatment of Roth 403(b) contributions may differ from the federal rules.)3

What about employer contributions?

Your employer can match your Roth contributions, your pretax contributions, or both. But your employer contributions are always made on a pretax basis, even if they match your Roth contributions. That is, your employer’s contributions, and investment earnings on those contributions, are not taxed until you receive a distribution from the plan.

What else do I need to know?

Like pretax 403(b) contributions, your Roth 403(b) contributions and investment earnings can be paid from the plan only after you terminate employment, incur a financial hardship, attain age 59½, become disabled, or die.

You must begin taking distributions from a Roth 403(b) plan after you reach age 70½ (or after you retire if later). But this isn’t as significant as it might seem, since you can generally roll over your Roth 403(b) dollars (other than RMDs themselves) to a Roth IRA if you don’t need or want the lifetime distributions.

Employers aren’t required to make Roth contributions available in their 403(b) plans. So be sure to ask your employer if it is considering adding this exciting feature to your 403(b) plan.

Roth 403(b) Roth IRA
Maximum contribution (2017) Lesser of $18,000 or 100% of compensation Lesser of $5,500 or 100% of compensation
Age 50 catch-up
(2017)*
$6,000 $1,000
Who can contribute? Any eligible employee Only if under income limit
Age 70½ required distributions? Yes No
Potential matching contributions? Yes No
Potential loans? Yes No
Tax-free qualified distributions? Yes, 5-year waiting period plus either 59½, disability, or death Same, plus first-time homebuyer expenses (up to $10,000 lifetime)
Investment choices Limited to plan options Virtually unlimited
Bankruptcy protection Unlimited At least $1,245,475 (total of all IRAs)

*Special Section 403(b) catch-up rules may also apply.


This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.