University 403b Retirement Plan Fees Can Be Costly Over Time

When a college or university employee goes to review retirement plan investment options, too many fund choices can eat up review time and cause investor confusion. The situation at hand is like the difference between the simple menu at your favorite locally-owned diner and the book-like menu at Cheesecake Factory

The expenses associated with the management of a 403b retirement plan with multiple investment options can add up to huge amounts over time – aggregate fees that aren’t working for the future retiree.

What is a 403b Retirement Plan?

The 403b retirement plan is used by a variety of non-profit institutions such as churches, colleges and universities, social service agencies, governmental organizations and K-12 school districts.  It is a tax-deferred savings retirement savings account that differs from the more commonly known 401k plan in the following ways:

• It is strictly available for non-profit organizations and institutions
• It has lower associated administrative costs
• Like 401k retirement plan, employee can contribute tax-deferred amount limited at $18,000 as of 2016. If employee is over 50, they can also contribute tax-deferred catch-up amount up to $6,000 annually for total of $24,000. In some 403b plans, if option is written in, workers with over 15 years of employment can tax-defer an additional $3,000 over and above their annual limit.

It Takes Multiple Administrators to Offer Multiple Choices

Several large, prestigious universities are now under investigation for possible mismanagement of their retirement plans, such as offering too many investment choices in their 403b retirement plans.

A high number of investment choices may require multiple service vendors that all charge fees. These are fees that aren’t building the employee’s retirement income, but taking away from it.

Major service vendors such as Vanguard, TIA-CREFF and Fidelity have frequently all been contracted by larger non-profit institutions to be investment record-keepers at the same time.

The cost of maintaining such a huge menu of possibilities can add up to thousands of dollars with just the addition of one percentage point in fees over three decades of working life.

The Paralysis of Choice

According to www.insidehighered.com, too many fund choices and vendor points of contact lead to investor confusion and a type of paralysis in which little or no decisions are made. An excess of options may just leave the investor stuck in the decision-making process.

Universities are Failing in Their Fund Management

Among other possible fund mismanagement, some well-girded institutions of higher learning may fail to switch out poor performing investment funds for better ones. This mismanagement is also costing future retirees thousands in potential earnings

If you feel your 403b retirement planning efforts have been damaged by your employer’s mismanagement, consult with a lawyer with retirement planning expertise today.

Join a Free University Employee 403(b) Retirement Plan Class Action Lawsuit Investigation

If you believe your 403(b) plan fees were more than necessary, or that the investment options were otherwise imprudent, you may be eligible for a FREE class action lawsuit investigation and pursue compensation for these violations.

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