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Dan's Blog

403(b) Escape Hatch? 🔐

April 14, 2020

One theme has been clear in 20 years of running a 403(b) advocacy website: employees simply want help getting better investing choices. End of story. That's it. That's the problem. Many emails I receive start with four simple letters. The correspondences are remarkably like a certain Beatles song... 

403(b) Help!

Help! I need somebody. 
Help! Not just anybody. 
Help! You know I need someone. 

When I was younger so much younger than today
A sales agent signed me up for a bad 403(b) I shouldn't be in no way
But now these days are gone and I'm much more self assured
Now I find I've changed my mind, I want to open up the doors

Help me if you can, my 403(b) has me feeling down
And I do appreciate you being 'round
Help me get out of this product that ain't sound
Won't you please, please help me?

Pre Coronavirus Advice: Beg Benefits Officials

Typically we tell those reaching out to us to:

Right Now: Deploy Escape Hatch

I hope it goes without saying that we wish there never had been a pandemic. There are very few silver linings in this crisis. All of which are trumped by the horror this virus unleashed. However, included in the CARES Act stimulus package may be some relief for 403(b) participants stuck in high-cost investments. A possible escapte hatch was discovered by my podcast partner and fiduciary advisor Scott Dauenhauer, CFP®. He believes the provision that permits withdrawal of up to $100,000 from a retirement plan can be used to exit a bad 403(b), and move that money to a tradtional IRA with a low-cost vendor. He details the idea here

Caveats abound so extreme caution is urged. It should be noted that, if permitted, this provision as it now stands will only be available in 2020. Several teachers on our Facebook Group are actively looking into how to activate this escape hatch. We will keep you apprised of their progress.

Stay well. 

Sidenote: Our family just watched and loved the movie Yesterday