Florida District 403(b): A Closer Look 🤔
November 2 2021
Broward County Public Schools in Fort Lauderdale, Florida serves approximately 260,000 students and employs more than 14,000 teachers. They offer a three-vendor 403(b) plan. The vendors are: AIG Retirement Services (VALIC); Equitable; and VOYA Financial.
We rate 403(b) plans A through F based on a green light (go), yellow light (caution), red light (stop) methodology for vendors (detailed explanation of rating system). All three of these vendors are rated red. Note that we created our red light/green light system before Squid Game which now seems eerily prescient and highly applicable to the K-12 403(b). Consequently we rate Broward County’s 403(b) as an F. Note also that AIG recently settled with the SEC over sales practices in Florida.
After spotlighting this rating in a recent BWISE ALERT, our free weekly e-newsletter, we received a note from an industry insider declaring that the plan was much better than an F. We asked for evidence to the contrary from this individual which we have yet to receive. We reached out to both the district's HR and Benefits Departments. Both individuals we spoke with in these respective departments were friendly but were unable to tell us the plan cost information or where this information could be found. Instead we were pointed to a pdf listing sales agents names and contact information. One mentioned that she contributed to the 403(b) but had no idea what she was paying in costs. Both ultimately transferred us to individuals who they thought could help answer our questions. Both transfers went to voicemail. We left messages. We were also encouraged to send an email to the benefits office which we did. While we await a response we did a little digging.
We approached this as if we were an employee of Broward County looking to start a 403(b). We began on the home page. There is no obvious information on the home page so we tried the Careers tab at the top. This yielded a “Benefits & Employment Services” prompt under Quick Links. After clicking that it got a little murky. There was no mention of the 403(b). On the left under "Benefits" was a “BCPS Benefits” prompt. We clicked that but only learned how much is spent on benefits annually. We clicked “Retirement” which took us to information about the Florida Retirement System, Social Security, BENCOR National Plan (something called a FICA Alternative Plan and a Special Pay Plan, and the Deferred Retirement Option Program (DROP) which provides “eligible employees with an alternative method for payment of your retirement benefits for a specified and limited period.” No mention of the 403(b).
After seemingly reaching a dead end we noticed a “Financial Planning” prompt on the left hand side. Clicking that finally led to the first mention of the 403(b). Under “Resources” on the right we found:
- 403(b) and 457 Plans Comparison
- 403(b) Roth Salary Reduction Agreement Form
- 403(b) Salary Reduction Agreement Form
- Plan Summary Information
- Tax Sheltered Annuity Vendor/Representative Listing
Now we are getting somewhere. The “Plan Summary Information” link seemed the obvious place to get fee and investment choice information. Instead it’s a listing of 403(b) FAQs adorned with an image of compass and a sunset. Next we clicked the dubiously named “Tax Sheltered Annuity Vendor/Representative Listing” prompt and "Yikes!" Two strikes against the plan.
- The use of the term “Tax Sheltered Annuity” conveys to employees that they can only use annuity products which is false. Mutual funds have been available in 403(b) plans since 1974.
- "Representative Listing" conveys that employees must use a representative which, unless these are salaried representatives, means sales fees and quite possibly surrender charges. Note: this is the pdf the HR department employee pointed us too.
Sheep in Wolves Clothing or Another Terrible K-12 403(b) Plan?
Pity the employee of Broward County who must navigate this byzantine bread crumb trail to 403(b) information. Of course, the information might be behind a firewall. We just don't know. One of the district individuals we spoke to said to her knowledge the plan cost information was not behind a firewall.
While we favor the single vendor approach taken by Montgomery County Public Schools in Maryland and the Anchorage School District in Alaska, a three vendor plan can be a quality plan if it is put out to bid and reasonable pricing has been secured. This is the case with the Philadelphia City School District in Pennsylvania. They also offer AIG Retirement Services (VALIC) and Equitable (along with Lincoln Investments). But look at this easy-to-find plan and cost information resource they provide employees. Consequently this plan earns a B rating.
Happy to Update Any Plan Rating
Next to every plan rating is the following link to submit corrections and supporting material for a grade change. For the sake of Broward employees we hope our plan rating is wrong. We stand ready to change our grade when supporting documentation is provided. Stay tuned...
Stay wise and well (and keep fighting for better 403(b) plans).