The K-12 403(b) in One Image
November 28, 2023
Ahh, the K-12 403(b). The largely unregulated, non-fiduciary, multi-vendor plan where one of the most popular vendors available was fined $50 million by the SEC. It's a mess. How can you sum it up succinctly? What is the elevator pitch for explaining how bad it is? I've played with this idea: Imagine at retirement you should have $1.5 million in your 401(k) plan (I use this plan as its more recognizable) but instead you have about half that amount. That's the type of fee hit too many K-12 403(b) participants take.
My partner, fiduciary advisor Scott Dauenhauer, CFP, may have found — with a little help — a better way to describe the mess that is the K-12 403(b).
Says It All
Leading Participants to Slaughter
This AI-generated image accompanies a story Scott recently wrote about the total abdication of fiduciary duty by a San Diego education consortium tasked by the San Diego County Office of Education with using its collective buying power to lower the cost of employee benefits.
Not Just San Diego
Too many school districts nationwide have surrendered their 403(b) plan to Thirty Party Administrators (TPAs) who promise free oversight. What do districts get for this "free" oversight? Mostly multi-vendor plans stuffed with high-cost vendors. Worse, too many school district Section 125 Flexible Spending Accounts are run by high-cost 403(b) vendors. Get this: many school districts require all employees to meet with a vendor representative if they want to participate in the FSA plan. What do you think these sales agents pitch at these meetings? Most would call this unconscionable. We call it just another Tuesday in the K-12 403(b) world.
Stay wise and well (and advocate for fiduciary protection for the K-12 403(b) plan).
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