403(b) Lemon Challenge 🍋
September 22, 2020
When it comes to California K-12 403(b) plans, it is the worst of times, and it is the best of times.
Worst of Times
Thanks to legislation written by the insurance industry in the 1970s, California's more than one thousand school districts are prevented from putting their plans out to bid in an effort to get the best combination of pricing and services. School districts in this state are prevented from moving to single vendor plans common in the 401(k) world. Consequently, it is not uncommon for vendor lists to number in the 40s. In the city I live, Redlands, teachers must sort through more than 42 vendors. Insane.
Best of Times
While vendor lists are large, we believe that just about every California school district has at least one of the following low-cost vendors available.
- CalSTRS Pension 2
- Fidelity Investments
- T. Rowe Price
Teachers in Redlands Unified have access to CalSTRS Pension 2, Fidelity Investments, and Vanguard. Sounds great, right? The problem? Overwhelming, teachers have no idea how the 403(b) works so they fall for the agent in the lounge or increasing the agent phishing for business.
Challenge: Find the Lemon Get a Copy of Teach and Retire Rich
Using the excellent state run tool 403bcompare, we have looked at hundreds of districts in the state and have yet to find a plan that doesn't offer at least one of these vendors. Often, the lone star is CalSTRS Pension 2, an excellent 403(b) run by the state teachers pension agency CalSTRS. I am embarrassed to admit that my former school district, Corona-Norco Unified, has the worst vendor list we have seen. It is only saved by the presence of CalSTRS Pension 2.
We will give out a free copy of my book Teach and Retire Rich to anyone who can find the the district that doesn't have at least one of these 7 vendors available (max 50 books).
- Start at the Find Employer section of 403bcompare
- Clicking a letter will bring up school districts (and junior colleges) whose name starts with that letter
- Click on a school district to see which vendors are available
- If you find a district without at least one of the above 7 vendors, email me directly at dan(at)403bwise.org with a link to the district and your mailing address
- If you find another district like my former employer which only has one good choice send me an email with the link to the district and your mailling address as I could probably be pursuaded to send out a book for that as well.
Five districts have been found that only offer awful choices. Thanks to the teachers and advocates who located these (your books are on the way). If you work in any of these districts you can easily add CalSTRS Pension 2 by calling (888) 394-2060.
- Junction Elementary School District
- Manzanita Public Charter School
- Maple Elementary School District
- Marcum-Illinois Union
- Mariposa County Unified School District
- Digiorgio School District
Keep 'em coming!