New Jersey 403(b) Bermuda Triangle
December 6, 2022
We love New Jersey. Two of our favorite advocates — Danielle Greco and Chris Nye — hail from the state. The dynamic duo have spread the word about a fantastic, almost secret 403(b) plan available in the state: Lincoln Investment's Participant Directed Plan which has been described as a "Vanguard" clone. It's available in almost every district. Perhaps I should say, it has been available in almost every district. Chris just shared in our most recent podcast (access below) that Lincoln is beginning to close the plan to new participants.
Great Plan Until It Starts Being Used
My partner fiduciary Scott Dauenhauer, CFP said that companies like Lincoln love programs like the PDP until participants actually start using it. Why? Because it is not as lucrative as their advisor model. The irony — or hypocrisy — is that Lincoln often tauts this low-cost option when looking to get to added to vendor lists.
Other Hurdles
- Legislation was recently introduced in New Jersey that would require large school districts (more than 1,000 students) to have at least four vendors. This would prevent school districts from putting their plans out to bid in order to get the best pricing. Read more about the bill here.
- 403(b) contributions are not deductible on a state basis
Bermuda Triangle of Problems
Taken together, New Jersey educators face three distinct challenges in saving for retirement.
What Should Educators Do?
Speak out. Contact your union. Attend board meetings. Lobby to have the excellent state 457(b) available to school districts. Join the 403bwise Facebook Group.
Stay wise and well (and get involveded in 403(b) advocacy)
Related Podcast:
Good 403(b) Bye Bye? Was it all just a dream? New Jersey teachers are losing a fantastic 403(b) option: Lincoln Investment's Participant Directed Platform. Listen Now »
Related Podcast: New Jersey's Bad 403(b) Bill
New Jersey's Bad 403(b) Bill Proposed New Jersey legislation would require large school districts to have at least three 403(b) vendors. We speak with “Izzy” Tannenbaum, partner at Withum, a tax advisory and public accounting firm. Izzy supports the intent of the bill but acknowledges it contains flaws. Listen Now »