Texas: You Have a 403(b) Problem
August 1, 2023
Roughly 53 years ago, Apollo 13 Command Module Pilot John L. “Jack” Swigert uttered the immortal words: "Houston, we’ve had a problem here." Note: I had always thought it was "have" a problem but according to NASA it is "had."
The same can be said of Texas school district 403(b) plans. They are absurdly long (often 40+ vendors, each with dozens of investment choices) and stuffed with high-cost companies. The great Texas personal finance writer Scott Burns describes it as: The Texas 403(b) Corral. And it's not Okay. He contrasts the raw deal 1.6 million teachers get compared to the low-cost investing offerings (0.1%) the 72,000 workers at ExxonMobil in the state get.
Texas-Sized Vendor Lists
Search all Texas districts here.
Fee Impact & Texas 403(b) History
- See: K-12 Fees Are Bigger in Texas
- See: More Adventures in Bad K-12 403(b) Policy as Texas Tells Pennsylvania: “Hold My Beer.”
Fix Available
The last words go to Scott Burns...
There is absolutely no reason for this to continue. We only need to bring Texas into the same century as 401(k) plans and IRAs. It could be done by an observant and thoughtful Texas Legislature.
Stay wise and well (and let's put all K-12 403(b) plans out to bid in order to select one low-cost vendor).
