The Advisor - September 2011

IMPORTANT NEWS FOR YOUR FINANCIAL AND PERSONAL FUTURE

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What Can You Do?

Here are some advocacy steps your local chapter and/or you can take now.

  1. Request the district’s written plan document. Are there options, such as loans, that the district has omitted from the plan? If so, why?
  2. Screen the list of approved vendors. How did the district define the list? Does it include 403(b)(7) mutual fund vendors?
  3. Request that the district or its TPA provide a simplified fee and disclosure form to the district employees. See “More Fee Transparency Needed for 403(b) Plans” below.
  4. Did the district hire a third party administrator? If so, request disclosure under Education Code Section 44041.5.
  5. If you have a chapter website, link it to CTAinvest.org and 403bcompare.com. Ask the district to link its website too.
  6. Distribute the consumer guides: “Closing the Gap: Supplement Your Pension Benefits with a 403(b) or 457 Plan” and “Selecting a Financial Advisor & Understanding Plan Fees.” You can order these online at CTAinvest.org.
  7. Consider forming a 403(b) committee with the district to review the selection of the TPA, written plan document and list of approved vendors. Caution: Don’t take on an advisory or fiduciary role in the committee. For example, do not recommend specific investment products to participants.

CTA’s Work on a Best-in-Class Plan

CTA is working to develop best-inclass 403(b) and 457 plans. The plans would be offered through your school district via payroll deduction as required by law. Please be patient. CTA is working through its due diligence process to build a transparent and quality option for you. CTA is working with an investment consultant with expertise in defined contribution plans, including 403(b) and 457 options.

More Fee Transparency Needed for 403(b) Plans

New regulations for 401(k) fee disclosure are going into effect in 2012, so participants in 401(k) plans will start to receive detailed information in simplified language about the fees being charged in their plans in their statements next year.

Unfortunately, the same rules do not apply to 403(b) plans. That doesn’t seem fair. But, you can request that your district or TPA provide a simplified fee disclosure form to district employees.