FAQ – 403(b)/457 Costs and Surrender fees

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I have two 403(b) plans with my district's recommended company, but I am losing money rapidly and I really don't know how much I am paying in fees. Can I take my business to a different company? I'm not happy with the vendor and their inability to communicate with me in an honest, timely fashion.

First, it is important to understand that although your district provides a choice of vendors, it does not mean that they are endorsed or recommended by the district. Everyone who participates in a 403(b) plan needs to investigate their plan options. Be sure to read "Closing the Gap: Supplement Your Pension Benefits with a 403(b) or 457 Plan" and "Selecting a 403(b)/457 Plan Advisor & Understanding Plan Fees." These publications are designed to help you make informed choices and learn how to find out what fees you are paying.

As far as moving your current investments to another vendor, it depends on the investments themselves. If you are in mutual funds, you may choose to sell the funds and use the proceeds to purchase other funds that are available within your district's plan. You may have to pay a transfer fee. Check also to find out if the funds you are selling have a back-end load (a sales charge when you sell) and the ones you want to buy have a front-end load (a sales charge when you buy).

If you are in an annuity that has surrender fees, you may be stuck paying the fees and perhaps even losing money to get out. If you don't want to pay the fees, you have the option of keeping the annuity but stopping any new contributions to the annuity and redirecting them to an investment that is more suitable for your financial goals, timeline and risk tolerance. Read the answer to "what do I do about surrender fees?" for more information.

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