Issue link: http://educator.cta.org/i/812811
Unlike private-sector employees with 401(k) plans, employees of public schools, universities, nonprofits and religious organizations must instead rely on 403(b) s, which are not subject to the stringent regulations that 401(k)s must meet. Some CTA members who are state and government employees are instead eligible for a 457 plan, similar to a 403(b) plan. The New York Times performed a valuable service last fall by publishing a series on 403(b)s that revealed numerous horror stories in which teachers were paying ridiculous amounts in fees and commissions. One New Jersey teacher, for example, paid more than $15,000 on an $87,000 account over eight years. The series of articles, as well as a number of lawsuits against private universities including Cornell, Northwestern and the University of Southern California for offering plans that charge excessive 403(b) fees, has prompted the Securities and Exchange Commission to consider offering fiduciary training to school districts on the matter. Supplement your pension Although Brye-Jones was locked into her new plan, she The CTA Retirement Savings Plan The plan tailored for CTA members offers: 1. High-quality investment options recommended and monitored by independent investment consulting firm RVK , based on each fund's performance track record, fees and stability. Investment choices are available for members of different ages and with different levels of comfort with investing. 2. A focus on what's right for you, because plan representa- tives are salaried, not paid on commission. 3. Fiduciary standards to ensure that all recommendations and plan decisions are made solely in the interest of plan participants. 4. Low transparent fees. You pay a flat annual record-keep- ing fee of $65 and $15 for custodial account services. In addition, you pay asset-based fees for the available mutual funds listed at CTAMemberBenefits.org/rsp. Any additional fees are clearly identified in the annual fee disclosure statement and on the CTA Retirement website, CTARetirementPlan.org. 5. Resources to help you make informed decisions, including the CTA Retirement Plan Center toll-free at 855-604-6222, CTAinvest.org, and the CTA Member Benefits Department at 650-552-5200. was able to stop making contributions to it and has since signed up for the CTA-endorsed Retirement Savings Plan, which was developed in response to requests from members and is offered in the majority of school districts in the state. e CTA plan features low fees, complete transparency and easy investment options (see sidebar, this page). She is now back on track, contributing the maximum amount to her retirement savings. e contributions that Brye-Jones makes will definitely help fund her After a lunchroom presentation at school, Angelia Brye-Jones signed up for a retirement plan with excessively high fees. She has since switched to a CTA-endorsed plan with low fees and transparency. 48 cta.org CTA & You HOW DO WE STACK UP? HOW DO WE A 30-year-old educator with an account balance of $50,000 would pay $150 annually in fees to invest in the 2050 Target Date Fund ("TDF") offered by CTA. This is 77% lower than the $646 average annual fee to invest in a 2050 TDF listed on 403bCompare.com.* *Fees referenced include management and administrative/custodial fees. 77% LOWER FEES CTA RETIREMENT SAVINGS PLAN VS. OTHERS • 30-Year-Old with a starting balance of $50,000 • Works for 35 more years, and contributes $100 per month • Earns an average annual return of 7% CTA RSP fee assumptions are based on flat administrative ($16.25) and custodial ($3.25) fee amounts charged quarterly. Others administrative/custodial fee assumptions are calculated as average of the products listed on 403bCompare.com that offer a 403(b) product with a target date fund investment option. CTA 403(b) RETIREMENT SAVINGS PLAN • High quality investment options. • Follows a fiduciary standard so all decisions are made in your best interests. • Lower Fees. • No commissioned sales reps. • Designed for the hands-off investor. Simply enroll in a target date fund closest to your retirement date. • Exclusively endorsed by CTA. CTA RSP Others LOW FEES HIGH BALANCE High Fees low BALANCE • C A L I F O R N I A • T E A C H E R S A S S N Union Labor ANNUAL ASSOCIATED EXPENSE John Haschak, President Willits Teachers Association $150 Annual Fees $646 Annual Fees CTA PLAN OTHER PLANS $ 679,489 $578,730 HOW DO WE STACK UP? A 30-year-old educator with an account balance of $50,000 would pay $150 annually in fees to invest in the 2050 Target Date Fund ("TDF") offered by CTA. This is 77% lower than the $646 average annual fee to invest in a 2050 TDF listed on 403bCompare.com.* *Fees referenced include management and administrative/custodial fees. 77% LOWER FEES CTA RSP fee assumptions are based on flat administrative ($16.25) and custodial ($3.25) fee amounts charged quarterly. Others administrative/custodial fee assumptions are calculated as average of the products listed on 403bCompare.com that offer a 403(b) product with a target date fund investment option. • No commissioned sales reps. • Designed for the hands-off investor. Simply enroll in a target date fund closest to your retirement date. • Exclusively endorsed by CTA. LOW FEES HIGH BALANCE High Fees low BALANCE • C A L I F O R N I A • T E A C H E R S A S S N Union Labor ANNUAL ASSOCIATED EXPENSE $150 Annual Fees $646 Annual Fees CTA PLAN OTHER PLANS $ 679,489 $578,730 member benefits