The majority of K-12 employees are part of a pension plan. But to the surprise of many K-12 employees (and others), they are also eligible to contribute to not one, but two supplemental retirement plans: the 403(b) and the 457(b). Like the 401(k), these are defined-contribution plans, meaning the payout in retirement is defined by how much — and how wisely — they contribute. This makes financial education on these plans critical.
Historically, K-12 employers have provided little to no 403(b) and 457(b) education. Instead employers have largely left that to the representatives of the financial firms they have approved to sell 403(b) and 457(b) products. It’s not uncommon for school districts to make available more than a dozen financial firms selling 403(b) products. In California, 403(b) vendor lists can number in the forties. This leads to a patchwork of plan understanding, and an environment that prioritizes sales over objective financial education. I saw this firsthand as an elementary teacher in California. Sales agents trawled our classrooms and staff lounge, selling high-cost variable annuity products with onerous surrender charges.
I launched 403bwise in 2000 precisely because of the sales practices, poor product choices and lack of awareness on the part of my colleagues. The twin goals of 403bwise are 1) advocacy for better vendor choices and 2) education, which we provide through multiple channels. As a nonprofit, all of our services are free.
Information on the core workings of the 403(b) and 457(b), including eligibility, contribution limits, withdrawal information,and a side-by-side comparison of the two plans, can be found in the Education section of our website. Some other offerings include:
Live events: We put on weekly live education events on a range of financial topics through Zoom and the interactive web-based teaching tool Nearpod. Each month, we also hold an Office Hours event where the entire focus is answering participant questions.
On-demand learning modules: In an effort to provide learning flexibility, we recently developed on-demand, self-paced learning modules on the 403(b), the 457(b). and the basics of saving and investing. To date, hundreds have gone through these interactive modules that take about 30 minutes to complete.
Teach and Retire Rich podcast. This podcast with the tongue-in-cheek name covers savings and investing topics for school employees in what we think is a fun, easy-to-understand way. We like to joke that this is where Fo4s (Friends of 403bwise) become radicalized in their zeal to save and get better, lower-cost investment choices.
403bwise Facebook group: This fast-growing community (more than 3,000 approved members) is teacher-to-teacher learning and interaction at its best. We have been blown away by the energy and willingness of so many to help so many others better their retirement outcomes.
Come learn with us.
Dan Otter is executive director at 403bwise.org.
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