A Florida coalition is heralding a new model retirement plan that promises teachers and other school employees in the state large savings on 403(b) tax-deferred retirement account fees.
The coalition negotiated the new retirement plan under the umbrella of the Independent Benefits Council, Tallahassee. The IBC is a not-for-profit organization founded in 2002 by the Florida School Boards Association, Florida Association of District School Superintendents, Florida Association of School Administrators and Florida Education Association.
Together, the organizations represent more than 350,000 educators and school employees statewide.
K-12 educators in Florida have been paying some of the highest fees in the nation for their 403(b)s, IBC said. Under the new model plan, school employees participating in 403(b) accounts in the state will pay annual fees ranging from 1% to 1.5% of assets, compared to current averages of 2.5% to 3%, the IBC estimates.
The plan is designed to meet new IRS requirements, effective next year, requiring school districts to provide greater oversight of their 403(b) programs. Among other requirements, districts will have to inform employees which investment providers the districts will use to invest their 403(b) contributions.
The 5 investment companies the IBC selected to participate in its model plan are AIG Retirement Services Inc., Los Angeles, part of American International Group Inc., New York; PlanMember Financial Corp., Carpentaria, Calif.; AXA-Equitable Life Insurance Co., New York, part of AXA S.A., Paris.; American Century Investments, Kansas City, Mo; and Waddell & Reed Financial Inc., Overland Park, Kan.