I sat in on our latest 457b committee meeting...
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I sat in on our latest 457b committee meeting...
Since it's a local government employer, the plan committee meetings are required to be open to the plan participants. Though very few folks actually take advantage of this - maybe one or two folks at most at each bi-monthly meeting. That's too bad, because it's actually a somewhat rare and valuable opportunity, i think.
The meetings are actually sort of interesting, at least to a boglehead nerd. It's a reasonably sized 457b plan with 1.8 billion in assets. Besides the committee members and the staff, the plan administrator always has a few people there, as does the investment advisor consultants. The advisors discuss past, present, and future market behavior, which is sort of interesting. And the administrators, committee, and advisors discuss the behavior of the plan and its participants, and what changes (if any) to make to the investment choices. I find it useful to hear their thoughts and plans. And on occasion in the past as a guest and plan participant, i've even been able to influence the investment choices. Guests aren't allowed to speak of course, but there is a short public-comment opportunity at the beginning of the meeting, and plan participants can also submit comments and proposals beforehand.
This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices. And they're planning to up-scale the Target Retirement Fund suite from Institutional to Collective Investment Trusts.
So all in all, not too bad for now.
The meetings are actually sort of interesting, at least to a boglehead nerd. It's a reasonably sized 457b plan with 1.8 billion in assets. Besides the committee members and the staff, the plan administrator always has a few people there, as does the investment advisor consultants. The advisors discuss past, present, and future market behavior, which is sort of interesting. And the administrators, committee, and advisors discuss the behavior of the plan and its participants, and what changes (if any) to make to the investment choices. I find it useful to hear their thoughts and plans. And on occasion in the past as a guest and plan participant, i've even been able to influence the investment choices. Guests aren't allowed to speak of course, but there is a short public-comment opportunity at the beginning of the meeting, and plan participants can also submit comments and proposals beforehand.
This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices. And they're planning to up-scale the Target Retirement Fund suite from Institutional to Collective Investment Trusts.
So all in all, not too bad for now.
Re: I sat in on our latest 457b committee meeting...
I was a member of my company’s Retirement Committee, which dealt with both the 401k plan and the defined benefit pension plan. Our plan was a good bit smaller than yours, with 401k assets of $300 million or so.
It sounds like the meeting setup was similar between our two plans. Fidelity was our advisor and administrator, and they always had plenty of interesting things to say.
I’d encourage you to keep attending meetings, and to participate as you are allowed. To the extent that you can keep advancing Boglehead-style fund choices for your plan, that will be good for all participants.
It sounds like the meeting setup was similar between our two plans. Fidelity was our advisor and administrator, and they always had plenty of interesting things to say.
I’d encourage you to keep attending meetings, and to participate as you are allowed. To the extent that you can keep advancing Boglehead-style fund choices for your plan, that will be good for all participants.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: I sat in on our latest 457b committee meeting...
I wouldn't think the total stock index fund would be wandering anywhere near the chopping block. There's an argument to be made that ALWAYS including index fund offerings in major asset classes is sort of a minimum fiduciary requirement. Excluding them for "simplicity" shouldn't be an option, at least in my book.MadHungarian wrote: ↑Thu Jul 29, 2021 12:22 am This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices.
Maybe you'll have to make the committee aware of prior lawsuits filed against companies like Boeing that resulted in huge settlements because low-cost options were absent, or fees in general were too high.
See links:
https://401kspecialistmag.com/boeing-se ... y-lawsuit/
https://www.planadviser.com/boeing-401k ... ss-action/
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: I sat in on our latest 457b committee meeting...
Yes, having an index fund for US stocks, International Stocks, and US Bonds is three funds. Some plans split the US component between large cap and small cap. So four. Out of what is usually a 25-30 fund line up that is a reasonable allocation to make to passive investing. If funds are to be removed, the duplicate funds for active style investment should be considered first.retired@50 wrote: ↑Thu Jul 29, 2021 8:54 amI wouldn't think the total stock index fund would be wandering anywhere near the chopping block. There's an argument to be made that ALWAYS including index fund offerings in major asset classes is sort of a minimum fiduciary requirement. Excluding them for "simplicity" shouldn't be an option, at least in my book.MadHungarian wrote: ↑Thu Jul 29, 2021 12:22 am This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices.
Maybe you'll have to make the committee aware of prior lawsuits filed against companies like Boeing that resulted in huge settlements because low-cost options were absent, or fees in general were too high.
See links:
https://401kspecialistmag.com/boeing-se ... y-lawsuit/
https://www.planadviser.com/boeing-401k ... ss-action/
Regards,
There have been trends to reduce the number of funds offered now that the majority of participants choose Target Date funds.
Re: I sat in on our latest 457b committee meeting...
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Last edited by Fudgie on Thu Sep 16, 2021 9:02 pm, edited 1 time in total.
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Re: I sat in on our latest 457b committee meeting...
The average 401(k) participant loves Target Date funds. They really make the most sense for a real set it and forget it investor who does not know the difference between a stock and a bond. Before Target Date funds, a very large % of participants put their money in money market funds. TDF make sense for the majority of participants.Fudgie wrote: ↑Thu Jul 29, 2021 9:05 amWell, SOMEONE chooses Target Date Funds for the participants. That much is true.lazynovice wrote: ↑Thu Jul 29, 2021 9:01 am There have been trends to reduce the number of funds offered now that the majority of participants choose Target Date funds.
Re: I sat in on our latest 457b committee meeting...
Not to hijack OP's thread, but I was contemplating doing this myself (joining a "committee") to review investments and have a voice.
We have a nongovt 457b and while I am pleased with the funds offered (all Fidelity and mostly low cost index), I am not so pleased with the lump-sum immediate distribution on separation. I want to advocate for several year (3, 5 etc) options that help control taxable income.
Would a forum like such a committee be one to raise this and are there others who have been successful changing the plan document for items such as this? Is there literature/info to support such a move or should I expect point-blank resistance?
Thanks!
We have a nongovt 457b and while I am pleased with the funds offered (all Fidelity and mostly low cost index), I am not so pleased with the lump-sum immediate distribution on separation. I want to advocate for several year (3, 5 etc) options that help control taxable income.
Would a forum like such a committee be one to raise this and are there others who have been successful changing the plan document for items such as this? Is there literature/info to support such a move or should I expect point-blank resistance?
Thanks!
Re: I sat in on our latest 457b committee meeting...
Yes, join the committee if you can.tenkuky wrote: ↑Thu Jul 29, 2021 9:18 am Not to hijack OP's thread, but I was contemplating doing this myself (joining a "committee") to review investments and have a voice.
We have a nongovt 457b and while I am pleased with the funds offered (all Fidelity and mostly low cost index), I am not so pleased with the lump-sum immediate distribution on separation. I want to advocate for several year (3, 5 etc) options that help control taxable income.
Would a forum like such a committee be one to raise this and are there others who have been successful changing the plan document for items such as this? Is there literature/info to support such a move or should I expect point-blank resistance?
Thanks!
Yes, the committee is the appropriate forum to make the changes that you would like.
Whether you will be successful or not depends on the dynamics of the committee, and how well you can convey your ideas in a calm, reasoned way. Your committee may have one or two dominant people who drive the decisions, or it may operate more democratically. Hopefully you can present ideas that will help out participants, especially if they come with minimal or no cost to the Plan. Don’t be a bomb thrower; work within the system if at all possible.
I’d strongly encourage you to try to join the Committee. You’ll never know if you could have been a force for change and improvement unless you have a seat at the table.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: I sat in on our latest 457b committee meeting...
You have to read the committee charter. Sometimes the plan investment choices are selected by one committee (with investment knowledge) while the plan terms are chosen by another(with benefit expertise).tenkuky wrote: ↑Thu Jul 29, 2021 9:18 am Not to hijack OP's thread, but I was contemplating doing this myself (joining a "committee") to review investments and have a voice.
We have a nongovt 457b and while I am pleased with the funds offered (all Fidelity and mostly low cost index), I am not so pleased with the lump-sum immediate distribution on separation. I want to advocate for several year (3, 5 etc) options that help control taxable income.
Would a forum like such a committee be one to raise this and are there others who have been successful changing the plan document for items such as this? Is there literature/info to support such a move or should I expect point-blank resistance?
Thanks!
Non-governmental 457s are usually in healthcare and compensation consultants are used to ensure the plans don’t violate any IRS rules on out of market compensation. You’d have better luck if you can find other employers like yours that offer the 3-5 year payout to show that it is “market”
Re: I sat in on our latest 457b committee meeting...
Super helpful, thanks! On it.lazynovice wrote: ↑Thu Jul 29, 2021 9:32 amYou have to read the committee charter. Sometimes the plan investment choices are selected by one committee (with investment knowledge) while the plan terms are chosen by another(with benefit expertise).tenkuky wrote: ↑Thu Jul 29, 2021 9:18 am Not to hijack OP's thread, but I was contemplating doing this myself (joining a "committee") to review investments and have a voice.
We have a nongovt 457b and while I am pleased with the funds offered (all Fidelity and mostly low cost index), I am not so pleased with the lump-sum immediate distribution on separation. I want to advocate for several year (3, 5 etc) options that help control taxable income.
Would a forum like such a committee be one to raise this and are there others who have been successful changing the plan document for items such as this? Is there literature/info to support such a move or should I expect point-blank resistance?
Thanks!
Non-governmental 457s are usually in healthcare and compensation consultants are used to ensure the plans don’t violate any IRS rules on out of market compensation. You’d have better luck if you can find other employers like yours that offer the 3-5 year payout to show that it is “market”
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Re: I sat in on our latest 457b committee meeting...
The issue is that they also a large-cap, mid-cap, and small-cap index fund. So the total index fund (which is new -- i got them to add it a couple years ago), somewhat duplicates them. The new investment advisor recommended dropping the total index to reduce the duplication. Their IPS wants to have one active and one passive fund in each major sector. So now with Total Index, we have two passive funds in each of those three sectors.retired@50 wrote: ↑Thu Jul 29, 2021 8:54 amI wouldn't think the total stock index fund would be wandering anywhere near the chopping block. There's an argument to be made that ALWAYS including index fund offerings in major asset classes is sort of a minimum fiduciary requirement. Excluding them for "simplicity" shouldn't be an option, at least in my book.MadHungarian wrote: ↑Thu Jul 29, 2021 12:22 am This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices.
Maybe you'll have to make the committee aware of prior lawsuits filed against companies like Boeing that resulted in huge settlements because low-cost options were absent, or fees in general were too high.
See links:
https://401kspecialistmag.com/boeing-se ... y-lawsuit/
https://www.planadviser.com/boeing-401k ... ss-action/
Regards,
The issue for me is that the three sector index funds don't have the same coverage as the total index, they add complexity and recordkeeping headaches for the participants, etc. A single total stock index fund is much preferable from my standpoint.
Anyway, the plan committee didn't go with the advisor's recommendation on this item, for now.
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Re: I sat in on our latest 457b committee meeting...
Yes, between all the plans I have had and those my spouse has had, none has had a total market index fund. Almost all have had S&P 500 and a completion fund.MadHungarian wrote: ↑Thu Jul 29, 2021 10:58 amThe issue is that they also a large-cap, mid-cap, and small-cap index fund. So the total index fund (which is new -- i got them to add it a couple years ago), somewhat duplicates them. The new investment advisor recommended dropping the total index to reduce the duplication. Their IPS wants to have one active and one passive fund in each major sector. So now with Total Index, we have two passive funds in each of those three sectors.retired@50 wrote: ↑Thu Jul 29, 2021 8:54 amI wouldn't think the total stock index fund would be wandering anywhere near the chopping block. There's an argument to be made that ALWAYS including index fund offerings in major asset classes is sort of a minimum fiduciary requirement. Excluding them for "simplicity" shouldn't be an option, at least in my book.MadHungarian wrote: ↑Thu Jul 29, 2021 12:22 am This last meeting didn't go too badly. Some modest changes are planned to the actively-managed stock funds. The Total Stock Index fund survived the chopping block for now (i was worried there). Like usual, they're always trying to simplify the fund choices.
Maybe you'll have to make the committee aware of prior lawsuits filed against companies like Boeing that resulted in huge settlements because low-cost options were absent, or fees in general were too high.
See links:
https://401kspecialistmag.com/boeing-se ... y-lawsuit/
https://www.planadviser.com/boeing-401k ... ss-action/
Regards,
The issue for me is that the three sector index funds don't have the same coverage as the total index, they add complexity and recordkeeping headaches for the participants, etc. A single total stock index fund is much preferable from my standpoint.
Anyway, the plan committee didn't go with the advisor's recommendation on this item, for now.
Re: I sat in on our latest 457b committee meeting...
*****
Last edited by Fudgie on Thu Sep 16, 2021 9:00 pm, edited 1 time in total.
Re: I sat in on our latest 457b committee meeting...
The trick for the uninformed is that there are TD funds and TD index funds. Very sneaky how they sound the same. The ER is a big difference.Fudgie wrote: ↑Thu Jul 29, 2021 11:46 am
Target Dates funds are dandy. I heartily agree. If my 401K had only Target Date funds, I'd contentedly plow my contributions into one.
But, I think most people are simply auto-assigned to a TD fund that aligns with their age. I think that many of these folks don't even know they're in these funds. That's all.
I bet some of the plans that got dinged/sued had the former and not the latter.
Re: I sat in on our latest 457b committee meeting...
Thought that was interesting since our 457b and 401k only has one index fund offered, which oddly is different between the two - the 457 has a S&P 500 index at one basis point, while the 401k has a mid cap index at four basis points. The target date funds are at 32 to 42 basis points and the sector specific stock funds (large cap, mid cap, small cap, international) which are non-index have expense ratios of 22-54, which I suppose is OK. For my non-large cap exposure I did opt out and put that into the Schwab Personal Choice Retirement Account and bought the index Schwab ETFs for the appropriate categories, more for ease of tracking rather than a desire to save 20-30 basis points.