403(b) plan--Fidelity or Vanguard

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Topic Author
jjwpls
Posts: 63
Joined: Sat Feb 20, 2016 10:06 am

403(b) plan--Fidelity or Vanguard

Post by jjwpls »

Hello,

My wife's school allows her to select a 403(b) plan among different providers, and Fidelity and Vanguard appears to be most popular ones. Both provide low-cost index funds with low account maintenance fee, so the end results probably won't differ much (although Vanguard charges a bit more annually but have more investment options available). Still, I'd like to learn from experience -- for example, which one provides better user experience, which one you are happier to use...etc. All your input will help us make a decision, and below is the summary of the 403(b) plan of each:

Vanguard
--Fees: There is a $5 monthly book keeping fees for each account, OR $60 annually (http://www.vanguard.com/pdf/403bbp.pdf).
--Investment options: Have the usual low-cost index fund, such as Total Market Fund and Total International Index Fund (http://www.vanguard.com/pdf/403binvt.pdf)

Fidelity:
--Fees: Lower than Vanguard, probably $3 per month--I called its call center a few weeks ago, but cannot remember exactly how much Fidelity charge
--Investment option: Currently its site for 403b investment option is down, but I remember there are fewer options than Vanguard. For example, there is no equivalent to Vanguard's Total International Stock Index or TIPS. It does have Total Market and Total Bond Index, though.

A bit information about or financials:

Tax bracket: 22% federal, 5% state.
Having been able to max out my 401(k), my ROTH IRA, her ROTH IRA for the past several years. This year I should be able to max out my HSA, plus some after-tax contribution converted to ROTH.
Investment portfolio: Roughly 65% in stock, 25% bond, and 10% money-market, plus emergency fund for 12m expense.

Thanks so much for your suggestions!
Last edited by jjwpls on Sat Sep 18, 2021 1:54 pm, edited 1 time in total.
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ResearchMed
Posts: 16795
Joined: Fri Dec 26, 2008 10:25 pm

Re: 403(b) plan--Fidelity or Vanguard

Post by ResearchMed »

I'm not sure that you've accurately captured the Vanguard fees.
From the link you posted:

"• A flat recordkeeping fee of just $5 per month
($60 annually)...
"[emphasis added]

The $60 seems to be the total of the $5 monthly fees, a "total equal to", not an "and".
It's not a huge difference, but I don't think there is a separate annual fee.

BTW, when our 403b was moved from TIAA some years ago [it was moved back to TIAA last year!], we had a choice of Vanguard or Fidelity also.
However, we slice and dice, and there were a few unique (non-index) Vanguard funds and Fidelity funds that we specifically wanted. So it was less expensive to keep a 403b plan account at each than to pay to purchase V funds at F, or the reverse.

All of the V and F funds are now held in TIAA's Brokerage Window, but we now would need to pay to purchase more.

As for service, these days, I'd probably recommend "not Vanguard" :annoyed

RM
jjwpls wrote: Sat Sep 18, 2021 1:34 pm Hello,

My wife's school allows her to select a 403(b) plan among different providers, and Fidelity and Vanguard appears to be most popular ones. Both provide low-cost index funds with low account maintenance fee, so the end results probably won't differ much (although Vanguard charges a bit more annually but have more investment options available). Still, I'd like to learn from experience -- for example, which one provides better user experience, which one you are happier to use...etc. All your input will help us make a decision, and below is the summary of the 403(b) plan of each:

Vanguard
--Fees: There is a $5 monthly book keeping fees for each account, and $60 annually (http://www.vanguard.com/pdf/403bbp.pdf).
--Investment options: Have the usual low-cost index fund, such as Total Market Fund and Total International Index Fund (http://www.vanguard.com/pdf/403binvt.pdf)

Fidelity:
--Fees: Lower than Vanguard, probably $3 per month--I called its call center a few weeks ago, but cannot remember exactly how much Fidelity charge
--Investment option: Currently its site for 403b investment option is down, but I remember there are fewer options than Vanguard. For example, there is no equivalent to Vanguard's Total International Stock Index or TIPS. It does have Total Market and Total Bond Index, though.

A bit information about or financials:

Tax bracket: 22% federal, 5% state.
Having been able to max out my 401(k), my ROTH IRA, her ROTH IRA for the past several years. This year I should be able to max out my HSA, plus some after-tax contribution converted to ROTH.
Investment portfolio: Roughly 65% in stock, 25% bond, and 10% money-market, plus emergency fund for 12m expense.

Thanks so much for your suggestions!
[emphasis added]
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Topic Author
jjwpls
Posts: 63
Joined: Sat Feb 20, 2016 10:06 am

Re: 403(b) plan--Fidelity or Vanguard

Post by jjwpls »

ResearchMed wrote: Sat Sep 18, 2021 1:50 pm I'm not sure that you've accurately captured the Vanguard fees.
From the link you posted:

"• A flat recordkeeping fee of just $5 per month
($60 annually)...
"[emphasis added]
Ha--I typed too fast :) , and thank you for pointing out the error; I have corrected it in the original post.
terran
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Re: 403(b) plan--Fidelity or Vanguard

Post by terran »

If you already have accounts at one or the other I'd probably open it there just so more things are in one place. It may also be easier to rollover to an IRA at the same company when she stops working for this employer, so opening it where she'd want an IRA could make sense. If not or you if have accounts at both places, then I'd probably go with Fidelity for the $36/year instead of Vanguard for $60/year but would want to double check the Fidelity investment options first. If I could hit my desired asset allocation with the available Fidelity funds and my other accounts without too much trouble. If not then I'd pay a little more for Vanguard with more investment options if that would make life easier.
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ruralavalon
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Location: Illinois

Re: 403(b) plan--Fidelity or Vanguard

Post by ruralavalon »

It probably makes little difference. My 401k was elsewhere with bad to mediocre fund choices, I would have been thrilled with either Vanguard or Fidelity.

My personal preference would probably be Vanguard for a little broader selection of funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Metsfan91
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Location: Rust Belt

Re: 403(b) plan--Fidelity or Vanguard

Post by Metsfan91 »

First, I'll compare the funds available. Does either fund family work for me? Then, I'll compare expense fees for these funds. If the expense fees are pretty much similar, I'll follow the low account maintenance fee. Go with Fidelity.
"Know what you own, and know why you own it." — Peter Lynch
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