A must-read, especially if you are new to 403b plans.

If you have a 401(k) you have a certain level of protection that those of us with 403(b)’s do not. Who would think you’d need protection to set aside money for your retirement. Not me, nor tens of thousands of others who need it most.

The law, Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for private industry to provide protection for individuals in these plans. But it does NOT apply to the public servants in 403(b) plans.

Why not? and what does that mean to me? you might be wondering.

It’s not easy to answer why not without pointing fingers at the insurance companies, lobbyists, and the regulating agencies in power. Suffice to say, it’s beyond the scope of this post.

The second question, what no protection means to you, is easier. Money. Lots of it. There’s a link here that directs you to a post I wrote over on Choose FI and it includes a pictorial of the effect of fees on your money.

You’d no sooner sign up for a mortgage with an interest rate 2% higher than you could get down the street because you know the long-term effect of the higher rate.

Mortgage rates, unlike 403(b) fee expense rates, are published and disclosed. Furthermore, you do not see the long-term effect of fees because they are disguised and hidden.