When you think about greatness, we default to Micheal Jordan, President Lincoln or Albert Einstein. Â The Los Angeles Unified School District’s 457(b) plan may not appear to be great but when compared to the typical 403(b) plan, it is most certainly GREAT! This is not just my opinion, here are three reasons:
- LAUSD’s 457(b) won a “Plan Design” award in 2014. I cannot tell you how rare winning an award in this category from an independent professional organization, The National Association of Government Defined Contribution Administrators (NAGDCA). Have you ever heard of a public K-12 school district’s 403(b) plan winning an award? I have not, but please comment if you have.
- If you work for LAUSD and looking for a low-cost plan that invests your hard earned tax-deferred contributions in genuine investment companies, the following table lists your choices and what you will pay. This is an example of cost transparency that you will not see in 403(b) choices.
- Lowered Costs! Vanguard and Blackrock LifePath (aka, Target Date) choices have lowered their already previous low costs even more!
If you looking for a low-cost plan that invests your hard earned tax-deferred contributions in genuine investment companies (not expensive and low performing insurance products), the following table lists your choices and total fees.
Contact VOYA Reps for Presentation at your School or for help to enroll:
Joe Marini (310) 962-2525; Joe.Marini@voya.com
Michelle Williams (720) 925-5729; Michelle.Williams@voya.com
Note: The 457(b) VOYA reps are allowed on district property.  The 403(b) reps are never allowed.
Steve’s Bio
Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension, retired in 2008. The first generation Italian-American, ex-Marine, Vietnam vet wrote investment articles for United Teachers-Los Angeles’ union newspaper (circ. 40,000) for 11 years. A thrice featured volunteer retirement plan advocate, twice in the Los Angeles Times and once in U.S. News and World Report. He has recently been on the national broadcast PBS Frontline: The Retirement Gamble. He started an investor self-help group with Sandy Keaton for LAUSD colleagues and wrote 6,500 posts in three investment forums since 1997. Frequently quoted and interviewed by the media, testified at state legislative hearings, and honored with the “Unsung Hero” award by United Teachers Los Angeles, the teachers’ union, for his retirement planning advocacy.
After ten years, Steve still serves on LAUSD’s Investment Advisory Committee as Member-at-Large and former co-chair. The committee oversees 457(b)/403(b) plans for 55,000 former and current LAUSD employees, assets of $2.4 billion.
It appears that your long and hard-fought battle to get better and lower-cost options for the LASD teachers has finally paid off, Steve.
Best regards for a job well done.
Mel Lindauer
Forbes.com columnist and co-author, The Bogleheads’ Guide to Investing and The Bogleheads’ Guide to Retirement Planning.
Mel? from Bogleheads? Of course it is!!!!
It’s an honor to see you post on my little old blog. Thanks so much. This plan has been the result of over 20 years of fighting, screaming (a little) and massive persistence from a small group of us to finally get a decent low-cost plan with Vanguard and genuine growth oriented investments.
FYI readers, Mel has many titles! Where do I start? He is the co-founder with Taylor Larimore of the most famous investment website in the world, Bogleheads.org, the co-author of two Boglehead books and a frequent Forbes columnist. In his spare time, he just completed his MBA and was elected to his city’s council. And then from midnight till the wee hours in the morning, he contributes to Morningstar’s Bogleheads investment forum too. I am just tired writing all that Mel does.
Once again, it is an honor to see your post. It made my day.
Have a great rest of the weekend,
Warmest regards,
Steve
Thanks for the kind words, Steve. We’re all working towards the same goal — to help educate investors so that they can get their fair share of the market returns in order to reach their financial goals.
However, when they only have lousy high-cost funds to choose from in their retirement plan, it’s that much harder for them to do so. That’s why your long fight for low-cost funds in the LAUSD is so important.
Congrats on a job well done!
Mel
Steve, I thought you’d like to know by using the chart you sent me on the 457 fees, my co-worker and her husband are switching to the LAUSD 457 plan. Just the other day one of the guys who does security on our campus told me he just received his BA in Sociology and my co-worker asked me if I gave him my spiel on retiring early. I laughed and said not yet. But I will! LOL. That’s my soapbox and as I explain to the younger teachers, we didn’t have this information when we started 30 plus years ago. Thanks for all your help.
Hi Steve. Thank you so much for working on lowering the fees for the hard working teachers of LAUSD. You are a boglehead and have our best interest in mind, but I want to ask you the question of why we must pay the .25% fee to voya.
I am new to LAUSD, and have a 457 with a previous employer, which has t. rowe price as their 457 provider. I own the vanguard institutional index in the plan, and only pay .04% total. T Rowe Price does levy any additional fees, but they have other fund offerings that have higher fees. My cost is .04%. It is the fairfax county, va 457 plan.
Let’s say I have $1,000,000 in the plan. The lausd plan would cost me $2500 more per year, than what I am paying for my previous 457 plan. Why is this? Is this because of the “hold harmless” rule that LAUSD requires? To me this is a substantial reduction in my dividends, since 1 mil would only yield about 19k in dividends in the S&P 500, and Voya would be taking more than 13% of these earnings.
Due to this .25% extra fee, wouldn’t I be better off just maxing a Roth IRA at vanguard holding VOO and VTI (expense ratio .04%), and putting the remainder in VOO in my taxable account? (The last time I checked, VTI had a lower percent of qualified dividends than VOO, and thus I prefer VOO in a taxable account).
I would love to hear your thoughts. Thank you so much for all your effort.
Sorry, it should read t. rowe price does not levy any additional fees.