Thanks for all the great info! My wife works for a non-profit that sees kids in a couple counties that would otherwise not have access to dental care. She doesn’t own or manage the practice, so we are at the mercy of the office manager. I have looked the non-profit up on guidestar and it looks like they have had a balanced/slightly negative budget based on their tax filings over the last couple years. Not really sure that there would be much to profit share. I want to inquire how they decided on Principal and what funds we will be offered, but not sure how else to approach this. I feel that asking to get a fiduciary involved will continue to delay the process of getting a retirement option set up.
First, Principal is one of the worst, their expense ratios are very high. But as I said above, if they insist on a 403b plan (vs. 401k), then the choices are few. However, they could have gotten a much better plan than Principal would offer. This all comes down to doing the legwork. So two questions:
1) Why did they pick a 403b vs. a 401k? There are certain advantages and disadvantages to each plan, and they have to have a very clear reason to pick one over another. Here's a comparison between the two:
https://www.rbcwm-usa.com/resources/file-687824.pdf
One reason to have a 403b plan might be to avoid dealing with ERISA (which is a huge reason by the way, and that is because you are automatically exempt from certain requirements under ERISA, and this should bring the cost of the plan down significantly):
http://www.consultrms.com/Resources/36/403(b)/91/What-Does-it-Take-to-be-a-Non-ERISA-403(b)-Plan
So in that case they don't need a fiduciary at all. They can just drop this plan off at any provider they wish, even if it has the worst funds and the highest costs, but again, they do not have to do that.
2) Why did they pick Principal? What are the alternatives? Why did they not pick low cost open-architecture providers vs. a bundled one with high fees? I've seen really nice 403b plans with low cost funds. Vanguard does 403b plans as well:
https://personal.vanguard.com/us/whatweoffer/smallbusiness/403b7
They have all of the investor shares funds in their lineup, I bet that's a lot better than what Principal would offer. So I would have them call Vanguard and compare the fees side by side with Principal.
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