When it comes to things like saving for retirement, there’s nothing like waiting until the last minute! The last minute of the current month, that is… As I noted the other day, I’ve been thinking about increasing our retirement saving by opening a 457(b) retirement savings account, and my employer requires retirement-related paperwork to be filed before the end of the month in order for it take effect the following month. After a bit of hand-wringing and a last minute change of heart when it comes to the vendor, I snuck my 457(b) paperwork in just under the wire late in the day on Friday.
Regarding the vendor, I was planning on using Fidelity, mainly because Vanguard isn’t an option like it was for my optional 403(b) account. When I started looking for the application materials, however, I learned that Fidelity was only offered through a third-party. It’s a long story, but suffice it to say that Fidelity wasn’t willing to manage the 457(b) accounts directly for my employer, so they opted to have a “capital management” firm serve as the go between. This didn’t actually add to the cost, as the money management firm is eating the cost in hopes of making contacts for fee-only financial planning.
The problem with this is that I’m not completely comfortable having our funds held in an omnibus brokerage account that relies on a third-party. Moreover, we wouldn’t be able to access our account info through Fidelity’s NetBenefits; rather, we’d have to use a third-party website. Finally, I’m not crazy about the idea of getting hassled by some money manager looking to upsell me. Thus, I ended up going with TIAA-CREF, which offers a similar suite of mutual funds with remarkably similar fees. TIAA-CREF is fractionally higher, but I’m willing to forego 0.10% for the resulting peace of mind.
As far as opening the account with TIAA-CREF goes, I had to go through their phone enrollment hotline. It took about ten minutes, during which time they asked me a bunch of questions and then promised to send me a pre-populated application packet within three days. Apparently I just have to sign it and mail it back. Not as easy as opening my SEP-IRA online with Vanguard, but it definitely wasn’t hard.
The bottom line here is that we’ll be socking away an additional $1722.22/month toward retirement for the rest of the the year — this will leave us $0.02 shy of the $15, 500 457(b) contribution limit. This money will be invested in a combination of domestic and international stock mutual funds and a domestic bond fund.