It can be perceived that the process of setting up a 403(b) retirement account can be an overwhelming and confusing process. Sgroi Financial is here to assist and push those worries aside, making the enrollment process as simple and easy to understand as possible. Our firm is a proud local supporter of teachers, assisting over 3,000 clients from over 100 school districts with their 403(b) plans. This overview provides information on setting up the account, understanding your fees and other surrender charges, and how Sgroi Financial can be of help every step of the way. Setting Up Your New 403(b) Plan The first step in setting up your account is to check out the Vendor List provided by your school district; these vendors range from insurance companies to independent financial institutions. After selecting, it is important to schedule your meeting; be sure that when you meet with this financial advisor to have them explain all of the fees associated with the account and what you are investing in. At Sgroi Financial, we complete the process of setting up your Salary Reduction Agreement (commonly referred to as an SRA) on your behalf and inform you on the specifics of the fees and your investments. Know Your Fees Depending on your 403(b) plan selection, you may have different investment options. The most common options for this type of account are mutual funds, variable annuities, and fixed annuities. The fees for mutual funds are usually cheaper than annuities but can also vary in cost based on share class and the type of investment strategy you want (active vs passive). Normally, one of the biggest advantages of an annuity is that it offers tax deferred growth; this is a key benefit if you are working with after-tax money. However, the problem with this tactic is that 403(b) plans are already tax deferred, which means that using an annuity to gain tax deferral would be redundant. Additionally, variable annuities can be very expensive, as much $2.30 per year for every $100 invested in one annuity option. Although this may not seem like a lot of money, in the long run these fees will eat into your returns, making it harder to reach your investment and/or retirement goals. Lastly, both fixed and variable annuities typically carry surrender charges that can last as long as 7-10 years. This means that if you want to move your money to a different financial institution, you may be faced with a choice of paying significantly high charges or leaving your money where it currently is. Annuities & Surrender Charges As previously mentioned, certain circumstances require the need for an annuity. Very few times we see those types of situations, but when we do it is important to understand what costs are involved and the timeframe needed to hold the investments to eliminate any penalties. At Sgroi Financial, we believe the best way to maximize your retirement savings is to utilize mutual funds. By using this type of fund compared to annuities, it will reduce the account’s expenses by at least 25%. Lesser fees to pay leads to more growth in your account. Our advisors have a fiduciary responsibility to clients and will always go over all fees associated with the account. There are no surrender charges with our firm, as we believe you should have the freedom to switch if you do decide Sgroi Financial is not the right fit for you. What We Offer Our team of 403(b) retirement plan advisors offer numerous options and guidance when preparing your financial plan. We provide the ability to set up and/or transfer your 403(b)/Tax Sheltered Annuity (TSA) account, as well as management of your account and the investments selected. Clients are easily able to access their accounts online, and our office is available for questions, assistance, or meetings via phone, Zoom/screen share, and in-person. Typically, the set-up of a new 403(b) can be accomplished in one meeting. Contrary to popular belief, the main reason to hire a retirement plan advisor is not to pick funds or chase the highest rate of returns. It is the knowledge of the process by which investments are prudently selected and fiduciary standards are put into practice that makes a good 403(b) financial advisor indispensable.

ABOUT SGROI FINANCIAL

Sgroi Financial is a full service, independent financial planning firm proudly serving the Western New York area since 1971. We offer services that will help you achieve your financial goals including retirement planning, investment management, estate planning, college planning and insurance. We help individuals, families, retirees, working adults, young adults and business owners.