Ep03: 403(b) Explained – What Your District Didn’t Teach You
Ep03: 403(b) Explained – What Your District Didn't Teach You
Why Did No One Ever Teach Us This?
When Jessica, a first-year teacher in Orange County, opened her new-hire packet, she saw 403(b) information but had no idea what it meant.
Her district offered six different vendors, some with high fees, some with surrender charges, some with limited investment choices. No orientation, no explanation, no support.
Like many educators, she asked HR for help — but HR legally cannot provide investment advice.
So teachers are left to figure out everything alone.
What CalSTRS & Federal Regulations Actually Say About 403(b) Plans
403(b) plans are governed by IRS rules — not CalSTRS.
CalSTRS itself states on its website:
“We do not sponsor, endorse, or oversee 403(b) vendors. Teachers must evaluate plans independently.”
IRS rules require the following:
- All 403(b) plans must be offered by district-approved vendors
- Teachers are responsible for selecting the vendor
- Some contracts include multi-year surrender charges
- Fees can vary drastically between providers
CalSTRS Pension2 warns:
“High fees can significantly reduce retirement savings over time.”
This is why understanding 403(b) basics is essential.
Authoritative Tools Every Teacher Should Use Before Choosing a 403(b)
Government-level tools include:
- IRS 403(b) Contribution Limits
- 403(b) Vendor List from 403bcompare.com (California requirement)
- FINRA Fund Analyzer to expose hidden fees
- Department of Labor Fiduciary Guidelines
These tools help teachers compare vendors safely and legally.
A Clear 403(b) Framework: How to Pick the Right Plan Like a Financial Pro
01. Go to 403bcompare.com
Check your district vendors. Review fees, surrender charges, and features.
02. Avoid plans with surrender periods
Many teachers unknowingly sign 7–12 year contracts.
03. Compare fees using FINRA tools
Even a 2% fee can cost a teacher over $150,000 in lost retirement income.
04. Contribute consistently — even small amounts
A small $100 monthly contribution can grow significantly when started early.
Need help choosing the right 403(b) vendor?
Get a district-specific 403(b) review so you know exactly which options benefit you — not the advisor.