YOU HAVE FOUND OUR OLD WEB SITE. BE SURE TO CHECK OUT OUR NEW AND IMPROVED SITE!     Bill to Improve California 403(b) Plans Introduced     Background Teachers and other school district employees that qualify to purchase tax-sheltered annuities (TSAs) through their 403(b)* plans are drowning in choice. California Insurance Code 770.3 allows these employees to purchase TSAs through any provider or company of their choice. But what began as a law intended to protect employees' freedom of choice has resulted in an unwieldy benefits system with excessive providers, administrative burdens, and ongoing liability concerns. Many teachers struggle to budget for their retirement, only to discover that their savings are eroded by undisclosed fees, penalties, and restrictions. Companies in the private sector screen retirement products for their employees' 401(k) plans. Teachers demand a similar screening performed for 403(b) products.   Problem From the employer's perspective, Insurance Code 770.3 requires them to let all annuity providers sell products, regardless of vendor quality or fee structure. From the employee's perspective, there is virtually no screening of providers and little or no access to independent product information or financial education. Employees are often aggressively pursued by vendors offering high-loads or hidden-fees. Low cost and/or high quality providers cannot compete with the advertising resources of high cost vendors, so employees are often unaware of lower cost alternatives.   Solution - AB 2506   Allow California State Teacher's Retirement System (STRS) to assemble a "registered vendor" list. Vendors pay a fee to submit objective information about their products (fee structure, years of experience, etc.) for registration on the list. This list would be made available to school districts and public agencies.     Amending Insurance Code 770.3 to require school districts and public agencies to select only from the STRS registered vendor list. This is similar to the request for proposal (RFP) process, which is how 403(b) business is done in most other states, and this is exactly how business is done in private sector plans such as 401(k).     This bill allows school districts and public agencies to create a manageable list of high-quality vendors for their employees. It requires annuity providers to submit objective disclosure of their fees. It benefits providers by conveying product information more efficiently to employees and by protecting the industry from bad-actors. It benefits education by raising the quality of teachers' retirement benefits at no cost to the State.     * Internal Revenue Code   Home | Disclaimer | © 2002 403(b)wise. All rights reserved.