Though 403(b) plans are similar to 401(k) plans in some ways and serve the same basic purpose, it’s important to be aware of what makes 403(b) plans unique.
Generally, you want your ETFs to have fees of under 0.5% and hopefully under 0.2% for mainstream asset classes. The majority of ETFs just track an index, which doesn’t require any skill and so you shouldn’t overpay as performance isn’t likely to improve, in fact it will probably worsen as higher fees just eat into your savings according to most academic studies.
If your 403 isn’t subject to ERISA then there are fewer safeguards in place and your 403 may contain products that are a better deal for the salesperson than for you. You’re a little more on your own without ERISA protection. So if you have a 403 plan that is not covered by ERISA and you are being sold things like annuities and insurance under the plan, than you may want to be cautious.
Of course, there’s no guarantee you’ll see great investment performance, but historically speaking over decades such an investment approach has seen relatively robust returns. Again, do check the fees on the fund. Ideally you want to be paying 0.5% or less. That might seem like a small number, but over time it can really add up. For example, with retirement savings of a half a million, a 0.5% fee is $2,500 a year or $75,000 total if you have 30 years until retirement.
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