How Harbourfront Wealth Management Conducts a 403(b) Fee Review

What does a 403(b) fee review count, and who needs one?

A 403(b) fee review calculates the combined dollar impact of mutual fund expense ratios, variable annuity mortality charges, administrative fees, optional rider costs and advisory fees across your retirement balances. A 1.6% yearly cost on $150,000 takes $2,400 a year from your savings, whereas an unbundled 0.1% index portfolio takes just $150. Many public-school educators carry contracts without realizing how many separate layers pull money out of their balance every quarter.

The evaluation covers both mutual fund custodial accounts and insurance annuity contracts sold by representatives visiting staff lounges. It also reviews inactive plans from prior school districts, inherited accounts and rollover IRAs funded by earlier plan distributions. Most public-school plans are governmental plans under IRS rules and fall outside ERISA, which means districts are rarely required to send you the standard fee disclosure notices private-sector workers receive. To uncover the real numbers, Harbourfront Wealth Management asks the insurance carrier or recordkeeper directly for the contract data page and the full underlying prospectus.

Three groups gain the most from this analysis: educators holding variable annuities inside their district plans, anyone with $500,000 or more in retirement savings who expects to stop working within the next five years, and people settling an inherited 403(b). The review has one real constraint. While you still work for the district and are under 59½, it cannot move your own balance outside the district's approved vendor list. If every vendor on that list charges high rates, the review picks the cheapest option on the menu and checks whether future paycheck deferrals belong in a governmental 457(b) instead.

Follow the first ninety days with Harbourfront Wealth Management, week by week

During weeks one and two, families gather recent account statements, the annuity contract data page, underlying investment reports and any beneficiary election paperwork. Harbourfront Wealth Management contacts the vendor directly to secure any missing schedule of asset charges or surrender cutoff dates. By weeks three and four, you receive a written cost sheet that lists every account expense in actual dollars per year alongside the exact date any remaining surrender penalty expires.

Weeks five and six bring the first formal planning discussion. Your advisor compares your current holdings with lower-cost alternatives and prices any surrender fee against the yearly savings. When a surrender penalty drops to zero within twelve months, we often recommend waiting. Before work starts, you sign a written agreement that states the exact fee for the review.

Direct custodian-to-custodian transfers begin across weeks seven through ten when a reallocation makes economic sense. In practice, the receiving custodian sends a formal letter of acceptance, after which the transferring insurance company usually issues a physical check by mail, a procedural quirk that commonly adds two to four weeks. During weeks eleven through thirteen, a second meeting confirms that all balances settled correctly, ending with an updated side-by-side cost sheet verifying your new ongoing expenses.

Ask these four things before anyone reviews your 403(b) costs

Take these four specific questions to any professional who offers to evaluate your school retirement accounts:

• Are you paid a sales commission or distribution incentive on any investment product, insurance contract or rollover IRA you might recommend?
• Will you put every charge, including underlying fund fees, mortality charges, optional riders and your advisory fee, into total dollars per year in writing?
• Do you calculate the surrender charge and verify the tax impact before advising me to move any funds?
• What will this review cost me, and will I see that total in a signed agreement before we start?

How much does leaving a high-cost 403(b) alone cost me?

Leaving money in a high-cost 403(b) contract costs you the gap between bundled annuity charges and unbundled index fees. On Esther's $150,000 inherited balance below, that gap is $2,250 a year. Waiting three years to fix it costs $6,750 in expenses you never get back, before any portfolio growth.

Over the full ten-year window her inherited account must be emptied in, the gap could reach $22,500, somewhat less in practice as required withdrawals shrink the balance each year.

Consider Rick and Esther, ages 63 and 61, who hold $900,000 across district 457(b) balances and rollover IRAs (hypothetical, round numbers). Rick retired as a district transportation supervisor with a pension, while Esther continues working as a middle-school librarian. Esther recently inherited a $150,000 403(b) from her late mother, held in an old insurance annuity that charges a 1.25% mortality and expense fee alongside 0.35% in sub-account fund expenses. That combined 1.6% expense removes $2,400 a year from her balance. Moving that balance to an inherited IRA built with index funds charging 0.1% costs only $150 each year, leaving $2,250 in her pocket annually. Because her mother passed away after her required beginning date, the IRS mandates that Esther take annual distributions and empty the inherited account by the end of the tenth year. The existing contract waives all surrender charges upon death, and a direct trustee transfer generates no income taxes.

The total yearly cost row in the table shows the baseline annual difference between the two structures: $2,400 against $150, before market changes or required distributions.

Do I need this review now or after the next statement?

Checking only the fund's expense ratio on an investment firm's public website misses the separate mortality and administrative fees an annuity layers on top. That omission causes careful employees to look at a 0.35% fund expense and think their contract is cheap, missing the 1.25% mortality charge that drains $1,875 each year on $150,000, or $18,750 across ten years before growth.

For a direct transfer that triggers no tax, move now if today's surrender charge is smaller than one year's cost gap. If the charge is larger, multiply the yearly gap by the years until the charge ends and pick whichever number is lower. If an active surrender fee sits at 5%, that $7,500 cost exceeds three years of fee savings, making patience the sensible move. Lower costs do not protect investments from losing value during market downturns, and your account can still end up worth less than you started. Moving the inherited account does not alter Esther's mandatory distributions or interfere with their broader tax strategy. You need an evaluation now if your money sits inside an insurance annuity, if you inherited an educator's plan, or if you plan to retire within five years; otherwise, reviewing your next annual statement is fine. To book a video or phone discussion with Harbourfront Wealth Management, send us your request using the form on this page.