Florida’s four leading education associations today announced a historic, new “Model Plan” for individual retirement accounts that could help educators close the gap in saving enough money to retire. That perceived gap was documented in a new poll showing that nine of 10 educators polled say they are concerned about meeting their financial needs after retirement.
The Model Plan, negotiated by the Florida Education Association, the Florida Association of School Administrators, the Florida School Boards Association and the Florida Association of District School Superintendents, could put billions of dollars into teachers’ pockets over the next 20 years, if adopted by the state’s 67 school districts, financial experts say. Districts must change the way they oversee tax-sheltered accounts — also known as 403b plans — offered to their employees due to new IRS regulations that take effect next Jan. 1, creating an urgent need for the Model Plan.
Historically, school system employees across the U.S. have paid higher-than-average fees than any other sector of the marketplace to the companies that manage their tax-deferred investments. This plan could reverse that.
“This is the first time in the nation that a plan this comprehensive and with such outstanding terms will be offered to educators,” IBC spokesman Tom Herndon said. “More of educators’ dollars – perhaps billions more in Florida alone – will be available to them when they retire.”
Educators have a range of choices within the Model Plan, with fees varying with the level of service they choose. That’s important because three out of four educators polled said they would pay higher fees for more hands-on service.
Among the companies selected for inclusion within the Model Plan are:
AXA-Equitable Life Insurance Company, Waddell & Reed, PlanMember Financial Corporation, AIG Investment Services and American Century Investments.
Among the other poll findings:
6 in 10 say they do not have any idea whether the fees they are being assessed are fair and reasonable.
8 in 10 say they are not entirely satisfied with the financial results from their current tax-deferred investment plan.
8 in 10 say it would be very important for a plan like the Model Plan, which is endorsed by the state’s four largest education associations to be available to them in their respective districts.
The poll was conducted by Mason-Dixon Polling & Research, Inc. of Washington, D.C. The pollsters interviewed 625 Florida Education Association Members on Dec. 20-30, 2007. The margin of error is plus or minus 4%