News | 08.09.19
Texas 403(b) Law Causes Advisor Concern over Investor Protection
A Texas law taking effect next month is causing concern among some retirement plan advisors who are worried that the legislature has weakened investor protection for public schoolteachers in the state. The law eliminates price caps on investment products such as annuities sold to employees in the state's kindergarten through 12th grade school system who participate in a 403(b) plan. Other states have tinkered with their 403(b) rules recently, too. A law that took effect in Pennsylvania in July requires school districts to use at least four service providers, which advisors believe will result in higher costs for investors since districts can't leverage one provider to gain economies of scale. A 2017 Connecticut law boosted 403(b) fee transparency by requiring disclosure of investment fees and compensation paid to those giving investment advice to participants.
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