As a teacher, you have a number of choices to make when investing for retirement. The SEC’s Office of Investor Education & Advocacy is issuing this Investor Bulletin to help teachers make informed investment decisions, including about 403(b) & 457(b) plans — tax-advantaged retirement savings programs often offered to teachers of public educational institutions.  More information for teachers is available in our A Guide for Teachers: Saving & Investing for K-12 Educators.

Key Takeaways

  • Do your homework on the investment products available to you.  Don’t be afraid to ask questions — it is up to you to select investments that best meet your financial objectives. 
  • Understand how much you will pay in fees & costs.  Someone is making money from your investment.  Ask about how much others may earn in fees or commissions —  it could save you thousands of dollars for your retirement.
  • Contact your employer to find out your options for investment professionals or vendors.  Take advantage of resources that can assist you in researching those options. 

Investment Options for Teachers

One of the best ways to build wealth is by saving & investing over a long period of time.  The earlier you start investing, the more your savings & investments will grow over time due to compound interest, helping you reach your investment goals with less money out of pocket. 

Many public schools, colleges, & universities offer investment plans for retirement to their teachers & other employees.  These plans are often a supplement to teacher pension plans, which on their own may not afford teachers adequate retirement savings.  

These supplemental plans usually include tax-advantaged retirement accounts called 403(b) plans (some employers may offer similar 457(b) plans).  Contributions to these plans can be automatically deducted from a teacher’s pay, & in some cases a teacher’s employer also may contribute to the account.

As a defined contribution plan, unlike a pension, a 403(b) plan does not promise a specific payment upon retirement — the teacher, as the plan participant, bears the primary responsibility to fund the account & often to decide how to allocate the investments. 

Ask Questions When Choosing a 403(b) Plan Vendor

Depending on the state or district in which you teach, your employer may allow you to choose your 403(b) plan provider (called a vendor) or your employer may offer only a single vendor.  A vendor could be an insurance company or an investment professional, like a broker-dealer or investment adviser.

Do not assume that your employer has vetted any vendor.  Contact your employer to find out your vendor options for your specific 403(b) plan.  & make sure you ask questions & understand whether there will be fees taken out of your investment & how your vendor gets paid.

Vendors may imply or falsely claim that they are affiliated with or endorsed by your employer, your teachers union, or your state retirement system.  If you are approached by an insurance company or an investment professional that appears or claims to be affiliated with your employer, ask your employer to verify the nature of the affiliation – especially before submitting any payroll deduction form to your employer.  If the insurance company or investment professional misrepresented their relationship with your employer, be wary about handing over any money.

Determining which investment products best meet your financial objectives & identifying a vendor who sells those products is very important.  If your employer offers multiple vendors, each vendor may sell different types of products, & some may have a limited number of choices.  It is important to ask about fees & costs associated with investment products & services; they may seem small, but over time they can have a major impact on your investment portfolio.

Here are some questions to ask when choosing a vendor for a 403(b) plan:

  • Given my financial situation, should I choose an insurance agent, an investment advisory service, or a brokerage service?  Why or why not?
  • How will you choose investments to recommend to me?
  • Help me understand how fees & costs might affect my investments, including vendor fees.  What are the total fees, commissions, & other costs I will pay when I buy, own, & sell my investment – directly or indirectly – over time?  
    • If I give you $1,000 to invest, how much will go to fees & costs, & how much will be invested for me?
    • How will fees & costs be reflected on my account statements? Will I be charged any fees & costs that won’t be detailed on my account statements? If so, how will I be informed about those fees & costs? What types of fees & costs will I pay? Can you give me this information in a simple form, so that I can easily compare it to similar information from other vendors?
    SEC Enforcement Action – Misleading Account Statements. In In the Matter of Equitable Financial Life Insurance Company, the SEC took enforcement action against a vendor for allegedly giving the false impression that all fees paid by the investor were detailed in the investors’ personalized quarterly account statements when instead the most significant fees were excluded.  According to the SEC’s order, the vendor offers variable annuities to participants in 403(b) & 457(b) defined contribution retirement plans.  The SEC found that the vendor provided investors with quarterly account statements that often misleadingly stated that the investor paid $0.00 or a very small amount of fees, when in fact investors had paid significant fees that were not detailed in the account statements & that could amount to thousands of dollars each year.  According to the order, the vendor provided the misleading account statements to approximately 1.4 million investors, most of whom are teachers or other employees of kindergarten-through-twelfth-grade (“K-12”) public school districts.
  • Do you make more money by selling me one product over another?
    • Do you receive a commission for selling a particular product &, if so, how much? What other types of compensation do you receive for selling the product?
  • How might your conflicts of interest affect me, & how will you address them?
SEC Enforcement Action – Undisclosed Payments. The SEC announced charges in In the Matter of VALIC Financial Advisors, Inc. against a vendor who failed to disclose that its parent company was providing cash & other financial benefits to a for-profit company owned by Florida K-12 teachers’ unions in exchange for referring teachers to the vendor. 

The SEC’s order found that, in exchange for the payments, the for-profit company agreed to promote exclusively the vendor’s financial planning services.  The SEC’s order further found that the vendor’s parent company provided three of its employees to serve as full-time “member benefit coordinators” who promoted the vendor to Florida K-12 teachers, including at benefits, fairs & financial planning seminars, while presenting themselves as employees of the for-profit company.     

  • As a financial professional, do you have any disciplinary history? For what type of conduct?
Check the background of a broker-dealer or an investment adviser using the free search tool on

You can also see if a person has been named in an SEC action using the SEC Action Lookup – Individuals (SALI) database, or even do a simple internet search for any news about the person.

  • What is your relevant experience, including your licenses, education & other qualifications? What do these qualifications mean?
Form CRS. If the vendor is an SEC-registered broker-dealer or investment adviser, the vendor is required to provide you with a concise, plain-English client or customer relationship summary (or “Form CRS”). The relationship summary tells you about the types of services a firm offers, the fees & costs you will have to pay for those services, the conflicts of interest a firm may have, the required standard of conduct, any disciplinary history & key questions to ask. For more information, visit
  • Who is my primary contact person?  Is he or she a representative of an insurance company, an investment adviser or a broker-dealer?  Whom can I talk to if I have concerns about how this person is treating me?

Learn About the 403(b) Plan

There is a wealth of information available to you about your plan. Take the time to read & understand the documents & materials.

  • Read your employer’s 403(b) plan documents to learn the basic rules for how your plan operates.
  • Read each vendor’s 403(b) plan materials. A vendor’s plan materials may include:
    • A background description of the vendor, including the vendor’s credentials & experience;
    • A description of the vendor’s investment products & services, including information related to product fees & past investment performance;
    • Information related to the vendor’s fees, including brokerage fees, advisor fees, account transfer or closure fees, recordkeeping or custodial fees, & general administrative fees; 
    • A discussion of the tax information related to investing in a 403(b) plan; &
    • Any additional information the vendor may need to provide as required by applicable federal or state laws.
  • A state can require vendors that provide 403(b) plans to register with one or more state regulators, in addition to any required registrations under federal laws.  If your state requires these vendors to register, it may provide resources to assist you in researching vendors.
    • Some vendors may be registered with the SEC or state securities regulators. For tips on researching a vendor registered with the SEC or state securities regulators, read our Investor Bulletin: How to Select an Investment Professional.
    • If the vendor is a broker-dealer or an investment adviser, you can run a background check using the free search tool at For more information on using the search tool, see How to Use the Investment Professional Search Tool on
    • Vendors that are insurance companies generally register with a state’s insurance commission.  For information on how to research insurance companies in your state, contact your state insurance commission.

How to Choose Investment Products Offered in a 403(b) Plan

A 403(b) plan may offer different investment products.  Do not assume that your employer has endorsed any particular investment product offered through a 403(b) plan.  It is up to you to select investments that best meet your financial objectives.  You may need to choose among different types of investments.

By law, 403(b) plans can only offer annuities & mutual funds.

Different names for investment products. Vendors may use different names for these investment products — if you are unsure what type of investment product is being offered, ask the vendor to explain.

Annuities are contracts between you & an insurance company that requires the insurer to make payments to you, either immediately or in the future.

There are three basic types of annuities: fixed annuities, variable annuities, indexed annuities. Some annuities include both an insurance & an investment component & require you to choose from various investment options, generally mutual funds.  Each of these products have different features, risks, fees, & rewards. 

Mutual funds pool money from investors & invest the money in stocks, bonds, short-term debt or money market instruments, or other securities.  Most mutual funds fall into one of four main categories — bond funds, stock funds, money market funds, & target date funds.  Each type has different features, risks, & rewards.

Here are some questions to ask when choosing investment products in a 403(b) plan:

  • Why is this product best for me?  What are the other options?  Are there lower-cost products that also meet my needs?
  • How does my salesperson get paid?  Does the salesperson make more money selling me one product over another?
  • What fees will I pay?  Are these fees ongoing or only assessed upfront?
Product Fees Matter.  Even small differences in ongoing fees & expenses can mean large differences in returns over time.  Investment products with higher fees must perform better than investment products with lower fees to generate the same returns. 

If a vendor tells you an investment product has “no fees” or your account statements list little or no fees paid, ask more questions.  It may mean there are no upfront fees when buying the investment product, but there may be fees or expenses that are taken out of your investment every year.

In fact, most investment products in 403(b) plans — including mutual funds & variable annuities— have expenses related to their operation that come out of investment returns on an ongoing basis (e.g., annual operating expenses for mutual funds or administrative expenses for annuities).   Ask how much these fees will be.

In addition to investment product fees, you should also carefully consider the impact of fees charged by the vendor. You can generally find these fees in the vendor’s plan materials.  Ask about the vendor’s fees.

  • Will I have to pay any penalties if I change my investment choices? If so, how much?

Make sure you know the answer to these questions before you make your investment choices.

For example, if you withdraw money from an annuity within the first few years, the insurance company may assess a “surrender” charge that compensates the vendor who sold the annuity to you.

Some mutual funds have a fee paid at the time of the sale of the mutual fund, also known as the “back end.”  One type of “back end” fee is known as a “contingent deferred sales load.”  Additionally, some mutual funds charge a redemption fee when shareholders redeem their shares.

Whether your employer offers you one vendor & few investment options, or many vendors & investment options, make sure you pick the services & investment products that work best for you, & know the costs & fees associated with them.  Remember — it’s your money at stake.

Additional Resources

Investor Bulletin: Retirement Investing Through 403(b) & 457(b) Plans

A Guide for Teachers: Saving & Investing for K-12 Educators

IRS 403(b) webpage

U.S. Department of Labor’s 403(b) plan webpage 

FINRA fund analyzer

Ask Questions: Questions You Should Ask about Your Investments (also available in Spanish)

Saving & Investing: a Roadmap to Your Financial Security through Saving & Investing (also available in Spanish)

Call OIEA at 1-800-732-0330, ask a question using this online form, or email us at [email protected].

Visit, the SEC’s website for individual investors.    

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This Investor Bulletin represents the views of the staff of the Office of Investor Education & Advocacy. It is not a rule, regulation, or statement of the Securities & Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This bulletin, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, & it creates no new or additional obligations for any person.