If you’re a member of the New York State Teachers’ Retirement System (NYSTRS), you’ve likely been approached at some point by a financial representative offering to set you up with a 403(b). Maybe it happened in your school’s break room, at a union meeting, or during a district enrollment period. And maybe you signed up — or maybe you’ve been meaning to look into it.
Either way, what most NYSTRS members don’t realize is how much the details of that decision matter. Unlike a 401(k) in the private sector, where your employer vets the plan and its options, your school district’s 403(b) is a patchwork marketplace. The choices available to you, the fees you pay, and even whether you have access to a Roth option depend entirely on which providers your district has approved through OMNI — the third-party administrator that manages 403(b) eligibility for New York school districts.
That patchwork creates real consequences for your retirement. This post is designed to help you understand them.
Why Your District’s 403(b) List Matters More Than You Think
When you open your district’s OMNI-approved provider list, you might find anywhere from a handful to a dozen financial institutions offering 403(b) products. Some districts have low-cost, direct investment options, while others are dominated by products that come with higher fees, and limited investment flexibility.
This isn’t a new problem. In 2016, the New York Times ran an investigative piece titled “Think Your Retirement Plan Is Bad? Talk to a Teacher” — and it struck a nerve nationwide. The article described how one teacher may have had 50% more in retirement from a plan with lower fees, and cited an Aon study finding that people saving in 403(b) plans may be losing nearly $10 billion each year in excessive investment fees.
The article was about teachers across the country — but it describes a dynamic that plays out in New York State school districts every day. Unlike 401(k) plans, which are subject to ERISA — the main federal law protecting retirement account holders — many 403(b) plans lack the same fiduciary oversight that private-sector workers take for granted. That gap is where a lot of the damage happens.
The Real Cost of High Fees
Fees don’t feel painful in the moment. A 1.5% or 2% annual charge sounds like a rounding error. But compounded over a 25- or 30-year career, the drag on your account balance is substantial — and the chart below makes it easy to see exactly how much.
Chart 1 — How Annual 403(b) Fees Affect Your Balance Over Time
Low-cost (0.25%)
$482,065
Mid-tier (1.00%)
$419,008
High-fee (2.00%)
$348,804
Estimated cost of high fees vs. low-cost over 30 years at $5,000/year $133,261 lost to fees
The numbers above assume a $5,000 annual contribution and a 7% gross return. For members contributing more — or with more years ahead — the gap is even wider. And critically, this loss never shows up as a line item on your statement. It simply disappears quietly from your ending balance.
The Power of Starting Early
The second most important variable after fees is time. When we talk about compound growth, we don’t mean it as a cliché — we mean it as math. The earlier you start, the more years your money has to generate returns on its returns. The chart below illustrates just how powerful that effect can be.
Chart 2 — Why Starting Early Matters: Time vs. Contribution Amount
Early saver — $200/mo from age 25
$421,484
$88,800 contributed over 37 years
Late saver — $500/mo from age 42
$280,919
$120,000 contributed over 20 years
The key takeaway: The early saver contributes $31,200 less in total dollars yet retires with $140,565 more — purely because of time in the market. The best time to start is today.
How Much Should You Contribute?
There’s no one-size-fits-all answer, but a few principles guide our recommendations for NYSTRS members:
Start with what you can and increase with your salary. Even $50 or $100 per paycheck gets the compounding clock running. Most districts allow you to adjust your contribution amount at any time through OMNI’s online portal, so you can increase it as your salary grows or when coaching stipends and other additional pay comes in.
Don’t overfund a high-fee product. If you’re in a high-cost 403(b) product, contributing aggressively means more of your savings are being eroded by fees. Getting into the appropriate vehicle first — then maximizing contributions — is often the smarter sequence.
Know your limits. The 2026 IRS contribution limits for 403(b) plans are: under age 50: $24,500 / ages 50-59: $32,500 / ages 60-63: $35,750 (enhanced catch-up under SECURE 2.0) / age 64 and older: $32,500. If your district offers both traditional and Roth 403(b) options, these limits apply to your combined contributions across both.
403(b) vs. Roth 403(b): What’s Available in Your District?
Some NYSTRS districts offer both a traditional (pre-tax) 403(b) and a Roth 403(b). Many still only offer the traditional version. Whether you have access to a Roth option depends entirely on what your district’s OMNI-approved providers have elected to make available.
The core difference: with a traditional 403(b), you contribute pre-tax dollars and pay ordinary income taxes on withdrawals in retirement. With a Roth 403(b), you contribute after-tax dollars and qualified withdrawals are completely tax-free — including all the growth. For teachers earlier in their careers or those who expect a higher tax rate in retirement, the Roth 403(b) can be a compelling option — if it’s available in your district.
One important point worth noting: your NYSTRS pension is a pre-tax income stream. Every monthly payment you receive in retirement will be taxable as ordinary income. That’s not a flaw — it’s simply how defined benefit plans work. But it does mean that Roth savings, where available, provide a meaningful counterbalance to an otherwise tax-heavy retirement income picture.
Which 403(b) Provider Is Best for You?
This is the question we hear most often at our seminars, and it doesn’t have a single answer — but it has a clear framework.
Start with fees. Look at the total annual cost of your current plan: the expense ratios of the underlying investment, any administrative or platform fees, and any mortality and expense (M&E) charges if you’re in an insurance product. Some 403(b) statements may list fees as “$0” while actually charging each year based on your balance — its embedded in the product structure rather than shown as a line item. If you can’t easily determine what you’re paying, that is itself a warning sign. The difference between an expense ratio of 0.05% and 1.20% on the same underlying investment is the difference between keeping your money and giving it away year after year.
Evaluate investment options. Can you access low-cost options? Are you limited to proprietary products? Are there features that draw you to one option over another?
Check for Roth availability. If your district’s OMNI list includes a provider offering a Roth 403(b) with low-cost investment options, that combination may be worth considering for many members.
Understand surrender charges. Some 403(b) insurance products come with surrender periods — if you want to move your money during the surrender period, you’ll pay a penalty that can run several percentage points. Before committing to any provider, understand your exit terms.
The OMNI portal at omni403b.com is where you can look up exactly which providers are approved in your district. We review these lists with members regularly and can walk you through what you’re looking at and what it means for your retirement.
How Should You Be Invested?
Your 403(b) investment mix should reflect several factors specific to your situation. As a NYSTRS member you should consider:
Your time horizon. A teacher with 25 years to retirement can likely carry more meaningful equity exposure. A teacher within five years of retirement is likely considering a materially different posture.
Your pension as an anchor. Your NYSTRS pension provides a guaranteed income floor in retirement — that changes your overall risk picture. Because you already have a defined benefit, your 403(b) doesn’t need to carry the full weight of your retirement security, which can support a more growth-oriented allocation than someone with no pension at all.
What’s actually available in your plan. If your district’s approved providers only offer insurance products with a narrow investment menu, your ability to build a well-diversified, low-cost portfolio may be limited — which may be a reason to examine whether your current provider is the right fit.
Diversification does not guarantee a profit or protect against a loss.
Turning 59½? Your Options Expand Dramatically
One of the most underutilized provisions available to NYSTRS members is the in-service distribution at age 59½. If you are still actively employed and have reached age 59½, you may be eligible to roll a portion of your existing 403(b) balance directly to an IRA — without leaving your job and without any tax penalty.
Why does this matter? Because once your savings are in an IRA, you are no longer limited to the providers and investment options your district has approved through OMNI. You have access to the full universe of investment options with far greater flexibility than most district-approved 403(b) products can offer.
For members who have spent years in a high-fee product, an in-service rollover at 59½ can be one of the most impactful financial moves available to them. We help NYSTRS members evaluate whether this makes sense given their specific plan, balance, and remaining years of service. It’s important that you understand your options and do a full comparison on the differences in the guarantees and protections offered by each respective type of account as well as the differences in liquidity/loans, types of investments, fees and any potential penalties.
We Review Your District’s OMNI List — So We Can Give You The Complete Picture
At Westchester Financial Partners, we specialize in working with NYSTRS members across Westchester, Rockland, Nassau, Suffolk, Putnam, Orange, Dutchess, and Ulster counties. We know which providers appear on which district lists, which products are worth considering based on your circumstances, and which ones we’d steer you away from. Peter Knapp, CLU® has over 40 years of experience helping New York teachers build retirement strategies that work — not just at the moment of enrollment, but across a full career and into retirement.
Ready to find out if your 403(b) is working for you — or against you?
We’ll review your district’s OMNI list, analyze your current fees, evaluate your investment strategy, and give you an honest assessment of whether your 403(b) is serving your best interest.
Click Here to Schedule a Complimentary Consultation With Our Team.