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Reforming K-12 403(b) Plans

Steve Schullo is working to shed light on the awful shortcomings of K-12 403(b) plans.

W. Scott Simon, 05/07/2015

W. Scott Simon is a principal at Prudent Investor Advisors, a registered investment advisory firm. He also provides services as a consultant and expert witness on fiduciary issues in litigation and arbitrations. Simon is the recipient of the 2012 Tamar Frankel Fiduciary of the Year Award. 


As a complement to my current multipart series analyzing the contract between a K-12 public school district and a giant insurance company providing investment options for a non-ERISA 403(b) plan, I thought it would be interesting to hear from someone who has long been in the trenches fighting the good fight against the many abuses that typically characterize 403(b) plans in the K-12 marketplace. 

Steve Schullo was an elementary schoolteacher with the Los Angeles Unified School District (LAUSD) for nearly 25 years. In his retirement, he has just written another book titled "Fighting Powerful Interests: Educators Challenge Tax-Sheltered Annuities and WIN!" which can be downloaded (as a PDF) for free. Steve is also a blogger at Late Bloomer Wealth

Steve has a unique perspective on the nature of the investment options typically offered by insurance companies to participants (teachers, psychologists, counselors, substitutes, custodians, nurses, et al.) in the 403(b) plans established and maintained by K-12 school districts. 

I cannot think of anyone else today that has the same in-the-trenches experience and insight gained from fighting against a powerful and entrenched industry as well as decades of indifference demonstrated--regrettably--by the vast bulk of the teaching profession. One result of this has been a general reluctance to even publicly discuss reformation of the poor investment options typically offered to employees in K-12 403(b) plans. The perplexing apathy of teachers unions and the general ignorance displayed by administrators and teachers at many K-12 school districts continues today when it comes to their 403(b) plans. 

Steve's efforts at bringing to light the awful shortcomings of K-12 403(b) plans is offered to help others in their own attempts at reform. No one in the K-12 leadership hierarchy is going to look out for the best interests of educators without the educators themselves stepping up and demanding reform of their 403(b) plans. 

The following interview was conducted via email and has been edited. 

W. Scott Simon is an expert on the Uniform Prudent Investor Act and the Restatement 3rd of Trusts (Prudent Investor Rule). He is the author of two books, one of which, The Prudent Investor Act: A Guide to Understandingis the definitive work on modern prudent fiduciary investing.

Simon provides services as a consultant and expert witness on fiduciary issues in litigation and arbitrations. He is a member of the State Bar of California, a Certified Financial Planner, and an Accredited Investment Fiduciary Analyst. Simon's certification as an AIFA qualifies him to conduct independent fiduciary reviews for those concerned about their responsibilities investing the assets of endowments and foundations, ERISA retirement plans, private family trusts, public employee retirement plans as well as high net worth individuals.

For more information about Simon, please visitPrudent Investor Advisors, or you can e-mail him at wssimon@prudentllc.com

The author is not an employee of Morningstar, Inc. The views expressed in this article are the author's. They do not necessarily reflect the views of Morningstar.

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