Today, I’d like to START A NEW VIDEO SERIES on the topic of “Is My Yeshiva’s Retirement Plan Up to Standard?
Let’s start with a question I recently received recently on this topic. The question read as follows:
The yeshiva I work for has a pension and I always contribute the maximum, including the $24,500 this year. My issue is that there is no guidance. I am not sure what funds to choose. The firm running the plan includes mostly its own mutual funds, and that’s what they suggest I purchase when I call the 800 number on my statement. I also have no idea what the fees are. Something doesn’t feel right. Is this standard for all yeshiva pensions? Thanks.
So, this is a good question and likely one that many yeshiva employees face. It’s also not something I have discussed at length before, so it’s worth exploring. While I can’t speak to what is standard for all yeshivas, I can touch on all the points in this question, provide some background, and offer some suggestions for any employees in this situation.
First, let’s discuss Types of retirement plans: It’s worth taking a step back to define terms. The questioner used the word “pension,” but it sounds like you actually have either a 403(b) or a 401(k) plan. Those are known as “defined contribution plans,” where employees can contribute up to $24,500 in 2026, or more if they are over 50 years old. The plan participants, or employees, get to choose their own investments, and the money that they put into the account belongs to them.
Pensions, on the other hand, are retirement programs that provide a guaranteed, regular income stream in retirement, often for life, funded by employer contributions. The payout is calculated using a formula based on salary, years of service, and age. The employer bears the investment risk, offering employees predictable financial security. Most pensions are disappearing given the financial risk and cost to the employer.
There are a myriad of retirement plans on the market today, but yeshivas typically use the 403(b) or 401(k) given the nature of their business. I will focus my response on these plans since they are the most popular and likely the plan to which you are referring. For simplicity, we will assume that 403(b) and 401(k) plans operate identically.
Next point is discussing Who’s managing your plan: A 401(k) plan runs smoothly when three key professionals handle distinct responsibilities while collaborating effectively with each other. They include:
1) The custodian: A custodian safeguards all plan assets, processes contributions and withdrawals, executes trades, maintains accurate records, and provides participant statements. They are overall responsible for ensuring the money is protected and properly accounted for. There are many well-known companies on the market that provide custodial services, including Fidelity, Voya, and Empower.
2) The Third‑Party Administrator (or TPA): A TPA manages the technical and compliance side of the plan by maintaining the plan document, performing annual IRS and DOL testing, calculating employer contributions, preparing Form 5500, monitoring eligibility and vesting, and advising on plan design so the plan stays compliant with regulations.
3) The financial advisor: It’s imperative to have a financial advisor on the plan. They oversee the whole plan to ensure everything is running appropriately. Their key roles are to help employers select and monitor investments, create and review the Investment Policy Statement, benchmark fees annually to industry averages, educate employees, and provide fiduciary support that reduces employer liability.
Together, these three roles ensure the 401(k) is structured correctly, operates legally, and delivers a positive experience for both employers and participants.
In my next video, I will discuss conflicts of interest, fees, and other important considerations when it comes to your Yeshiva retirement plan.