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.
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 your question, provide some background, and offer some suggestions for any employees in your situation.
Types of retirement plans: It’s worth taking a step back to define terms. You 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 403(b)/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.
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 (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.
Conflicts of interest: It’s imperative that each of the aforementioned parties is a separate and distinct entity in order to minimize conflicts of interest.
You mentioned the company running the plan advised you to use their own products in the plan. It is inappropriate for them to offer advice that is clearly not objective. The company that holds the assets (i.e. custodian) should not be pushing their products on plan participants. Rather, an independent financial advisor, who doesn’t work at a firm that manufactures financial products, should be offering each participant guidance on what funds are appropriate for them. If the advisor does not have a financial relationship with the mutual fund companies in the plan, then there is a good chance you are getting unbiased advice that is not tainted by a conflict of interest.
Investment options: Every well-structured 401(k) should have a diverse lineup of mutual funds from a variety of different companies within the plan. Access to many different mutual fund families is known as an “open architecture” plan. If you see only one fund company, that may be a red flag.
There should be several funds from which to choose in each asset class, giving options to folks who prefer to take a hands-on approach. It’s also important to have a variety of target date funds for investors who want to be more hands off. They simply pick the year closest to their anticipated retirement year, and the portfolio will be structured based on that time horizon. It’s a way to have a sensibly structured portfolio for retirement without having to do too much work or research.
Since 401(k)s cater to a large group of people, the investment options can’t be customized to every employee’s specific needs. However, if the plan includes a variety of options from different firms and a lineup of target date funds all at a reasonable price, then that’s a good sign.
Fees: The fees on corporate retirement plans may be opaque in nature. There may be layers of associated fees, including investment fees, plan fees, and costs to both the TPA and the custodian. That is why it’s imperative for the plan’s advisor to lay out all retirement plan costs annually and benchmark to industry averages. This allows the plan to remain competitive and cost effective, ensuring participants and plan administrators know they are not overpaying.
Fiduciary obligation: Ultimately, the board and leadership at the yeshiva are responsible for meeting their fiduciary obligation to the school’s employees. A fiduciary standard is the duty to act solely in the best interest of plan participants and beneficiaries. This includes making decisions with prudence, monitoring investments and fees regularly, and ensuring the plan is operated according to its governing documents. This also involves selecting and overseeing service providers carefully, avoiding conflicts of interest, having regular education meetings, and documenting all major decisions. They are also responsible for maintaining compliance with ERISA, including eligibility rules, contributions, disclosures, and annual filings. Ultimately, the school leadership’s obligation is to protect participants’ retirement assets and ensure the plan is managed responsibly, transparently, and in line with regulatory standards.
What can you do? While there seem to be a few red flags in the way your plan is being handled, unfortunately, without having your specific plan information it is impossible for me to accurately assess that.
However, the process of evaluating the quality of your plan is simple. Here is what I suggest to all readers who are in this conundrum:
1) Make your voice heard: Reach out to the person at your yeshiva who oversees the plan. This is likely someone with one of the following titles: Executive director, CFO, Head of Finance, or Human Resources. Express your concerns and see what they say.
2) Request a review: If they fumble or are not sure what’s going on, don’t panic. Suggest they have an independent third party review their plan. When I review 401(k)/403(b) plans, I don’t charge a fee, and I try to make it as seamless as possible. Other advisors have different processes for handling this type of inquiry/analysis.
3) What to expect from a review: A review involves analyzing several critical pieces of information and offering a succinct report on the plan that points out concerns (if there are any), practical suggestions for improving the plan for employees, and ensuring that the employer is fulfilling their fiduciary obligation.
A properly administered retirement plan for yeshivas should include annual benchmarking, educational meetings, an open architecture investment lineup, and three distinct parties handling the management of the plan. When administered correctly, a 401(k)/403(b) can be an invaluable resource to yeshiva employees.
Rebbeim, morahs, and teachers in yeshivas provide some of the most important work in any frum community. They are educating and inspiring our children to live a life of Torah. They deserve to be compensated appropriately, which includes offering a retirement plan that provides the resources that will lead them to a successful financial future.