Questions to Ask a Financial Advisor as a Teacher Nearing Retirement

"The school's 403(b) rep is free"

A product that costs 1 percentage point more per year than a plain index fund takes $5,200 per year from a $520,000 403(b). That cost comes out of the account. Commissioned annuity reps are usually paid by the insurer, and the insurer recovers that pay through yearly contract charges and surrender schedules.

The cost grows in step with the balance, so it matters most in the last ten years before you retire, when balances are largest. Flat balances, no growth, for illustration.

A straight answer sounds like this: "I'm paid a commission of X percent by the insurer, about $Y on your money, plus Z percent per year while you stay." A pitch sounds like "it doesn't cost you anything."

"Every advisor has to put my interests first"

People say all advisors must act in your best interest. The actual rules differ by the job title. Investment advisers registered with the SEC or a state owe a fiduciary duty under the Investment Advisers Act. Broker-dealers follow the SEC's Regulation Best Interest when they recommend something. Insurance agents selling annuities follow state insurance rules, and those differ by state.

So ask in writing: "Are you acting as a fiduciary on all of my accounts, at all times, including any product you sell me?" A pause, or "it depends on the account," tells you the standard changes from product to product.

This is general education only. It doesn't say which standard Green State Credit Union is under.

"Tax-free retirement income is always the smarter buy"

Tariq's $2,880 is the number to start with. Tariq (hypothetical) is 49 and turns 50 this year. He's a high-school assistant principal earning $135,000, married to a hospital pharmacist, with two kids in high school and a $520,000 403(b). At a benefits meeting, a rep pitches a cash-value life policy as "tax-free retirement income." The plan: cut his 403(b) deferral from $32,500 to $20,500 and put $12,000 per year into the policy.

At an assumed 24 percent federal rate, he loses a $2,880 deduction ($12,000 × 0.24). After five years the policy holds about $60,000 before growth. If its charges run 2 percent per year, that's $1,200 per year, compared with $120 at a 0.2 percent index fund. And the unused $12,000 of 403(b) room is gone for that year, because annual limits don't carry forward (the IRS limit for 2026 is $24,500, plus the $8,000 catch-up at 50).

What the rules allow: money paid into the policy is after-tax, the same as a Roth 403(b) contribution. The tax result is similar, but the policy adds insurance charges and commission.

The rep's line is "you're too rich for a Roth." Roth 403(b) contributions have no income limit. Only direct Roth IRA contributions phase out, between $242,000 and $252,000 of joint income for 2026, and Tariq and his wife are at about $285,000 combined. That's why the line sounds convincing. It's wrong for the 403(b).

The fix: Tariq keeps the full $32,500 in the 403(b) and designates $12,000 of it as Roth. He gets the same after-tax cost now and tax-free qualified withdrawals later, without policy charges. If the family needs life insurance, that's a separate and usually much cheaper question about term coverage. The fund inside a Roth 403(b) can still fall in value, and he can lose money, including what he put in.

What the rep's plan costs

The fix, with the same tax cost

"The rules haven't changed since I enrolled"

Many illustrations a rep showed years ago are out of date. Brokers now work under Regulation Best Interest, not the older suitability standard. Required minimum distributions now start at 73, or 75 for anyone born in 1960 or later. A plan that assumed withdrawals must start at 70½ or 72 needs to be redone, and so does any withdrawal timing built on it.

Which answers about pay and surrender charges are straight ones?

A straight answer names a dollar figure, a percentage and a number of years in one sentence: "Leaving in year three costs 5 percent, $10,000 on $200,000." A pitch answer drifts to bonuses, guarantees or "most people never leave."

Bring four questions:

For any recommendation, ask which tax line it changes. Pre-tax 403(b) and 457(b) deferrals lower taxable wages this year. A Roth choice raises them this year. Moving money between accounts by direct trustee-to-trustee transfer shouldn't create taxable income at all.

Before Green State Credit Union suggests moving money out of an existing product, it writes down the surrender charge and the yearly cost difference, so you see what the switch costs in dollars before deciding. The same logic sits behind our article on 403(b) annuity surrender charges.

• How are you paid, in dollars?
• What would I owe to leave, by year?
• What are the yearly costs inside the product?
• What does this move do to my taxable income?

What ages and income lines should an advisor ask about?

Five ages matter. At 50, catch-up contributions start ($8,000 for 2026, per the IRS). At 55, you skip the 10 percent penalty on 403(b) withdrawals if you separate from that school district during the calendar year you turn 55 or any year later. Then comes 59½. At 60 to 63 the higher catch-up is $11,250. RMDs start at 73, or 75 if you were born in 1960 or later.

Income lines matter just as much. If your prior-year FICA wages from the district topped $150,000, catch-ups must be Roth. Couples with Roth IRA income between $242,000 and $252,000 are in the phase-out range. Medicare Part B premiums rise once income passes $218,000 joint or $109,000 single, and the 2026 premium is set by your 2024 tax return, so a big conversion or lump sum shows up on your Medicare bill two years later.

One detail from the desk: governmental 457(b) money can be withdrawn without the 10 percent penalty after you leave the job, at any age. A rep who suggests rolling it into an IRA before 59½ should say what that access costs you. Run this list against your own statements:

Ages

Income lines

• Annuity or custodial account
• Surrender schedule years remaining
• Yearly contract and fund costs
• Pre-tax versus Roth split
• 457(b) balance and no-penalty access
• Spouse's plan and joint income

A fee you can see usually costs less

A visible advisory fee is an amount you can compare and argue about. A commission hides inside contract charges. The give-up is that you write a check, or see a deduction, every quarter, and that feels more expensive even when it isn't.

A teacher with $150,000 in a low-cost 403(b) option and a simple pension may do fine alone with a once-a-year look. Someone at $500,000 or more, with a pension choice, a surrender schedule and a spouse's plan to fit together, gets more from paid advice.

Green State Credit Union takes on clients with $500K or more in investable assets, and each client signs an agreement that states the fee in dollars before any work starts. Think of a written roof-repair quote versus a "free inspection."

First stop: the contract behind your 403(b)

Green State Credit Union would first read the actual 403(b) contract or prospectus to see whether it's an annuity or a custodial account, how many surrender years are left and what it charges per year. Then it would look at your last tax return to see which lines a recommended change would touch: taxable income, Roth IRA eligibility and the Medicare income tiers. Nothing is changed at that stage. Good answers screen out conflicts but don't prove the advice is right.