Maine Medical Center Retirement Plan - 10 Essential Questions and Answers Every MaineHealth Physician Needs to Know About MaineHealth's 403(b) and 457(b) Retirement Plans

1)    Did MaineHealth lose a 403(b) lawsuit for having a bad 403(b)?

If MaineHealth (the corporate name for Maine Medical Center) did lose a lawsuit, it was not significant according to our research. MaineHealth actually has a fairly decent 403(b) plan. While no plan is perfect and 403(b) plans, in general, are often considered inferior to 401(k) plans available at for-profit employers, in our experience working with MaineHealth physicians, the 403(b) plan at MaineHealth is actually pretty decent.

2). How much does Maine Health match my contributions and what does it mean for my long term savings?

Below are the match rates according to the Maine Health Retirement website. 

Years of Service	Employer Core	Employer Match	Grand Total
0-4 years	2%	2%	4%
5-9 years	3%	2%	5%
10-14 years	4%	2%	6%
15-19 years	5%	2%	7%
20+ years	6%	2%	8%

Source: https://www.mainehealth.org/maine-medical-center/education-research/department-medical-education/stipends-benefits-and-job-description

You should know that if you leave MaineHealth before completing one full year of employment, you will lose the 2% match. Additionally, you must work there for three full years to keep the core contribution.

In terms of long-term savings, a safe harbor or standard match on a workplace retirement plan is usually around 3%, so the MaineHealth plan is not particularly generous to employees in their first four years on the job. Over time, 401(k) matches tend to average around 4.6%, so after your fifth year of employment, MaineHealth offers a larger match than the standard American employer.

However, MaineHealth does offer a Supplemental Employee Retirement Plan (SERP) through their 457(b), but you must opt in to have those funds deposited into the MaineHealth 457(b) plan. In some cases, employees can receive as much as 10% of their salary in employer contributions between the 403(b) and the 457(b) plans at MaineHealth.

3)     How does the Maine Health 403(b) and 457(b) fit into a good retirement plan

A 403(b) and 457(b) are tax-advantaged retirement plans that can play a key role in a strong retirement strategy, especially for nonprofit and government employees. Both plans allow for tax-deferred growth, meaning you don’t pay taxes on your contributions or investment gains until retirement, helping your savings grow faster. The 403(b) often includes employer matching contributions, while the 457(b) offers flexibility with penalty-free withdrawals if you leave your job before age 59½. Contributing to both plans can maximize your savings potential, as each plan has its own contribution limits, and combining them can allow you to contribute up to $45,000 annually (if you're over 50), doubling the tax-deferred growth opportunity. Together, these plans can complement other retirement accounts, creating a diversified and comprehensive approach to saving for retirement.

4) Is a 403(b) and 457(b) better or worse than a pension?

From an employee’s point of view pensions are definitely better – but pensions are going the way of the dodo bird for lots of reasons.

Pensions, particularly defined benefit plans, are disappearing mainly because they are  costly and risky for employers. Companies must ensure there are enough funds to meet promised payouts, which is increasingly difficult given market fluctuations and longer life expectancies. Additionally, pensions are less attractive in today’s mobile workforce, where employees frequently change jobs and for a lot of pensions you have to work there for 5 years to get anything and so some younger employees prefer more portable retirement options, like 401(k)s, 403(b)s, and 457(b) retirement plans which shift the savings and investment risk to the individual and away from the company. Defined contribution plans like 403(b)s and 457(b) plans also cost employers less and are easier to manage, while pensions are subject to complex regulations and underfunding issues. As a result, many employers have moved away from offering pensions in favor of more flexible, cost-effective retirement plans.

5)     How does the Maine Medical Center 403(b) Retirement Plan Compare to other healthcare system plans?  And, is Lincoln Financial a good insurance company?

The MaineHealth 403(b) plan offers a solid foundation for retirement savings, especially if you're in the nonprofit sector, with employer contributions and the added benefit of the 457(b) plan. However, compared to for-profit companies' 401(k) plans, it might have lower employer match contributions, a longer vesting period, and potentially higher fees. Still, for MaineHealth physicians and employees, it is a good option, especially when considering the Supplemental Retirement Plan (SERP) and the tax-deferred benefits, though some employees may find it less generous than the 401(k) offerings from large private employers.

And yes, for an insurance company Lincoln Financial is one of the better ones and the Maine Health 403(b) has some good features in it.

6)      What are the investment options in the Maine Health 403(b) Plan and what should I invest in?

The YouPath Target Date Funds offer automatic diversification and a hands-off approach, but may not suit all risk tolerances, can ignore market conditions and can give a false sense of assurance that they will meet your goals (in our view).  There are two promises in every target date fund – one of which we believe to be true. The promise that we believe to be true is that if you don’t do anything with it – it will change its approach as you age and that makes things easy.  The other implied promise in our view is that it will get you to your destination – our view on this is that it really depends on market conditions because what has happened in the past is not necessarily guaranteed to happen in the future.  Target Date Funds, for all the convenience they provide, there are some concerns that they influence the pricing, valuarion and liquidity of the assets that they acquire and they can have an elevating impact on those assets' underlying prices and the demand for those assets. As a result, some financial clinicians have expressed concern that where you are in the demographic hierarchy could be more important in how well your target date fund provides for you than the underlying holdings of the funds themselves.  Essentially what their concerns are is that if the generation behind you in samller and the generation in front of you is bigger, when it comes time for bigger generations to sell their assets to smaller generations they may not get as good of a price for these assets. These are just ideas that have been circulating and only time will tell whether these concerns are valid but some people have those concerns. For my own clients I’m not a huge fan of target date funds and we tend to use them in moderation, but everyone has to come to their own conclusion.

Vanguard Mutual Funds are known for low fees, strong performance relative to higher fee funds from competitors, and broad diversification.  The Vanguard funds are an example of the plan administrator and the investment committee doing a good job for the physicians and other employees of Maine Health with this selection.

Other Company Mutual Funds provide a variety of strategies and professional management but can have higher fees and potentially underperform.  The dirty secret about 401(k) and 403(b) retirement plans is that a certain amount of fees has to be extracted from the plan to pay for the overhead of running the plan and to create a financial profit for the vendor – in this case Lincoln Financial.  Those fees don’t come out equally of all employees' pockets – those who use Vanguard funds pay less of those fees and those who use certain other company’s funds may pay more.

The Lincoln Stable Value Fund is not a good investment option in our view compared to an alternative like the Vanguard Federal Money Market Fund or other good company money market account.  As of 4/1/25, the Vanguard Federal Money Market Fund pays a 4.23% yield whereas many stable value funds pay 2-3% interest on their cash like options.  If Stable Value Funds were phased out of most 403(b)s and replaced with money market funds that would certainly be in the interest of most employees, in my view.  Certain competitors to Lincoln Financial, such as TIAA-CREF do include the Vanguard Federal Money Market Fund in their 403(b) plans, so it certainly is possible to have a good money market in the Maine Health 403(b) if the plan sponsor and Lincoln wanted to add it. And of course, using an inferior money market option when rates are so high is risky for a legal liability point of view because it is hard to justify why investors using the cash option in the Maine Health 403(b) or 457(b) have to settle for a 2-3% interest rate on their cash, when firms like TIAA-CREF and Vanguard offer 4-5% interest rates on their cash as of the time of this writing. ERISA is pretty clear that the employees interest should come before the firms interest when running a retirement plan, and definitiely the employees interests should be prioritized over any financial vendor's interest. Stable value funds are very much a source of legal exposure for any 403(b) or 401(k) that uses them today because stable value funds routinely pay 1-2% less interest than a money market account today. When stable value funds first started to get adopted in 403(b)s and 401(k)s in the mid 2010s, they actually used to pay more interest than money market funds, but that hasn't really been true since 2022, and so any employer would be very wise to review their money market options and how a fund like the Vanguard Federal Money Market or other money market funds compare in yield today againt the stable value fund options available.

While yields can change over time here is the product page for the Vanguard Federal Money Market Fund with the 7 day SEC yield on the left (an SEC yield is just basically the annualized interest that a money market pays over the course of a week) and you can compare that to what the current crediting rate is of the Lincoln Stable Value Fund

https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx

Self-Directed Brokerage Accounts (Mutual Fund Only) offer control and customization of your portfolio, and a broader range of investment options than those in the Maine Health 403(b) or 457(b) and sometimes lower fees as well (on the non-Vanguard funds).  But as of 4/1/25, Charles Schwab is the vendor for the self directed brokerage account and they have some low fee mutual funds but not as many as some of their competitors like Fidelity or Vanguard which offers a plethora of low cost mutual funds.

The reason why this matters Is because in a 403(b) plan you cannot invest in stocks or ETFs directly, so you are stuck with mutual funds, which are inferior in my view and in most people’s view which is why customers have been abandoning them for ETFs when they have a chance.  In a 403(b) since that is not an option – the value of a self directed brokerage account really hinges on the financial vendor and their selection of low cost mutual funds.  Of all the options available, Charles Schwab is in the middle – but Fidelity and Vanguard tend to really be the leaders in terms of self directed mutual fund only brokerage accounts for 403(b)s from what I’ve seen.

7)      Are there any fees associated with the Maine Health 403(b) Plan

In our experience with MaineHealth physicians, there are two main sets of fees in the 403(b) and 457(b) plans, in addition to mutual fund fees. First, model portfolios, a growing trend in retirement plans, often come with extra fees, which can erode returns over time. These portfolios are often not worth the cost, especially when low-cost alternatives like target-date funds offer similar benefits without the 0.20%-0.30% annual fee. Second, with the plan’s standard option, you don’t get to choose your financial advisor, and the advice provided is generally impersonal and limited. If your 403(b) grows to $1M or more, you could end up paying tens of thousands of dollars over decades for a generic asset allocation that a financial advisor could easily create in minutes. While some higher earners benefit from personal financial advice, you typically get more value by hiring your own advisor rather than using the plan’s default option, which can be more expensive and less tailored to your needs. This isn't to criticize anyone who chooses the standard option, but like choosing a concession stand over a grocery store, you often get a better deal elsewhere, in our view.

8)     How has the performance of the Maine Health 403(b) Investments held up in recent years?  How does the Maine Health plan compare to its peers in terms of investments and fees?

Both the Maine Health 403(b) and 457(b) investments and fees are both just fine. While any 403(b) plan has lots of structural limitations that make it vastly inferior to a well - constructed 401(k) plan with a self-directed brokerage account – overall the Maine Health 403(b) and 457(b) are generally pretty good plans in my opinion.

9)     How can the Maine Health 403(b) and 457(b) be improved and who can I talk to fix it?

The most powerful thing that can be improved in any 403(b) plan or 457(b) is who runs the self directed brokerage account.  As of April 2025, Charles Schwab runs it, and Charles Schwab is a good firm.

But considering the 403(b) is mutual fund only by law, it might be worth looking into firms that have a superior track record for low cost mutual funds like Vanguard or Fidelity Investments.

This isn’t to take anything away from Charles Schwab which is a great firm – and on 401(k)s they are just as good as anyone else – but for 403(b)s where there is a critical need for a wide variety of low cost diversified mutual funds – Vanguard and Fidelity Investments are both great firms to consider for a self directed brokerage account.

Generally retirement plans go through a review every 3-5 years and so it can be reasonable to ask the plan administrator, who is likely going to be the new CFO, Richard Bayman: if they might be willing to consider looking at Vanguard or Fidelity for the MaineHealth 403(b) plan and 457(b) Plans at their next request for proposal.  Richard Bayman has a securities background so he is likely aware of the strong offerings that Fidelity and Vanguard have in terms of low cost mutual funds.  Richard’s linkedin is available here: https://www.linkedin.com/in/richard-bayman-a4496043

But overall, the Maine Health 403(b) already has a strong 403(b) plan and with a brokerage window at a firm that has lots of low cost mutual funds like Fidelity or Vanguard, the plan could be made even better.

Many employees fear asking for improvements in their 403(b) plan – but it is actually in the interest of the plan trustee who has personal liability for what happens in the plan and the employees to get the best deal possible. 

Moreover, I would argue that brokerage firms should take an enlightened view of 403(b)s and 401(k)s and view them as products to break even on or earn a very small profit on (say 0.05% a year or less) but create a great bond with employees as a firm who has good products that you can trust.  Financial firms spend a lot on marketing – but some of the best marketing out there is just doing a good job with a captive audience.

10)     How do I know if my retirement planning is on track?

For do-it-yourself investors, a simple rule of thumb is to take your investments, divide them by 25, and then add your projected Social Security payment, which the Social Security Administration will provide if you request it online.

It’s fairly normal for spending to decline by about 33% from peak earning years to retirement (so you might spend 67% of what you were spending during your peak earning years) from ages 65-75. After 75, it’s typical to spend about 42% less than what you spent in your peak earning years, or 58% of your peak income.

However, everyone’s situation is different, and while the rules of thumb are somewhat precise, a lot depends on individual circumstances.

If you’re someone who wants a second opinion, I’d encourage you to chat with a fee-only fiduciary advisor, preferably one who works with people in your field. This can help put your mind at ease if you’re concerned or suggest course corrections if you find that you’re off track after the conversation

I hope you enjoyed this article. If you'd like to learn more about Daniel Harris or D.R. Harris & Co. you can learn about that here and here.