Its benefits include providing for the accumulation of retirement savings via tax-deferred growth. Fax: (845) 981-7299 want a guarantee of principal, you should consider other investment options or products that provide Then the market takes a turn for the worse and drops by 30%. Deferred annuities are long-term contracts and most annuities of this type charge surrender fees during the first 5 to 10 years of the contract. by KESP » Sat Feb 11, 2017 1:57 pm, Post The SIO enables you to seek growth, up to a limit, with some downside protection. The school district name was in the pull down, they accepted the application and opened the account. If you’re contributing the maximum 2018 amount of $18,500 to your plan and, if over 50, also taking advantage of $6,000 catch-up contributions, then AXA could be paying as much as $490 a year to your broker. If you have not contributed to a ROTH IRA, i would contribute to that instead by opening an account at Vanguard, Fidelity, or Schwab. Gain a much clearer sense of whether this annuity fits your individual savings needs so that you can make an informed decision. But you should consider whether the cost of this feature is worth the potential benefits you could receive. In fact, that’s one thing this annuity does have—a lot of choices. If you are like many school district employees, there is a good chance you are using a 403(b) plan as a way to supplement your pension in order to build a healthier retirement. The one rider I analyzed had a 1% fee and it locked in returns at the high-water mark. The AXA EQUI-VEST® 201 series for 403(b) plan is a deferred annuity contract that is designed for school district employees. Let’s say hypothetically you’ve contributed $100,000 over a 15-year period, and the investment performance helped it grow to $150,000 over that time period. The 403(b) platform offers over 90 in-vestment options and 34 different money managers. That’s basically every other em… Any investment inside a 403(b), 401(k), IRA, or tax-qualified retirement plan has the potential to grow tax-deferred, even if they aren’t inside an annuity. Re: Does anyone know what the AXA 403(b) fees are? No guarantees are made as to the accuracy of the information on this site or the appropriateness of any advice to your particular situation. In fact, millions of people who save in 403(b) plans may be losing nearly $10 billion each year in excessive investment fees, according to a recent analysis by Aon, a retirement consultant. Says AXA: “The Target Date Allocation Portfolios are not guaranteed at any time, including the target date.”. By contrast, the average investment fees for mutual funds inside a 401(k) retirement plan cost investors 0.88%, according to a 2015 BrightScope report. i am pretty sure the expense ratio and fees at AXA is eating up your 403b account. When this investment might make sense: If you have already maxed out all your qualified retirement accounts and would like to put aside more money into a tax-deferred account, then a variable annuity might be an appropriate option. Today I’m going to break down an annuity that is issued by AXA Equitable Life Insurance Corporation. AXA pays agents 1.5% to 2% commissions on every future dollar you contribute to your 403 (b) annuity. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. Deferred annuity contracts such as EQUI-VEST® provide for conversion to payout status at or before the contract’s “maturity date.” This is called annuitization. I did that for you. While 1.20% might not sound like that much, this fee can make a significant difference to the value of your portfolio when you retire. But how much can you protect? ). There is also "other expenses" of .25%. These are typically 403(b)s offered by insurance companies (AXA, VALIC, MetLife, etc. AXA Equitable Life Insurance Company is the #1 provider of retirement plans for K-12 schools, serving more than 820,000 participants in over 17,000 plans. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. But there are a few differences. AXA variable annuity 403b: 3.36% in fees AXA mutual fund 403b: 1.25% in fees Fidelity 403b: 0.07% in fees You can calculate the cost of these fees over time using this calculator: http://www.bankrate.com/calculators/ret ... lator.aspx I used $50,000, kept for 20 years and assumed a market return of 6%. You can obtain contract and sub-account prospectuses and summary prospectuses from your financial representative or by clicking on the prospectus link within this article. Administration Charge: This fee is charged on the insurance side and it will be the lower of either 2% or $30 of your account value plus any amounts withdrawn. tchasteen- honestly, I wasn't even aware Vanguard waived the $15/fund. 401(k) plans, on the other hand, are provided by employers engaged in for-profit businesses. by tchasteen » Tue Feb 14, 2017 5:31 pm, Post by krow36 » Fri Oct 18, 2019 1:19 pm, Post The range was much narrower for large plans, with all-in costs ranging from 0.34% to 0.58%. It’s always satisfying for me to break down complicated financial products out there to try and provide some clarity on how they really work. There is no additional tax benefit to you when you buy this annuity inside a 403(b) or retirement plan. I didn't read your other thread but if it hasn't been mentioned, one reason that school districts and others select these plans from the various life insurance companies is that they can offer these plans to the district for "free". The contract also offers death benefit protection and, as discussed earlier, it offers a Personal Income Benefit for an additional cost. If you work in K-12 school and participate or plan to participate in a 403(b), there is a good chance you may get pitched the AXA EQUI-VEST variable annuity. First, the death benefit is only paid out if you die. Please note that AXA Equitable will not process your request if the Employer sponsoring your 403(b) plan, or its designee, has specifically advised that hardship withdrawals are not permitted in its plan. by Teacher88 » Tue Feb 14, 2017 9:55 am, Post Many of you probably signed up with a sales rep or agent that came to visit your school. What you may find with plans from Vanguard or Fidelity is an expectation that the district will cover some of the plan-related expenses. With no fee at all, $100,000 would have become $2.6 million after 40 years, ... We reached out to Axa, the largest provider of 403(b) plans to the K-12 market. Find out more on the website. Overall Fees: There are additional fees associated with variable annuities that are not found in other types of annuities or mutual funds. by runner9 » Sat Feb 11, 2017 12:47 pm, Post In this post you say you're in Ohio, if so go to. There are situations when the withdrawal charge is waived—for example, if you are confined to a nursing home for more than 90 days—and they no longer apply after the completion of 12 contract years. The SEC’s Office of Investor Education and Advocacy has issued bulletins warning investors how much fees can impact the growth potential of a portfolio. . Another reason is an apparent obsession in the public sector with having plans that provide annuities. BENEFITS & FEATURES AS ADVERTISED BY THE AXA EQUI-VEST ANNUITY: ADDITIONAL BENEFITS AND FEATURES OF THE AXA VARIABLE ANNUITY, Ask a Question or Schedule a Consultation, North American Securities Administrators Association, clicking on the prospectus link within this article, Podcast: Bruce McNutt and Ken Ford discuss 403b’s. This option gives you different investment strategies designed to adjust with you as you move through the phases of your life and become more conservative. Trying to get something introduced in our district that gave people the most options and made sense financially. This means that if you move jobs you won’t need to worry about changing your MPO log in details. The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Furthermore, any investment that you purchase inside your 403(b) account can give you tax-deferred growth. If you’re contributing the maximum 2018 amount of $18,500 to your plan and, if over 50, also taking advantage of $6,000 catch-up contributions, then AXA could be paying as much as $490 a year to your broker. Have a question about your personal investments? (All those extra fees with no value added!) If you have a 403(b) plan, then you’re already getting tax-deferred growth. A teacher who works 40 years and has a variable annuity with AXA, VALIC, Security Benefit, MetLife (just to name a few) can lose over $350,000 due to fees. According to one analysis from the independent investment research company Morningstar, the most popular version of the AXA Equi-Vest annuity has total annual operating costs that can range from 1.81% to 2.63%. Even if you do die, your account didn’t drop below your total contributions, so the death benefit guarantee did not provide any guarantee in this example. With a variable annuity, in order to get the investment selection combined with the income options, you pay two types of fees: This is something you want to look very closely at if you are still working and making contributions to your retirement plan. Securities offered through LPL Financial, Member FINRA/SIPC. Unlike other fee-only planners, I find that some annuities may be a part of a comprehensive financial plan when used correctly. Withdrawal Charges: In addition to all the fees listed above, the AXA Equi-Vest variable annuity also charges a surrender fee (sometimes known as a withdrawal charge). This includes school systems, hospitals and healthcare systems, and religious organizations. However, think carefully about whether or not this specific variable annuity with the structure of its surrender fees, agent commissions, and income rider options would best support your retirement goals. You see a $45,000 drop in your total account value, and your new account balance is now $105,000. Investors have access to over 80 variable investment options including numerous equity and fixed income portfolios as well as various asset allocation and target date portfolios. My Action Steps And 403(b) Wise. In this case, the AXA Equi-Vest variable annuity agrees to pay out your total contributions even if your account takes a terrible market hit. The fees on the current 403(b) can be drastically reduced. For example, if you are contributing $1,500 a month to your retirement plan, and 10 years into your contract you want to make a small withdrawal to pay off your home, you would have to pay 5% to AXA on any contributions made during the five previous years. 2000 A.M. Best Company, Inc. 20 Apr. While the difference between .25% and 1% might not sound like a lot, assuming a hypothetical investment of $100,000 earning a 4% annual return, in 20 years’ time, that difference could reduce your portfolio by nearly $30,000. What if you know you need more money than that? They are sold only by prospectus. Answer: We recommend always using a personal email address for your MPO account rather than a work email. This annuity also gives the agent commissions based on your contributions. The BrightScope data reveal that total plan fees for small 403 (b) plans ranged from 0.49% of assets all the way up to 1.48%. For example, in my current 403b I have access to the Vanguard LifeStrategy funds which would be solid investments with fees of only.14%. During the growth phase, you can invest on a tax-deferred basis in one or more of AXA’s variable investment options or guaranteed interest options (GIO) or structured investment options (SIO). Does that mean you get to earn higher returns? This review is meant to be an independent review at the request of a client so they can see my perspective when breaking down the positives and negatives of this particular annuity model. You have a heart attack and go into the hospital. Some annuities that offer this fee add a guaranteed income base growth rate that typically range from 4.5-5.5% on top of the locked-in watermark. I finally tuned in when I came across the website 403(b)wise. Over 30 years the 1.75% annual fee costs you 65.37% of your real profits. These frequently asked questions and answers provide general information and should not be cited as authority. It’s very common for people to withdraw money from their retirement plans. Read our full 403(b) vs 401(k) comparisonhere. Overall fees including a Mortality and Expense Risk charge, Surrender Charges based on ongoing contributions, Agent commissions and compensation based on ongoing contributions, Income rider features that limit investment options for a lifetime fee, Annuitization of the contract may be required, No additional tax benefits when part of a 403(b). I had AXA at one time. Home » Blog » An Independent Review of: The AXA EQUI-VEST® (Series 201) contract for employer-sponsored 403(b) retirement plans. If you want to go for the lowest fees, you should choose the individual index funds rather than the Target Retirement funds. The EQUI-VEST overview states: “There is risk of substantial loss of principal because you would This product is marketed as a solution to help supplement your retirement income needs. I was signed up with AXA at a school professional development meeting. by tchasteen » Sat Feb 11, 2017 12:00 pm, Post This is a good thing. That’s right. A variable annuity is a type of deferred annuity, so there are two phases to your contract: the growth phase, and the income phase. Teachers: Is the Death Benefit Killing Your Retirement Plan? A 403(b) is a retirement plan provided by employers in nonprofit organizations. (Source: 403bwise.org) See Also: When 2% Costs Everything–How Investment Fees Cost You Your Freedom. Maybe they bought you lunch in the teacher’s lounge and gave a short presentation about the basics of the 403(b) plan. If you’re not familiar with variable annuity products and how they work, fees can be confusing to decipher. At least AXA engaged, letting me know that the Equi-Vest 201 variable annuity that it offers via a prospectus that runs 132 pages would cost a minimum of 1.81 percent annually in one version and possibly a fair bit more.” If you know a teacher or someone who is thinking about an annuity and might benefit from this post, feel free to forward it on to them via email. I added the account as an Investing/Retirement 403B and track deposits from my paycheck into it, but cannot seem to link the account online. I’m just reporting on the main facts; to find answers specific to your situation may require a review of the full prospectus for applicable the details. My adviser did not want to give me that information until I got tough with him. A 403(b) is a retirement plan designed for educators and available through your school district. For someone trying to save for a retirement, fees are an important consideration. The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. Bonds are subject to market and interest rate risk if sold prior to maturity. Mutual funds typically do not charge you this fee. . by merdock69 » Wed Oct 16, 2019 3:31 pm, Post It’s a perk that comes with the plan. Investing in mutual funds involves risk, including possible loss of principal. So i am currently investing 15% of my salary in an AXA 403b sponsored by my work. My own stupidity for not checking on that before I started investing. BrightHouse (in Administration) is the UK's largest rent-to-own lender. This is a detailed post about a popular 403(b) annuity product, the AXA EQUI-VEST variable annuity. I was able to go through the vanguard/newport group 403b enrollment for my wife. I have no idea why this seems to be such a big deal because in every case, if you need an annuity, you are better off getting one from anyone but these providers. A fee charged by an investment manager to manage an investment fund. The percentage can be as high as 7% and never less than 2.5%.”. What’s different about this annuity is that you remain invested in the stock market even while you are taking income withdrawals, which is why you have those additional fees. So, even if you die, you’ve been paying that 1.25% M&E fee all this time to guarantee that your beneficiary (in this case, your spouse,) will still get all the money you paid into this account. The average mutual fund fees and expense ratio is 1.02% a year, according to the Investment Company Institute. (12b1). This independent review will cover the following information on the AXA Equi-Vest Annuity: How will this AXA annuity product review help you? Axa pays a commission of 1.5 percent to 2 percent on every future dollar an employee contributed to a 403(b) … My goal is to make my review of annuities as impartial and objective as possible. He gets 5 % of teachers are using them to save for a retirement plan is now $ 105,000 you! Lady said if i can get 5 people interested in a 403 ( b ) annuity to %!: does anyone know what the AXA EQUI-VEST® 201 series for 403 b! 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