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Valic Fees


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#1 TonkinGulfYachtClub72

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Posted 20 February 2006 - 06:39 PM

Could someone tell me how to decipher Valic management fee(s) per portfolio? Other posts list Valics fees as high as 1.5 to 2.5 %. yet these fees aren't readily apparent. Does it vary for each mutual fund? Is it hidden in the "stock" purchases of the cloned funds, e.g., the Mid-Cap Index, Science & Technology, etc? The administration fee that is listed on each quarterly report is about 0.45%. Are there other fees not listed on the quarterly report? Thanks!

#2 Admin

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Posted 21 February 2006 - 09:08 AM

You have touched on one of the real challenges of analyzing variable annuities: unearthing all fees. While Valic products and fees can vary from employer to employer you may find it helpful to take a look at the information available at 403bcompare.com This is the link for the vendor search. Type in AIG Valic and then you can browse their products. Remember to look at the Fees and Charges tab and the fees and charges under the Subaccounts Tab to get total fees for this product. Good luck.

Dan Otter

#3 danc

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Posted 21 February 2006 - 11:01 AM

You are going to need to carefully review the contract that applies to your situation. VALIC has several different arrangements, and typically there are fees at the investment fund level and contract level. The contract charges are usually separate and distinct from the investment fund charges.

Admin has assumed you have a variable annuity contract, but that is not necessarily so as VALIC has been converting many of its relationships from VA arrangements into a product VALIC calls RSVP, which is a 403(b)(7) custodial arrangement using mutual funds.

The quarterly report is not going to give you a clear picture, as some expenses likely come out of the investment instruments as part of the unit price determination, and therefore are invisible to you.

Cheers!

Danc



#4 TonkinGulfYachtClub72

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Posted 22 February 2006 - 09:06 AM

QUOTE(Admin @ Feb 21 2006, 08:08 AM) View Post

You have touched on one of the real challenges of analyzing variable annuities: unearthing all fees. While Valic products and fees can vary from employer to employer you may find it helpful to take a look at the information available at 403bcompare.com This is the link for the vendor search. Type in AIG Valic and then you can browse their products. Remember to look at the Fees and Charges tab and the fees and charges under the Subaccounts Tab to get total fees for this product. Good luck.

Dan Otter



Thanks! Looks like I have my work cut out for me.

QUOTE(danc @ Feb 21 2006, 10:01 AM) View Post

You are going to need to carefully review the contract that applies to your situation. VALIC has several different arrangements, and typically there are fees at the investment fund level and contract level. The contract charges are usually separate and distinct from the investment fund charges.

Admin has assumed you have a variable annuity contract, but that is not necessarily so as VALIC has been converting many of its relationships from VA arrangements into a product VALIC calls RSVP, which is a 403(b)(7) custodial arrangement using mutual funds.

The quarterly report is not going to give you a clear picture, as some expenses likely come out of the investment instruments as part of the unit price determination, and therefore are invisible to you.

Cheers!

Danc


Thanks! Will get started on this right away.

#5 ira

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Posted 22 February 2006 - 11:23 PM

Hi, Are you invested with Valic? Are you still contributing to Valic? Are you interested in developing financial knowledge to determine better financial alternative?............Ira

#6 TonkinGulfYachtClub72

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Posted 24 February 2006 - 07:56 PM

QUOTE(ira @ Feb 22 2006, 10:23 PM) View Post

Hi, Are you invested with Valic? Are you still contributing to Valic? Are you interested in developing financial knowledge to determine better financial alternative?............Ira


Maybe...what are you offering?

#7 ira

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Posted 24 February 2006 - 09:01 PM

I'm trying to help you if you are interested. What does maybe mean?..To be more speicific what is your investment situation? It seems to me if you are investing with Valic, your financial knowledge is very limited........Ira

Edited by ira, 24 February 2006 - 09:17 PM.


#8 ira

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Posted 24 February 2006 - 09:15 PM

[indent=1]

#9 TonkinGulfYachtClub72

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Posted 25 February 2006 - 06:30 AM

QUOTE(ira @ Feb 24 2006, 08:01 PM) View Post

I'm trying to help you if you are interested. What does maybe mean?..To be more speicific what is your investment situation? It seems to me if you are investing with Valic, your financial knowledge is very limited........Ira


Well...I'd tend to portray my situation in a different light. I don't think it is my financial knowledge that is limited. It would be fairer to say that Valic deliberately restricted knowledge not only to me, but others as well. Valic initially portrayed itself as the only alternative to the State's contributory retirement plan. Valic also gave the false impression that the only fees involved in their organization was the quarterly administration fees listed on the quarterly report.
So now my plan is:

1. Review other annuity programs and compare profiles, performances, expense ratios, and other key aspects.
2. Decide whether to continue contributing to Valic
3. In the event contributions are ceased, run a spreadsheet economic evaluation of anticipated returns vs surrender losses at various stages of w/draws (comparing decreasing surrender w/draws against anticipated earnings)
4. Compare the results of "3" with straight contributions to a Roth IRA with investments primarily in stock purchases.

Your thoughts?




#10 ira

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Posted 25 February 2006 - 08:34 AM

Tonkin, There are no load, low expense funds such as Vanguard, Fidelity, TR Price, etc where the cost to the investor is very low. There are no surrender fee, loads, in most cases no 12b-1 fees. For example the average yearly cost to an investor for the average fund at Vanguard is 0.22.

On the other hand Valic and other insurance companies charge loads, surrender fees, in most cases 12b-1 fees, and any other fee that they can think up. The average mutual fund charge at these insurance companies is 1 to 2 percent higher in the average year, which is cummulative, so say after 10 years, you pay 20 percent extra for your investment substantially reducing your return..

The average person buying a 403b is ignorant of the above, and as you found out there are sharks that distort the facts to make a sale.

Ira





#11 JeffV

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Posted 06 March 2006 - 10:05 PM

Hey Ira,

Can money be transferred from the VALIC 403(b) into a traditional IRA at Vanguard? Or would I have to change jobs to do that? When I started teaching, I fell for the VALIC "shark" pitch, but now I want out. What is the best move for me?

JeffV

#12 ira

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Posted 07 March 2006 - 02:36 AM

Hi Jeff, I believe that if you are over 55 and separated from service you can transfer to a traditional IRA. Also I think if you are over 60 and working you can transfer to a traditional IRA(providing that there is no restriction by your employer). If you are under 55 you can only transfer to another 403b, providing there is no restriction from your employer(say they are matching your money). Vanguard has a 403b that money can be transferred to where the expenses are the same as their IRA funds, only there is a $10 fee per year on each funds in a 403b that you have, which is very small, but the small fees can be minimized by investing in a target fund(which is a fund of funds).

Now Valic has surrender fees depending on how long the money has been invested with Valic. You need to check into that.

If you are still investing with Valic, STOP. Check with your employer to determine what funds are approved by them, and available for you to invest to invest in. You want a no load fund such as Vanguard TROWE, USAA, fidelity, tiaa cref, etc.

hope this helps you

#13 JeffV

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Posted 07 March 2006 - 08:56 AM

Thanks, Ira. That helps. Unfortunately, I am not in any of those situations. I will try to transfer to Vanguard. I will also try to get Vanguard on the list, but my district currently offers only load funds and insurance companies. To get Vanguard on the list, I will have to "recruit" others - we need at least 5 people to contribute to a plan for it to be approved for the list. I also have an account with American Funds, at 5.25% load. What would you recommend until I can get Vanguard on the list (assuming I can make that happen)? Should I stop contributing altogether, or bite the bullet, contribute to Valic, and transfer the money to Vanguard when the money is exempt from the fees?

Thanks,
Jeff

#14 Guest_Sierra_*

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Posted 07 March 2006 - 09:27 AM

QUOTE(ira @ Mar 7 2006, 02:36 AM) View Post

Hi Jeff, I believe that if you are over 55 and separated from service you can transfer to a traditional IRA. Also I think if you are over 60 and working you can transfer to a traditional IRA(providing that there is no restriction by your employer). If you are under 55 you can only transfer to another 403b, providing there is no restriction from your employer(say they are matching your money). Vanguard has a 403b that money can be transferred to where the expenses are the same as their IRA funds, only there is a $10 fee per year on each funds in a 403b that you have, which is very small, but the small fees can be minimized by investing in a target fund(which is a fund of funds).

Now Valic has surrender fees depending on how long the money has been invested with Valic. You need to check into that.

If you are still investing with Valic, STOP. Check with your employer to determine what funds are approved by them, and available for you to invest to invest in. You want a no load fund such as Vanguard TROWE, USAA, fidelity, tiaa cref, etc.

hope this helps you


HERE ARE THE RULES FOR TRANSFER/ROLLOVERS

1. Under Revenue Ruling 90-24 one may "transfer" a 403b only to another 403b. This may be done regardless of age or employment status.

2. Upon separation from service, at any age, one may "rollover" a 403b to an IRA.

3. While still in-service, upon reaching age 59.5, one may "rollover" a 403b to an IRA.

Peace and Hope,
Joel L. Frank


#15 ira

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Posted 07 March 2006 - 06:13 PM

Joel..........Thanks for the clear information that you listed.............Ira



.Jeff, It's possible that there will be no fees if you contribute to one of the money market accounts at the insurance company, then transfer to Vanguard 403b. Maybe another poster at this site can give information about this.

www.403bwise.com has a listing of 403b companies that do business, published by the Ca. State Teacher Retirement System, and gives variousloads, expenses and surrender charges which you can research and determine strategy for the companies that your employer offers. You can find the least of evils.

BTW, if I remember correctly, American expenses after the initial load are relatively low, and I would consider keeping that one.

What district do you work for?

Ira