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JAM

Help want out AXA 403 B Tax Sheltered Annuity

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Hello, 

New to the site and the discussion board.  I have been teaching in NJ for the past 11 years at a High School in Hunterdon County.   I currently have a 403 B through AXA with around 49,000 in the account.   I have recently been looking into the fees and charges associated with my account.  I am not sure about my surrender charges or my exact % that im being charged.  I want out of AXA.   I stopped my distributions,  now not sure who to turn to.  I have contacted my building rep about other choices available and we have 3 choices in my district:

AXA

Lincoln Investments 

Waddell & Reed 

My question is which company should I go with for my 403 B if any of these?   

 Should I just invest elsewhere RIA and low cost mutual funds ?

A 457 is available in AXA and Lincoln would that be a better option? 

Any help would be great.  Thank you 

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Jam

Welcome to the site. Glad you found us. Its hard for me to fathom having only 3 choices. Usually there are too many choices.Thats not necessarily a bad thing if you have good choices but I'm not sure any of the three are ideal. Have you thought about petitioning your school system to add a few other choices? Aspire would be a good addition to that list as would be Vanguard or Fidelity. Aspire might be the easiest to add and you can tap into Vanguard or Fidelity through their self direct option. You would want to go the index fund  route.My thinking is Lincoln investments might be your best choice from your choices. 

Do you have a state sponsored 457B?. Usually they are superior in costs and offerings and are easy to add if school teachers qualify in your particular state. I totally agree though you need to get away from AXA if at all possible. Depending how much you are saving a Roth IRA or Traditional IRA might be a good choice so you can choose the company you wish but the money you can invest yearly is much lower.. If you are married your partner can also participate to an IRA. You might check out Lincoln Investments at 403bcompare.com and see what they offer and their fee structure.

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1 hour ago, JAM said:

I am not sure about my surrender charges or my exact % that im being charged. 

Does anyone really ever know what they are really paying in these accounts LOL!! You are not alone and its probably more than they tell you and more than you think.

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I'm not sure how much you're investing every year, if it is equal to or below the IRS limits for an IRA ($5,500 per spouse) then just stick with the IRA.

Lincoln has a self-directed option for certain locations (NJ is one I think). Search the form it has been talked about several times...this is the first result. AXA is awful and I don't know about Waddell & Reed (but the odds aren't good). I'd make sure it is true that you only have 3 options, usually there are more.

The 457b has slightly different rules than a 403b, you can google that. Usually it is reasonable to pick the plan with the lowest cost regardless if it is a 403b or 457b...if each route has identical costs then you may choose based on the slightly different rules.

I can't remember the exact fees for the self-directed Lincoln plan. I'm guessing it is relatively good, but you'd probably still benefit from getting your district to add Vanguard or Fidelity. I view Aspire has a 2nd tier option because they add on fees that you could avoid by going directly to somebody like Vanguard or Fidelity.

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3 minutes ago, EdLaFave said:

I view Aspire has a 2nd tier option because they add on fees that you could bypass by going directly to somebody like Vanguard or Fidelity.

Probably right but Vanguard-Fidelity can be difficult to get added for many sometimes TPA state specific reasons which I can't explain or understand. I like Aspire because they seem to be getting on many district lists fairly easily and its a good end around at minimal extra cost. From having experienced both types of accounts I don't seem to see much difference between a 403b account and a 457b account except 457b accounts are less likely to be littered with insurance products but even then thats not always the case either. I would see if you have a state sponsored  457b and inquire about adding it. If my memory serves me correctly I think New Jersey is one of those states where teachers can't tap into the state 457 b but I hope I am wrong. KROW! where are you hiding:)

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4 hours ago, tony said:

Jam

Welcome to the site. Glad you found us. Its hard for me to fathom having only 3 choices. Usually there are too many choices.Thats not necessarily a bad thing if you have good choices but I'm not sure any of the three are ideal. Have you thought about petitioning your school system to add a few other choices? Aspire would be a good addition to that list as would be Vanguard or Fidelity. Aspire might be the easiest to add and you can tap into Vanguard or Fidelity through their self direct option. You would want to go the index fund  route.My thinking is Lincoln investments might be your best choice from your choices. 

Do you have a state sponsored 457B?. Usually they are superior in costs and offerings and are easy to add if school teachers qualify in your particular state. I totally agree though you need to get away from AXA if at all possible. Depending how much you are saving a Roth IRA or Traditional IRA might be a good choice so you can choose the company you wish but the money you can invest yearly is much lower.. If you are married your partner can also participate to an IRA. You might check out Lincoln Investments at 403bcompare.com and see what they offer and their fee structure.

Ghoul

4 hours ago, tony said:

Jam

Welcome to the site. Glad you found us. Its hard for me to fathom having only 3 choices. Usually there are too many choices.Thats not necessarily a bad thing if you have good choices but I'm not sure any of the three are ideal. Have you thought about petitioning your school system to add a few other choices? Aspire would be a good addition to that list as would be Vanguard or Fidelity. Aspire might be the easiest to add and you can tap into Vanguard or Fidelity through their self direct option. You would want to go the index fund  route.My thinking is Lincoln investments might be your best choice from your choices. 

Do you have a state sponsored 457B?. Usually they are superior in costs and offerings and are easy to add if school teachers qualify in your particular state. I totally agree though you need to get away from AXA if at all possible. Depending how much you are saving a Roth IRA or Traditional IRA might be a good choice so you can choose the company you wish but the money you can invest yearly is much lower.. If you are married your partner can also participate to an IRA. You might check out Lincoln Investments at 403bcompare.com and see what they offer and their fee structure.

 

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I am not sure about a state sponsored 457b.  I will have to check into it.  

I have listened to the pod cast on how to approach the district about adding vanguard or fidelity .  I have to think some more about this. 

 

Thank you 

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Good Luck Vanguard or Fidelity would be ideal but if you can't get them consider Aspire because I know for fact its very very easy to add and if you self direct through them you can get to fidelity or vanguard index funds for just a few pennies more than going directly with Vanguard or Fidelity. Anyway you look at it getting away from your current choices is going to be a huge improvement . Let us know what you decide and how we might help further.

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My district quietly added Vanguard, Fidelity, and Aspire to our list of approved vendors about 3 years ago, so change is slowly happening.  I opened a 403B(7) account with Vanguard as soon as I could, but didn't exchange my old 403B (from an insurance co.) right away because there was a 15 year surrender penalty period.  This period elapsed about 1.5 years ago and Vanguard was very helpful in "pulling" the old account over.

 

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The NJ Education Association has an arrangement with Lincoln Investment that allows the use of low-cost  Vanguard Admiral class index funds. This is called the Lincoln Investment Participant Directed Platform. It’s low cost ($35/yr) and available for both 403b and 457 plans.

 

I and others have posted on this option on this forum and on the Boglehead forum. Use the search function to find these threads. I’m in remote BC with no WiFi and limited cell phone data and reception.

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I unaware of any reason that Vanguard or Fidelity would be more difficult to add than any other vendor. However, I do agree that Aspire is a quality alternative to Vanguard, Fidelity, NEA DirectInvest, etc.

Because I prefer quantitative answers over qualitative answers, Aspire charges an extra 0.15% per year. If you assume a 3% real return, the 0.15% fee eats up 5% of your real profits after one year and 6.54% after 30 years. Adjusting for inflation, if you invest $8,000 every year then after 30 years you will have lost $9,945.96.

I don't find this to be egregious, but I do think it is unnecessary and I'd prefer investors keep their money.

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3 hours ago, EdLaFave said:

I unaware of any reason that Vanguard or Fidelity would be more difficult to add than any other vendor. However, I do agree that Aspire is a quality alternative to Vanguard, Fidelity, NEA DirectInvest, etc.

 

I know in the past when the new regs came into being Vanguard was eliminated from some plan documents (including ours)because Vanguard refused to sign certain agreements. I think one of them was a hold harmless agreement. Maybe things have changed or maybe its deliberate to keep better vendors out of the system . I really don't understand any of it really. I do remember others losing Vanguard for the very same reason as we did here in Virginia and it was talked about on this site. Maybe its all in the past now and access is easier now. 

Ed

I am not disputing that Vanguard or Fidelity would be better choices but an additional  .15% per year is not the end of the world if you can't get on with the big boys.But Aspire would be a move in the right direction and would cut his costs compared what he is paying now. Sometimes you have to take what you can get.

Actually at this point I think Krow may have answered his question better than the rest of us. i would look into the Lincoln Direct Invest. Of course they may be some fee similar to what Aspire charges and that should be considered. But for the sake of expediancy since he already may have quick access to Lincoln that may be his best option. i would still though work on getting the others added.

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It’s been confirmed repeatedly that in NJ the only fee is $35/yr plus VG’s ER. This option is similar to the NEA Direct Invest, almost too good to believe. It’s even better in that it includes both a 403b and a 457 plan.

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On 7/20/2018 at 9:43 PM, krow36 said:

It’s been confirmed repeatedly that in NJ the only fee is $35/yr plus VG’s ER. This option is similar to the NEA Direct Invest, almost too good to believe. It’s even better in that it includes both a 403b and a 457 plan.

Thanks Krow, i will try and remember that going forward. And actually I need to thank Ed because he mentioned it too and first in his post.

 

 

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Sounds like JAM's best option is Lincoln Investment, as long as it's self--directed and no one prey's upon participants to get a FA/sales rep to manage.

The reason why Vanguard and Fidelity aren't easy to add is basically, they have been "blacklisted" by the large Third Party Administrator (TPA) from the approved vendor's list thereby making them nearly impossible to get added on. Like Tony said, reasons are hard to explain but include refusing to pay or pass on the administrative fee that the TPA's and/or vendors charge. Aspire passes on the fee in the form of the 0.15% fee whereas big players like AXA bury it in their other excessive fees. That is my understanding of it, at least, where I am from, Long Island, NY. I tried to add back Vanguard and Fidelity but was turned away in a heartbeat but Aspire was a relatively easy pitch that was added at the one time of the year when the school board approves changes to the 403b lineup.

The state-sponsored 457 is the best option for dollars beyond the $5500 (Roth) IRA, as Ed pointed out, where I am but each state and plan is different so you must ask your HR or business dept. or post questions here. The ability to access your 457 funds when you sever service is more valuable than having to wait until age 591/2 regardless of employment status.

JAM, while it's great to think about your options, don't try to do it alone. Ask your district the right questions and act, based on your options. 

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