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dedavao

403(b) Surrender Charges

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Hi there!

 

My wife moved to a new job more than a year ago and would like to do a direct transfer of her VALIC 403(b)to her new employer's retirement plan. She has invested in VALIC 403b for more than 7 years on her 1st employer.

 

A VALIC adviser told her that she still has to pay a 5% surrender/exit charge. Is he for real or what!!!because i read some articles on this very good website that they often don't do an exit charge after 7 years of investment.

 

Anybody out there- please give us your much needed input. Thank you very much

 

Rey

 

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You need to check the terms of your specific agreement but frequently money is last in, first out and it has not been 7 or 8 or 9 years since you last put money in the 403b. i.e. The trailing commission period goes years from the LAST time you invested money.

 

Roberta

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I would check with your wife's past employer and ask them to look at the contract they have with Valic. The reason I would ask them is because we have a contract with Valic and it states that any past or present employees do not have to pay surrender charges. You wife's past empoyer might have the same qualification in their contract. Good luck.

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Hi dedavao,

 

The suggestions provided here are really good. I would add that if charges exist you have two choices: one, bite the bullet, pay the fee and move the money; and two, transfer only money that has passed the penalty threshold. If you have been contributing to an account for some time (which it seems you have) many of the contributions will no longer trigger penalties. Transfer this money first. As new money passes the penalty phase, transfer it.

 

Hope this helps.

 

Dan Otter

 

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