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Redwoods

Using A Variable Annuity In A 457(b) Plan

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Jim,

 

Did you know that legally the assets in your account are titled in the name of the 457(b) Trust that your employer formally established. Not in your name. You have a beneficial share in the assets of the TRUST established by your employer.

 

Insofar as this plan is already operational and legally includes the establishment by your school district of a formal Plan Document, Summary Plan Description, Plan Administrator as well as a Board of Trustees to administer the Plan under its terms, you and your colleagues that recognize that 125 bp for an annuity wrapper is a drain on the growth of your money should demand asap the same asset allocation program without the annuity wrapper.

 

You have far more leverage than the average 403b teacher accross the nation that is stuck with these predatory ME fees. You have admitted that if it was offered absent the ME fee you would have grabbed it. So why not fight for it? Tell your Plan Administrator that the teachers of the City of New York have four pre-arranged portfolios (four asset allocation programs) to choose from, each with automatic rebalancing. Your question should go somthing like: "So if teachers in the big apple have it as a straight investment plan why is it offered to us only inside of a Variable Annuity that is of no value to me?"

 

In closing, may I say that the weighted average expense ratio for the 457(b) Plan of the City of New York is 34 basis points or 0.34 percent. Are you now going to accuse me of working for the City of New York?

 

Let us know what your employer says?

 

Joel

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Jim,

 

You have told us that your 457(b) is with a pt employer and you are maxing out on your 403(b) with your full time employer. I applaud you for being so industrious!

 

Do you also use the AUL OneAmerica Asset Director variable annuity to fund your 403(b) or do you balance out your salary reduction contributions with a direct investment in mutual funds?

 

Joel

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