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zams88

Should I Make This Transfer From Axa To American Century?

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Ok, so learning more on these forums, i changed my 403b provider from AXA Equitable (had a 1.2% mortality charge + 0.6/0.7 for their INDEX funds - so nearly 2% a YEAR charge!!) to American Century... a local mutual fund company (the only NON-life insurance company i could pick from).

 

I don't love American Century because they don't have any index funds, but they have some very reasonable mutual funds with 0.6-0.9% expense ratios without the insane 1.2% mortality charge.

 

So it's no vanguard, but it seems like with this 403b stuff it's all about picking the least bad option... and never a great or excellent option.

 

 

So i ceased making contributions to AXA and started making contributions to American Century, whom I'm satisfied with so far.

 

 

I don't have very much money over at AXA... it's about 40K.... and i contacted them on what it would cost me to switch... it would be about $1800 unless i want to leave the money there for another 4-5 years.

 

 

 

Would you bite the bullet and transfer the money now? or let it sit until my 5 year waiting period is over and then make the transfer?

 

 

I'm 29 if that makes any difference.

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There is no easy answer. I will tell you what I did. I bite the bullet, transfered the money and never looked back. The only difference was I was able to move to a better choice than American Century. Having said that, at least if you move your money over to American Century you do benefit in these ways:

 

No more surrendar fees ever again, so if a better choice eventually makes its way into your 403b lineup you can transfer it over without that horrendous and unethical charge.

Lower costs-costs matter the lower the better.

No more insurance wrappers

 

On another note Index Funds are only worth their salt if they are offered at rock bottom cost. You would never want to pay 1 % for entry into an index fund but I have seen some companies offer them for as high as 1.5% expense ratio. If you can't get an index fund at about .30 or lower than it might not be any better than a managed fund. Of course their are exceptions as some speciality index funds might be a little hire but you should never pay more than that for your typical index fund.

 

 

At your age I would be out of that Insurance annuity muy rapido. Just make sure your American Century options offer you opportunities for diversification.

 

You are on the right track. Crap I didn't figure out the annuity ripoff untill I was in my late thirties. You are ahead of the game.

 

Tont

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There is no easy answer. I will tell you what I did. I bite the bullet, transfered the money and never looked back. The only difference was I was able to move to a better choice than American Century. Having said that, at least if you move your money over to American Century you do benefit in these ways:

 

No more surrendar fees ever again, so if a better choice eventually makes its way into your 403b lineup you can transfer it over without that horrendous and unethical charge.

Lower costs-costs matter the lower the better.

No more insurance wrappers

 

On another note Index Funds are only worth their salt if they are offered at rock bottom cost. You would never want to pay 1 % for entry into an index fund but I have seen some companies offer them for as high as 1.5% expense ratio. If you can't get an index fund at about .30 or lower than it might not be any better than a managed fund. Of course their are exceptions as some speciality index funds might be a little hire but you should never pay more than that for your typical index fund.

 

 

At your age I would be out of that Insurance annuity muy rapido. Just make sure your American Century options offer you opportunities for diversification.

 

You are on the right track. Crap I didn't figure out the annuity ripoff untill I was in my late thirties. You are ahead of the game.

 

Tont

 

 

Thanks.

 

The index funds on AXA equitable are like 0.6-.7% so definitely higher than vanguard or anyone else.

 

American century has diversification for sure, they have really good target funds that i can get into for under 1%.. and good "all choice" funds.. like "aggressive" "moderate" "conservative" as well as a ton of other choices, many of which are stupid... but none of which are true index funds.

 

 

unfortunately my husband (a non-educator) also has his company 401k with AXA equitable.. and he can't get out.

 

BUT for whatever reason his deal is much better.. instead of a 1.2% mortality expense, he has 0.5.. and all of his funds (many of which are the exact same as mine) have a lower expense ratio.

 

So his AXA, while still very bad, he averages with his index funds (that have a ratio around 0.38-0.45) a total of about a 1% expense... which while bad compared to vanguard... is at least tolerable compared to my nearly 2%

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Take a closer look at that AXA index expense ratio by checking the prospectus you might be paying more than that .

 

I would definetly do the target fund at American century.

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Ok, so learning more on these forums, i changed my 403b provider from AXA Equitable (had a 1.2% mortality charge + 0.6/0.7 for their INDEX funds - so nearly 2% a YEAR charge!!) to American Century... a local mutual fund company (the only NON-life insurance company i could pick from).

 

I don't love American Century because they don't have any index funds, but they have some very reasonable mutual funds with 0.6-0.9% expense ratios without the insane 1.2% mortality charge.

 

So it's no vanguard, but it seems like with this 403b stuff it's all about picking the least bad option... and never a great or excellent option.

 

 

So i ceased making contributions to AXA and started making contributions to American Century, whom I'm satisfied with so far.

 

 

I don't have very much money over at AXA... it's about 40K.... and i contacted them on what it would cost me to switch... it would be about $1800 unless i want to leave the money there for another 4-5 years.

 

 

 

Would you bite the bullet and transfer the money now? or let it sit until my 5 year waiting period is over and then make the transfer?

 

 

I'm 29 if that makes any difference.

 

You're going to pay it now in the surrender or later through the higher costs for a longer period. I think Tony has the right idea, just do it and move on.

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Take a closer look at that AXA index expense ratio by checking the prospectus you might be paying more than that .

 

I would definetly do the target fund at American century.

 

 

I did look at the expense ratio, 0.62 for S&P 500 + 1.2 Mortality = 1.82 that's the lowest... some of the other indexes are a little higher.. like 0.7-0.8

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By the way do you possibly have a 457 plan at work?

 

 

I can have a 457. However the providers for it are all life insurance companies, american century won't service a 457

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I can have a 457. However the providers for it are all life insurance companies, american century won't service a 457

 

 

 

Thats a shame. Those insurance companies have infiltrated themselves just about everywhere.

 

 

Do you have a state run 457 plan that includes all public employees in your state? If you do you may be eligible to participate in it and it may offer an alternative

 

My state plan has extremely low fees even lower than vanguard. Once I discovered it it was easy to get our school board to add

it to our choices since it is a known commodity.

 

Just a thought.

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I work for one of the largest insurance companies that are on evey list. I REFUSE to use them in the 403b!!! I have not used them once. AXA is the one I find most times and have not met with one person who has not switched. Currently I am working on one that over 20 years will save the client about $30k in fees!!! The m&e fees are crazy! Now that does not mean that annuities do not have a place in retirement planning. I use them in different situations but not one in a 403b.

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Now that you know the game, I think that the next 4-5 years will drive you crazy every time you look at your account. I agree with Tony....I would bite the bullet.

 

Congratulations on educating yourself and getting into "the only NON life insurance company". American Century is a good mutual fund company with many options; at age 29 you are on the road to a great retirement. Bob

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