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nickstrobel

Transferring 403(B) Accumulation To Variable Annuity Guaranteeing Payo

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I'm considering taking some of the funds accumulated in my 403(b) and putting it into something with guaranteed accumulation increase while I'm working and a pension like payout when I retire. My advisor has suggested a VALIC variable annuity (Portfolio Director) with IncomeLOCK+6 rider that guarantees a 6% increase for the first 12 years (while I'm still working) and then a set amount of withdrawal after I retire for life that can be between 4.5 to 5.5% of what I earned at the end of that 12 years of accumulation while I was still working. I'm balking at the fees: $15/year contract fee + 1.35% for the rider if it is a joint life that includes my wife. As near as I can tell the variable annuity part also has fees tacked on to it but I'm not sure about that. If there are fees with the variable annuity part (besides the $15/year contract fee), the total fees could be pretty large.

 

Since I'm still 18-19 years from retiring, perhaps it would be best to just stick with the regular 403(b) and go with the market for a while.

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Nick,

 

Perhaps your last sentence made the most sense; with 18-19 years to go, you won't need a life insurance company to manage your investments.

 

Listen to the fellas ( Joel, Steve, Tony) closely for some great advice. If you don't like what you hear, I have a bridge in Brooklyn and a magnifying glass for sale. Bob

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Hi Nick, What is your "regular 403b?" Read what yakers, another frequent poster suggested to read: http://money.cnn.com....html?iid=HP_LN Around here we NEVER listen to any type of annuity sales pitch. It's all talk, it's what's in the contract that counts, never what is said. Many times its your own contributions that are reported on your statement as RETURNS. When in fact it was the insurance company claiming returns it got for you when it was your money in the first place! There's no regulations. In fact many of the stuff they do that is completely legal in the 403b world could be jail time if they did the same thing in the 401k world! Steve

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I tried to pull the information off of morningstar but I can't get it pasted into here in a decent format. In addition to the charges that are being referenced there is a 1.25% annual M&E charge plus the charges for the investments in the range of .7% to 1.2%. So it would be easy to get your overall cost to nearly 4% annually.

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my "regular 403(b)" is a plan administrated by CalSTRS 403bComply where my pre-tax contribution (salary reductions) end up in a set of Franklin Templeton funds.

 

Thanks for your help in this. I'm going to stick with my original investing plan set up years ago (max out the IRAs and 403(b) for my wife and I) and not go with the VALIC.

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Nick,

 

 

 

Good decision! Additionally, for investors 59 1/2, slowly moving part of the 403b into a Roth IRA ( absorbing the tax bite) can be beneficial for some people. The RMD's at 70 1/2 can be brutal and partially avoided. This strategy can be helpful to some people and bears investigating. Bob

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