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rhollowood

Another 403B Gone Wrong Song...

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You should consider all your retirement accounts together—you don’t have to duplicate funds in each account.

Even your wife's accounts

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I haven't decided on my asset allocation and will certainly be looking at information already provided and continuing to post / ask questions. Right now I need to know what people's experience is with the plan exchange with regard to the amount without surrender charge. Yesterday the amount I put on the paperwork was the 93,770.98 which is what Ameriprise had for my account as available without surrender charge yesterday, Today it's up - just shy of $95,000. I figure I stopped contributions two years ago so I have 5 years left to not sustain the hit of the surrender charge. I also figure that I'll be able to periodically move the money. Not sure what I should do here as the amount available has ALREADY fluctuated and will continue to do so (?). What have other people had happen?

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Been there done that.

 

Go ahead and move the original amount. Then quarterly see whats available and move more out. I know its more paperwork that way. You could maybe do it just twice a year to once a year. I didn't want to wait. I took the surrendar charge hit and moved on. It was soooo liberating!!!

 

Regardless how you go about it, you are doing the smart thing!!!

 

Tony

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I'm right there with you. Awaiting the addition of Aspire this summer to our district choices, but if I had better choices today, I'd exchange it today. I started with AXA, then got involved with Ameriprise. Two bad choices. Worse part is, when I started we had Vanguard and Fidelity as choices!! (Salt in the wounds.)

Anyway, I'm in a 457 product now, doing Roth IRA's too. I got wiser, eventually.

 

Back to your questions: I've heard of many teachers here (Tony is among them) and at school who transferred all out right away or transferred out what they could, then realized how much greener the grass is, and transferred it all out of Ameriprise (AXA, fill-in-the-blank)/ You might do that too. You will recoup your losses in a relatively short amount of time, from what our forum members say.

 

Question: Besides the contractual obligations and surrender fees, is there any reason why Ameriprise wouldn't let you do an exchange in full?

What about 10% or $10K transfer amounts I've read about? Is that referring to hardship only?

I hope I'm allowed to transfer all monies out of AXA and Ameriprise this September. What would prevent that?

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Tony is right on the mark.....cut bait and find a better pond!!!! Not only will you be financially rewarded but psychologically as well. Keep us in the loop!!! Bob

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I don’t blame you about being uneasy about the surrender charges. I think keeping the fees in perspective might help you decide on whether to bite the bullet, or not. Using your original post numbers:

116.3k cash value
93.8k available without a surrender fee
22.5k has surrender fees between 1 & 5%
The 22.5k at Ameriprise probably has an annual expense ratio of least 2%. .02 times 22.5k = $450/yr
The 22.5k at Fidelity could have an expense ratio of about 0.15%. .0015 times 22.5k = $13.50/yr
You would save at least $437 due to the ERs over the next year if that 22.5k was at Fidelity
You would pay surrender charges on the 22.5k if you moved it all to Fidelity now. If the surrender fee averages 3%, that’s 22.k times .03 = $675 the first year. (5+4+3+2+1)/5 = 3%
At the end of the year, you’d take a loss of about $238 (+437-675) by moving it all to Fidelity now.
At the end of the 2nd year, you would be ahead because the 22.5k would be reduced (by about 1/5) to about 18k and the average surrender percent will be about 2.5%. (4+3+2+1)/4
You should ask Ameriprise to calculate your surrender fees. I have no first-hand experience with annuity surrender fees, so I could be off. When you finally close the account, Ameriprise will charge you the account closing fee which is usually about $100.
Keep in mind that you can contribute 18k per year to the 403b. Now that you can use a good provider like Fidelity, contributing more than you did in the past makes a lot of sense. Also you see retirement more clearly now, so you are more motivated. A $700 surrender charge as a percent of the value of your 403b ($116,331) is only 0.6%. Also consider that Fidelity’s index funds are more likely to capture the market’s gain than are Ameriprise’s managed funds.
I hope this helps you decide.
krow36

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Krows breakdown Is right on the monety. I was in similar about 10 year ago took the hit transferred it all and never looked back. the reduction in expense ratio will have you ahead of the game in no time

 

Rich

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You should ask Ameriprise to calculate your surrender fees.

 

Looks like about $1,103.95 in surrender fees. Based on your calculations it looks like it would still be beneficial to pay the surrender fee and get into the lower expense ratio funds with Fidelity. Does that seem correct?

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OK on the $1,104 surrender fees. It looks like I didn’t use the correct fee schedule.

When I google your annuity, I see they use a different surrender fee schedule:

https://www.riversource.com/content/files/22109.PDF(64 pages!)

Year plan started 7%

year 1 7%

year 2 7%

year 3 6%

year 4 5%

year 5 4%

year 6 2%

year 7 0%

This gives an average of 4.8% (7+6+5+4+2)/5

.048 times 22,500 = $1,080, which is fairly close to your figure of $1,104.

I think it’s very likely that you are paying at least $400 to $500 more per year at Ameriprise than you would at Fidelity. It’s hard to know without knowing what investments you are in, and what if any extra riders you have. I bet you are paying over 2%/year instead of 0.1 to 0.2%/year. If it were me, I think I’d bail out and move it all to Fidelity. Hopefully others will give you their thoughts.

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Guys

 

You don't need to over analyze this. Get rid of Ameriprise and move on with your lives. Like others have said you will quickly recoup the loss , Life will go on, and you will be richer and happier for doing so . Those awful surrender fees will be a thing of the past never to be encountered again.

 

Tony

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Got approval from TSA Consulting Group and Fidelity. Now Ameriprise is telling me that they can't accept it because they only take their own paperwork, not Fidelity's. 15 days for the first real hitch. They also tried to pitch me to stay for the guaranteed 3% interest rate feature since my contract is so old and I have that baked in. The rep said he'd email the paperwork I need when I said I still wanted to move forward with the contract exchange but that email has mysteriously not shown up thus far.

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Congratulations on making progress! I'd talk to the rep again and tell them their email got lost in the ether, and ask for the forms again. If you keep pestering them, you might motivate them to do their job. You could also tell Fidelity that Ameriprise won't email you the forms.

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Got approval from TSA Consulting Group and Fidelity. Now Ameriprise is telling me that they can't accept it because they only take their own paperwork, not Fidelity's. 15 days for the first real hitch. They also tried to pitch me to stay for the guaranteed 3% interest rate feature since my contract is so old and I have that baked in. The rep said he'd email the paperwork I need when I said I still wanted to move forward with the contract exchange but that email has mysteriously not shown up thus far.

Call their main headquarters, NOT your rep. Your rep has much more motive to put the brake on this. I did this with another company and it was much less hassle. You could also try Googling the form under various names and just doing it that way to avoid this.

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