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GSCalifornia

Getting Out Of National Life Group/life Insurance Company Of Southwest

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Congrats on your move. It's worth whatever it costs to get out of that plan. When informing colleagues about this info be prepared to get little response at first. People will be grateful for the information but their interest will fade or they'll think it's over their head. Share whatever info you find useful and offer help when needed. Good luck

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GS,

Thank you for posting this information.  I just wish I had found it sooner.  I've been contributing a little ($1820/year) to a National Life Group (Elite 5) Fixed Annuity - 403b.  It's earned me $375 in interest over last 5 years and I would have to pay an 8% surrender fee ($627) to move it to Vanguard.  It's frustrating when you think you're doing the right thing by "having a 403b", to later learn that not all 403b's are the same and there are far better vehicles to put your money into.  I've started a shell IRA with Vanguard and will work with NLG tomorrow to begin moving that money.

 

Thanks to all that have contributed to this post.  Very helpful!

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20 hours ago, carrjar said:

GS,

Thank you for posting this information.  I just wish I had found it sooner.  I've been contributing a little ($1820/year) to a National Life Group (Elite 5) Fixed Annuity - 403b.  It's earned me $375 in interest over last 5 years and I would have to pay an 8% surrender fee ($627) to move it to Vanguard.  It's frustrating when you think you're doing the right thing by "having a 403b", to later learn that not all 403b's are the same and there are far better vehicles to put your money into.  I've started a shell IRA with Vanguard and will work with NLG tomorrow to begin moving that money.

 

Thanks to all that have contributed to this post.  Very helpful!

We have all, or mostly all, of us made the same mistake. It is criminal that these products are STILL being sold each and every day to our public k12 403b plans. $375 dollars after the last five years is criminal! I was in my middle 40s when I had to pay an 18% surrender fee to get out of two horrible fixed annuities, but I did it in 1994 and was happy I did. I was so angry at the time, that I vowed to write a book, and I wrote two books to try and inform our colleagues to stay away from the "nice" guy or gal in the cafeteria.  

You might be able to take it out over five years, but depending on the contract, you might not get any interest. But in your case, assuming you have 20 years until retirement, I would pay the $627 so you can invest it in genuine stock and bond markets. 

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On 7/12/2017 at 7:17 PM, GSCalifornia said:

Thank you all for your help! After many hours on the phone, I figured out the process of how to transfer the money and I set up an account with Vanguard (their customer service was much better than National Life Group and the third party administrator, Envoy). I am so grateful that I found this forum to confirm my skepticism of National Life Group and indexed annuities.

 

Ed, thank you for the Investing 101 link. I'm a rookie when it comes to investing so your overview was very helpful. Any advice on choosing to do 3 total market funds vs a single target retirement fund? Any further advice/resources for Vanguard funds to select?

Thank you for your question. I am in the exact same situation with National Life Group and  Vanguard. Were you able to move your money from NLG to Vanguard? Did you have to pay fees? I am so glad that we have this forum with very helpful info!  Thank you! 

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18 hours ago, californiateacher1 said:

 I am in the exact same situation with National Life Group and  Vanguard. Were you able to move your money from NLG to Vanguard? Did you have to pay fees? I am so glad that we have this forum with very helpful info!  Thank you! 

This thread started by GSCalifornia is 3 years old, but you are certainly welcome to add to it with your own questions (or start a new thread?). If you send a personal message to GSCalifornia, it will generate an email to them, and they may respond to your query. I have no doubt that the transfer was completed, and that there was the surrender fee, and probably an account closing fee.  

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I am in a similar situation. I'm in Georgia, and I have a 403b plan through Midland National that I've been contributing to for about 5 years. I stopped contributing last month after listening to Clark Howard and finding you guys at 403bwise. However, I haven't moved the money yet. My school district doesn't offer ANY companies that are not high fee, etc. All are through insurance companies. What now? Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional? I'm learning but still limited in knowledge regarding all of this. I just wish I'd never signed up for that 403b but was talked into it!! Ultimately it's no ones fault but my own but would love some help getting out of this mess!

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3 hours ago, Deana said:

I am in a similar situation. I'm in Georgia, and I have a 403b plan through Midland National that I've been contributing to for about 5 years. I stopped contributing last month after listening to Clark Howard and finding you guys at 403bwise. However, I haven't moved the money yet. My school district doesn't offer ANY companies that are not high fee, etc. All are through insurance companies. What now? Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional? I'm learning but still limited in knowledge regarding all of this. I just wish I'd never signed up for that 403b but was talked into it!! Ultimately it's no ones fault but my own but would love some help getting out of this mess!

Welcome to the forum, Deana! 

Your story is decades old. Most of us regulars here have similar stories. I was sold two annuities 35 years ago and the same thing is still happening.

You did the first step correctly by stopping immediately!

Do NOT pull the money out! Just leave it there for the time being and we can guide you along about what to do moving forward. But we need more information. Now provide the other companies that are available so we can take a look. There might be one gem in the rough.  

Steve

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Deana, welcome to the forum! Don't be too hard on yourself, as there are lots of others that should share in the blame, like school districts which take no responsibility for the crappy products they allow to be sold to their employees! And the teacher unions, and the federal and state regulators. 

If you will post the list of your district's 403b vendors, we can check for any hidden low-cost vendors. Sometimes an insurance company has a decent product which isn't pushed because it doesn't make them much money. 

No, don't cash it out. Let it just do its thing while we figure out what options you have. It is an equity index annuity that will probably earn maybe 2% per year. Sort of like a bank savings account some years ago. These days savings accounts earn less than 0.5%! You can not move the balance to an IRA unless you move to a different district, that is change employers, or you are 59.5 years old. Hopefully we can find a lower-cost vendor on the district's 403b list that you can transfer your balance into.  

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4 hours ago, Deana said:

My school district doesn't offer ANY companies that are not high fee

That may be true, but you may be surprised. List the approved 403b vendors and the approved 457b vendors. If you don't have that information then tell us what district you're in and together we can try to track the information down.

15 minutes ago, sschullo said:

Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional?

I want to make sure you understand the different types of accounts.

At the highest level you have taxable accounts and tax advantaged accounts. As the names imply, the former doesn't give you tax breaks and the latter does.

Within the tax advantaged accounts umbrella you have accounts that are associated with an employer (403b, 457b, 401k, etc.) and accounts like an IRA that are not associated with an employer. Tax advantaged accounts, whether associated with an employer or not, often come in two varieties: Traditional and Roth. This specifies exactly how the tax break is applied, but I won't get into the details of that.

Within all of these accounts you can buy specific investments.

Now more to the point for your specific situation...

When an employer offers a 403b, 457b, 401k, etc. you have to keep your money in that account. If your employer has multiple vendors for these accounts then you're allowed to transfer the money between vendors (fees may apply), but you cannot transfer the money to an IRA.

Some important questions:

  1. How much are you investing per year?
  2. How long do you intend to work for your district?

After answering those questions your course of action should be to enumerate all of the vendors your district has approved and then we can give additional input.

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