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ariel

which documents shows AXA fees?

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Can someone tell me where I see the fees? So far I have seen a small 30 dollar fee for the whole year in my 10k 503b account. That seems low to me (0.3%) or is there something I'm not seeing? Or are fees from Fidelity for instance way lower than 0.3%? The only time I have seen the term "surrender fees" is when you invest in annuities. So far I have only invested in indexes mirroring the S and P 500 plus international stocks. I have seen posts stating to ask the AXA financial planners, but that doesn't seem like a good way to get honest info lol if they are not trustworthy. 

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Most K-12 403b plans are variable annuity plans because the AXA rep gets a large commission with them. Using the 403bcompare website, the AXA variable annuity has a 1.20% mortality and expense fee. This is in addition to the sub account fee which all your fund selections have. So if you are using the EQ/Equity 500 Index sub account, its expense ratio of 0.58% is added to the M&E fee for a total fee of 1.78%. This fee is subtracted out of the sub account’s market return on a daily basis. So the current value of your balance has had the 1.78% subtracted out already. If you compare the return of the sub account over a calendar year with that of say the Fidelity S&P 500 mutual fund (ER of 0.04%?), you will see that the AXA annuity sub account’s return is at least 1.8% lower than that of Fidelity or Vanguard.   

AXA does have custodial (mutual fund based) 403b plans they have used with school districts, but not currently with CA districts. These are 403(b)(7) plans and don’t have M&E fees. They may use funds with front-end or back-end loads but not usually 5 or 10 year surrender fees. These plans may be customized to a school district and if this is what you have, you’ll have to get the fees from the district’s 403b plan. You can look over AXA’s MF based plans on the 403bcompare website even though they are no longer used in CA.

The 403bcompare website is run by the CA state teachers pension authority (CalSTRS). CA law requires that all K-12 403b vendors list the fees of all their offerings on 403bcompare. Since vendors offer the same plans throughout the nation, the sight is very useful in other states.

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Assuming you have the variable annuity, I didn’t mention the AXA $30 per year Administration fee, or the 5% surrender fee that you would pay for each of the last 6 “contract years”.

Ariel, welcome to the forum! Hopefully your district has other vendors on their 403b vendor list. You can transfer your AXA 403b 10k balance into another vendor’s plan. Can you post the list? Hopefully there will be a low-cost vendor you can use. Also, what state are you in? About half the states have state-run low-cost 457 plans that public school district employees can use.

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Here’s an illustration of the effect of fees over time. It shows the difference between a fee of 1.74% and of 0.07%, if contributing $250/month over 35 years, with an assumed  market return of 6%. There’s a difference of over $100,000!! That’s getting to be serious money! https://docs.google.com/presentation/d/1Q4vixuuGGAVzZIF0G1EOriI_RQPuqgn_bpOmh9UrqPc/edit?fbclid=IwAR2OvqHkAGsK7BUtNOfYn7sR3vlBWek60WVm6xecfaSf6mzp7pfvMjlblPY#slide=id.p5

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This is the screenss of the plans available. What's the best from this list? Thanks for the info. So basically you are saying they subtract the fees without it being listed separately on the statements? That seems illegal to me. 

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Without a doubt, Fidelity Investments is your lowest-cost 403b vendor on your district's vendor list. Their annual fee is $24. Their broad-based index mutual funds are probably the lowest-cost you can find in a K-12 403b plan. Check out the funds at: https://www.403bcompare.com/products/68#/fees

For complete diversification, all you need is:

Fidelity Total Stock Market Index fund (more complete than S&P 500 Index as it includes mid and small cap stocks)

Fidelity Total International Stock Market Index fund

Fidelity Total Bond Market Index fund

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The fund names I gave were those for Vanguard. Here are the Fidelity names:

Total Market Index Premium, FSTVX, ER 0.02%

International Index Premium, FSIVX, ER 0.05%

US Bond Index Premium, FSITX, ER 0.03%

The first chore is to stop your contributions to the AXA plan. Contact your HR or third party administrator (TPA) for the form. Then I would contact Fidelity for the forms to establish a 403b account with them. That will take some time to get set up. There will also be district HR and TPA forms to take care of.

After you see that your contributions are being made every pay period, you can take on the chore of moving your 10k balance from AXA to Fidelity. This involves forms from AXA, Fidelity and your TPA, all signed by the other entities and you, and this can take several months. So you will need patience. In the meantime, you can tell your colleagues about how much lower cost Fidelity is than AXA! And what that cost difference means, over time. 

Assuming that you are in AXA's variable annuity plan, you will probably be charged a 5% surrender fee, or about $500. You should ask AXA for the amount of your surrender fee. You could consider the fee the cost of learning a lesson about annuities? I realize it's very annoying, but it's probably best to pay it, and put your AXA balance in a great low-cost plan. We've all made costly mistakes in the process of learning about investing. Most of our mistakes cost $1000's instead of just $100's.!

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3 minutes ago, ariel said:

I didn't invest in annuities in that plan just funds that mirror the SP500 and international stocks, so you're saying I won't be charged a transfer fee?

With the 403b plan, you haven't mentioned the name of the plan. The name should tell you whether it is an annuity-based plan, or a mutual fund based plan. The AXA variable annuity plan allows you to choose an S&P 500 Index fund and an International  Stock Index fund, but the variable annuity plan has a surrender fee of 5% for 6 years.

With your Roth IRA with AXA, there will not be a surrender fee. You will have to ask AXA for the expense ratios of the funds in your Roth IRA, and also for any other fees in the Roth IRA.

For fee info on both the 403b and the Roth IRA, you should call the AXA 800 number, not the number for the local rep. The 800 number is more likely to give you complete information on the fees you are paying.

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When I googled equi-vest, it says it's a variable annuity plan! Wow, and I specifically told them how I want to invest aggressively, not using annuities or bonds as they are not risky enough for my age group. 

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15 minutes ago, ariel said:

When I googled equi-vest, it says it's a variable annuity plan! Wow, and I specifically told them how I want to invest aggressively, not using annuities or bonds as they are not risky enough for my age group. 

Yes, I believe that Equi-vest is only used for their variable annuity plan. If you are up 25.58% YTD, then I believe you are invested aggressively in the S&P500 and an international stock subaccount, so you don't need to worry about that. You would probably be up about 27% at Fidelity, depending on the mix of the 2 funds.

I think you are probably in AXA's EQUI-VEST Series 201 plan.

https://www.403bcompare.com/products/153#/investmentoptions

If so, there’s a 5% surrender fee for 6 years.

If so, you are probably in these sub accounts:

EQ/Equity 500 Index (ER = 0.58%) and EQ/International Equity Index (ER = 0.81%)

 

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