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Lucy215

Help moving money from current 403b with AXA

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I currently have a 403b with AXA and I’m looking to move my money to a different account/company because of the high fees. Does anyone have any advice on the best way to do this? I don’t want to take it out to use it, I just want to put it in a fund with lower fees.

I stopped my contributions while I figure this out and my rep tells me there’s a 10% penalty and it’s subject to federal taxes if removed because I’m not 55 or retired (I’m 34).

Thank you!

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Lucy215, welcome to the forum! The 10% penalty your rep mentioned only applies if you take your money out of the 403b, that is cash it out. It does not apply is you transfer your balance to another 403b vendor that is on your district's vendor list. Can you copy and paste your district's 403b vendor list? You can get the list from the district's HR department or from the district's third party administrator (TPA). Sometimes just googling:  "your district's name, 403b plan" will get you to the list. 

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Thank you! That’s what I want to do. I attached my 403b options, there’s 3 screenss sorry I couldn’t fit it in one. Thanks again for your help. 

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Thanks for the list. You have 2 possible low-cost 403b vendors. Both options are custodial accounts, not annuity plans. Both options do not use local reps, but use the internet and phone. The easiest to use is Aspire which has good phone help. They allow you to use Vanguard's low-cost index funds. They add 0.15% to the funds' expense ratio, so the total fee would be about 0.20% to 0.25%. There is an administration fee of $40/yr which will cover the TPA fee to OMNI. 

The other option is Security Benefit's NEA Direct Invest. It is lower cost as the only fee is $35/yr if the account balance is less than 50k. It has 8 low-cost Vanguard index funds available. SB is known to have erratic phone service for NEA Direct Invest and it takes patience and probably persistence to get the account established. Once established posters report being satisfied with this option.

It's possible that you could get Vanguard added to the 403b vendor list. OMNI P3 is allowing it to be added. You would need to contact Vanguard, OMNI and your district HR people. 

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Okay, i will look into both options. 
 

If I get Vanguard added to the list then I could invest there without the extra 0.15% And $40/year that Asprire would add? 
 

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The administration fee for Vanguard's K-12 403b plan is $5/month or $60/yr. There is no percentage fee on the balance. If you are interested in getting Vanguard added, it would be helpful if you joined the Facebook 403bwise group where there are a number of posters working to add Vanguard to their district's 403b list. Some have OMNI as their ATP. You can see the link to the group in the stickies at the top of this forum's list of threads.

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Great I will look at both, thank you!!

Right now I’m looking at the Aspire 403b but there’s language that says “these fees include a transfer out fee of $75, a loan application fee of $100, and a distribution fee of $75. Recurring, scheduled distributions (eg installment payments) are subject to a distribution fee of $10 per distribution after the $75 for the first.”

does that mean when I go to retire, each time they send me money they are charging me $10? I’m confused by these fees.

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I assume:

  1. The transfer out fee applies when you close the account and move the money elsewhere.
  2. The loan application fee applies if you were to take a loan against your 403b; don't do that.
  3. The distribution fee applies when taking money out of the 403b.

If you were to go with Aspire, the 0.15% fee they charge on top of the mutual funds' expense ratio should be more than enough motivate you to roll that money over to an IRA when you retire. Therefore, I assume the only relevant fee here is the $75 transfer fee.

NOTE: Ethical vendors like Vanguard don't charge you distribution fees for IRAs.

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I only have the option for 403b or the nys 457 through my district. I currently have a 403b with AXA 😞 so I’m looking to transfer those funds out of that account with the least amount of fees. It was my understanding if I transfer them to a different 403b (ie from the one with AXA to one with Aspire) then I can avoid the fees and penalties. Am I correct in thinking that? 

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3 minutes ago, Lucy215 said:

It was my understanding if I transfer them to a different 403b (ie from the one with AXA to one with Aspire) then I can avoid the fees and penalties. Am I correct in thinking that? 

Not exactly.

Yes, you'll avoid the ongoing, day to day fees like high expense ratios or AUM (assets under management) fees. However, 403b and 457b vendors are notorious for discouraging you from leaving by charging fees to do so. The most notable such fee is called a surrender fee where you have to give up a percentage of your account to leave.

Read the AXA page I wrote here.

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6 minutes ago, Lucy215 said:

I only have the option for 403b or the nys 457 through my district

You should search the forum for the NYS 457b discussions. I can't remember their exact fee structure, but I think it is better than Aspire and worse than Security Benefit's NEA DirectInvest.

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3 hours ago, Lucy215 said:

Great I will look at both, thank you!!

Right now I’m looking at the Aspire 403b but there’s language that says “these fees include a transfer out fee of $75, a loan application fee of $100, and a distribution fee of $75. Recurring, scheduled distributions (eg installment payments) are subject to a distribution fee of $10 per distribution after the $75 for the first.”

does that mean when I go to retire, each time they send me money they are charging me $10? I’m confused by these fees.

When you retire, you will most likely roll the Aspire 403b into a traditional IRA. There is no fee to take a distribution from a Vanguard (etc.) IRA. The $75 transfer out fee will apply and I don't think you should be concerned about that. You'll transfer it ALL out, so it's a one time fee. I don't think it's likely you will be taking distributions from the 403b, but if you need to, you will take them from your IRA.

As Ed mentioned, AXA has a surrender fee they levy when you move your balance out. It is usually 5% for the current year and the previous 5 years. You should ask AXA for the exact amount. It depends on how much you contributed in each of those 6 years. Since you are probably paying about 2% per year in annual fees, it usually makes sense to pay the surrender fee and escape the annual fees. 

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