For readers who have found my website and don’t know much about me, I am a fee-only financial planner held to the Fiduciary Standard. For the investor who is age 65 and near the time of retirement, this might give you a layer of protection, but keep in mind that with this type of annuity, you’ll be paying over 2.5% annually just to get this benefit, and these fees negatively impact your return potential. Founded in 1859, AXA Equitable Life Insurance Company is the #1 provider of retirement plans for K-12 schools,1 serving more than 820,000 participants in over 17,000 plans. Overall fees including a Mortality and Expense Risk charge, Surrender Charges based on ongoing contributions, Agent commissions and compensation based on ongoing contributions, Income rider features that limit investment options for a lifetime fee, Annuitization of the contract may be required, No additional tax benefits when part of a 403(b). The death benefit is often sold as a way to guarantee that even if the market goes down and your contract loses money, a death benefit would still be paid. In 2017, the North American Securities Administrators Association listed “variable annuity sales practices” as one of its top investor threats. Today I’m going to break down an annuity that is issued by AXA Equitable Life Insurance Corporation. Read prospectuses carefully before investing. But how good is the protection? Furthermore, withdrawals may “significantly reduce” the future income payments of the Personal Income Benefit for which you’re paying that additional 1%. # 150223 These are typically 403(b)s offered by insurance companies (AXA, VALIC, MetLife, etc. A participant’s “An annuity contract that is purchased to fund an employer-sponsored retirement savings plan should be done so for the annuity’s features and benefits other than tax deferral. But you remember you have a death benefit! Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Simple, Account the amount of the withdrawal charge deducted is equal to 5% of any contribution withdrawn attributable to contributions made within the current and five prior contract years, measured from the date of the withdrawal.”. Helping you achieve your goals and build a tomorrow that’s worth looking forward to. At the time AXA looked like the lesser of all the evils on the schools vendor list. Deferred annuities are long-term contracts and most annuities of this type charge surrender fees during the first 5 to 10 years of the contract. Wrong. Be sure to read carefully the marketing materials and prospectus, and if you don’t understand what you’re paying for, ask questions and receive a full disclosure before making a decision. If you have a Facebook account, one of the best ways to spread this message around is by “sharing” the post by using the Facebook icon below (it’s a blue square with a white F on it). want a guarantee of principal, you should consider other investment options or products that provide Higher account balances. Warwick, NY 10990, Direct: 845-981-7300 Personal Income Benefit Charge: This is the charge for Income Rider, an optional fee common for deferred annuities. Deferred annuity contracts such as EQUI-VEST® provide for conversion to payout status at or before the contract’s “maturity date.” This is called annuitization. Competitive "All-In" Fee for Members Retirement Program Plans. 2. They also typically allow a 10% free withdrawal amount subject to federal income tax withdrawal restrictions. Thanks again for reading, and as always, if you have any questions or would like to have your retirement portfolio reviewed, don’t hesitate to reach out and schedule your no-obligation consultation. It offers Structured Investment Options (SIO) that enables you to invest for growth with some downside protection for a set period of time. *An annual asset-based fee will apply as well as the internal expenses and fees of the underlying funds. If you’re contributing the maximum 2018 amount of $18,500 to your plan and, if over 50, also taking advantage of $6,000 catch-up contributions, then AXA could be paying as much as $490 a year to your broker. Yes, it could happen. The prospectus and, if available, the summary prospectus contains this and other important information about the variable annuity contract and sub-accounts. This fee is charged by the life insurance side to cover the cost of providing the “Personal Income Benefit.” For this benefit, you will pay 1% annually, based on the value of your Personal Income Benefit account. That might sound good for someone who is nearing retirement and wanting to protect their nest egg. . Variable annuities invest directly in the market, and as such, they can lose money just like stocks and mutual funds. Your VALIC plan - even using the lowest cost fund of 1.1% - would start to go beyond that typical 401k or 403b plan $40 annual expense fee that many plans charge once your balance reached $3700. Mutual funds typically do not charge you this fee. I’m also on a mission to inform teachers about this commonly available variable annuity. Bonds are subject to market and interest rate risk if sold prior to maturity. AXA pays agents 1.5% to 2% commissions on every future dollar you contribute to your 403(b) annuity.
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