I work part-time as a receptionist in a doctor's office. I earn very little at this job. However, I was looking forward to being able to contribute to a 401K and having the doctor contribute 4%. He also will contribute to this account with profit sharing once per year. I met with the agent who handles this for the doctor on Friday. He is an agent with The Northwestern Mutual Life Insurance Company. I was shocked when I found out that it is a Flexible Payment Variable Annuity Account A and that it is a Back-Load Contract. One has to keep the money in the account for 8 years or face a withdrawal charge rate as high as 6% decreasing down to 1%. Their is a chart for the current annual contract fees showing 1.45% and maximum of 3.00% total fees. Also, there is an annual contract fee of $30.00.
I am 58 yrs old and wonder from day to day, how long I am going to keep this job. I could quit next month or decide to stay until age 62. I already have a COLA'd pension and sometime wonder why I am working this job. I had planned on putting 90% of my pay into this 401K and then whenever I quit, I was going to roll it over into my TSP. I would not sign The Application for Deferred Annuity when I found out it was a Variable Annuity. I told him that I did not know enough about them and that I needed to do some reading first. I think that I am the first person that would not sign up for it. All that I could think of was that everything that anyone had ever posted on this site about Variable Annuities was negative.
I was looking forward to being able to shield most of my earnings from taxes, getting 4% contributed by employer and receiving profit sharing. Now, I don't think that I am going to join. What if I did and decided to quit in a year. I would still have the 1.45% fees and $30.00 withheld at the minimum and it could go up to 3.00% for the next 7 years. If I rolled my money over to the TSP within the first 3 yrs, the charge would be 6% and then goes down 1% each year until 8 years from now.
What is your opinion of my options and what I should do? Also, why would an employer set up a pension fund using a Variable Annuity? I would appreciate all thoughts on this. Thanks in advance.
I am 58 yrs old and wonder from day to day, how long I am going to keep this job. I could quit next month or decide to stay until age 62. I already have a COLA'd pension and sometime wonder why I am working this job. I had planned on putting 90% of my pay into this 401K and then whenever I quit, I was going to roll it over into my TSP. I would not sign The Application for Deferred Annuity when I found out it was a Variable Annuity. I told him that I did not know enough about them and that I needed to do some reading first. I think that I am the first person that would not sign up for it. All that I could think of was that everything that anyone had ever posted on this site about Variable Annuities was negative.
I was looking forward to being able to shield most of my earnings from taxes, getting 4% contributed by employer and receiving profit sharing. Now, I don't think that I am going to join. What if I did and decided to quit in a year. I would still have the 1.45% fees and $30.00 withheld at the minimum and it could go up to 3.00% for the next 7 years. If I rolled my money over to the TSP within the first 3 yrs, the charge would be 6% and then goes down 1% each year until 8 years from now.
What is your opinion of my options and what I should do? Also, why would an employer set up a pension fund using a Variable Annuity? I would appreciate all thoughts on this. Thanks in advance.