Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
My first post and it's a dumb question!
Old 07-08-2013, 03:26 PM   #1
Full time employment: Posting here.
Tailgate's Avatar
 
Join Date: Jul 2013
Location: Texas
Posts: 881
My first post and it's a dumb question!

Greetings from Texas (Y'all)!

Found the forum a few days ago and have enjoyed it, been somewhat educated by it, but mostly baffled with the amount and depth of financial info that's way over my head. I know that in time, I'll learn a little by osmosis.

Question coming, but here are the bullets:

1. DW is 58 and taking ER from education at the end of August
2. I'm 62 and started 'what iffing' when she announced she was done with work
3. I've run the numbers, including Firecalc, and they seem to say we'll be ok for me to pull the pin at the end of this year.
4. We have 2 pensions, my SS and a 401k, and a couple of 457b's.

I know with my traditional investments through a financial advisor there have always been sales charges to buy and fees to pay along the way. I've never been able to crack the secret codes on how to research the actual numbers other than the upfront sales charge that I'm told is a one-time charge to play the game.

Now Dumb Question #1 (I'm going to start numbering them, 'cause there will be more)

DQ#1? When we start to draw down on the annuities, will we be paying additional fees, surrender charges or other hidden tolls, gratuities or ransoms to Franklin Templeton, Hartford, Great Western or the other financial gangs.... and if so, how in the world do I get straight answers or mitigate those handouts?

Thanks in advance for your input... If I can finally figure out the rules of the game they are playing, I think I can make an informed decision to go self-directed and play in a different way.
__________________

__________________
Tailgate is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-08-2013, 03:35 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,432
Are these annuities in your 401k or 457b's? or outside? What specifically are they?

If they are deferred annuities you may have the option to surrender them (if you have had them for a long time presumably the surrender charge period is over) or annuitize them (have them start paying you monthly income).

I think your first step is to get a better handle on just what it is that you own.
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 07-08-2013, 03:47 PM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Welcome.

I would (indeed, did) read the Boglehead book, the archives here, any of several books by Solin, and one or two by Malkiel and similar references. You could browse Lucia's work but it is a bit gamey and annuity-friendly for me. Within a couple of months you'll get the gist of it.

The big deal for me was when I fired my financial advisor and immediately saw my investments expenses drop ike a lead balloon as my returns beat hers ever since then. Don't be intimidated by doing it yourself, but don't sweat working with a good advisor if it puts you at ease, at least temporarily so you can keep an eye on things.

Hope that helps.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 07-08-2013, 03:50 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,182
Welcome to the forum. I dunno the answer, I suspect you won't have any more explicit expenses unless you actually surrender the annuity early, but there are management fees every year that you don't really see but that eat into your returns. It's tough to say since we don't even know what kind of annuities these are. You mentioned some other investments but then asked about annuities. It's not clear if you've bought an annuity or are being pushed into one, or what.

I'd think that even if you can't figure out the rules of their game, you'd still want to educate yourself and go self-directed.

And please put a summary of the actual question in your thread titles as you post more, if you are going to start new threads. You might better attract people who know the answers that way, it makes it easier for people to browse the forums to find topics they are interested in, and it makes searching easier for people who might have the same questions in the future. Thanks.
__________________
RunningBum is offline   Reply With Quote
Old 07-08-2013, 04:14 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
I'm assuming your annuities are in the 457b. They are probably "deferred" annuities that many people treat like ordinary saving/investing accounts.

There may or may not be surrender charges. That depends on the policy. I'd expect you should have gotten some disclosure at the time you started it. Did you save any paper?

If it's a variable annuity (it looks like a stock or bond mutual fund) there will be explicit ongoing management, administration, and "MRC" fees. If it's a "fixed" annuity (it looks like a CD), then fees other than the surrender fee are typically buried in the spread between when the company pays you and what it earns (e.g. what you see is what you get).

In the individual market, it's common to allow modest withdrawals every year without a surrender charge, even if a complete termination would trigger a surrender charge. I don't know about 457b annuities.

According to this chart http://www.irs.gov/pub/irs-tege/rollover_chart.pdf you should be able to roll your 457b into a traditional IRA at some other company. If you'd rather not work with Templeton, etc. going forward, you can consider simplifying your life and rolling everything to one firm.
__________________
Independent is offline   Reply With Quote
Old 07-08-2013, 04:55 PM   #6
Full time employment: Posting here.
Tailgate's Avatar
 
Join Date: Jul 2013
Location: Texas
Posts: 881
good points on posting and knowing what exactly it is that I own.. I don't have all the details, but will pull the paperwork and will post a more educated question.

I know we have an IRA, 403b, 457, 401k and a variable annuity, but it sounds like there are different flavors of each.

I have the Bogglehead book and have skimmed it.. guess I need to go back and read closely.

Thanks for the replies thus far. I have a long way to go..
__________________
Tailgate is offline   Reply With Quote
Old 07-08-2013, 07:10 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
For the 403b and 457 you can get a lot of useful information at 403bwise.com. DW's 403s were almost criminal in structure, rolled them over to Vanguard when she retired. You may have better ones, do check into contingent defered fees and the like.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 07-09-2013, 12:13 AM   #8
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 390
Tailgate, I don't know the answer to your question, but I wonder what it means when someone says, "I have a dumb question".

Because my dumb questions aren't nearly as smart as your question Sometimes I think my questions really are dumb, so I just don't ask.
__________________
Elbata is offline   Reply With Quote
Old 07-09-2013, 08:21 AM   #9
Recycles dryer sheets
 
Join Date: May 2012
Posts: 89
A side question. What the hell do 403bs have all these def annuities in them? 403b is already tax def so why have tax def investment in a tax def account? Are these sales people that persuasive or are the HR people that ignorant or both?

My wife has a few def annuities in her 403b but thank god she also has Vanguard. So I have her max it to Vanguard.
__________________
hlfo718 is offline   Reply With Quote
Better question- about variable annuity
Old 07-09-2013, 09:42 AM   #10
Full time employment: Posting here.
Tailgate's Avatar
 
Join Date: Jul 2013
Location: Texas
Posts: 881
Better question- about variable annuity

Ok, I have a better handle on what we have. Still don't understand most of it, but at least it's a start...maybe this is a better question than yesterdays..

Account is Hartford 403b that says it's eligible to rollover to qualified IRA. Account was closed to new premiums and investors in Jan 2008 by Hartford, so it's been 6 years. In 2 more years there are no surrender charges according to prospectus. Annual maintenance fee is waived because it has 175k. Looks like only a 1.25% mortality risk expense associated with the account.

Is there something else I should look for? Account has been performing ok lately and I can rebalance it so it's self directed (am I right assuming that?).

Should I consider moving to an IRA at some point? I know nothing about variable annuities, but I'm more comfortable with the cost since I've read the paperwork.

Thanks from this noobie...
__________________
Tailgate is offline   Reply With Quote
Old 07-09-2013, 09:59 AM   #11
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
One thing to learn, there are no dumb questions. The tough thing with annuities is deciphering the fine print so you fully understand how it works. Many folks on here shy away from annuities due to that and their associated high expenses.
__________________
Doing things today that others won't, to do things tomorrow that others can't. Of course I'm referring to workouts, not robbing banks.
DFW_M5 is offline   Reply With Quote
Old 07-09-2013, 10:20 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by hlfo718 View Post
A side question. What the hell do 403bs have all these def annuities in them? 403b is already tax def so why have tax def investment in a tax def account? Are these sales people that persuasive or are the HR people that ignorant or both?

My wife has a few def annuities in her 403b but thank god she also has Vanguard. So I have her max it to Vanguard.
Because most companies that concentrate on 403Bs are insurance companies, and many of them have been in bed with universities and hospitals for many years. TIAA-Cref is one of the good ones. Principal and Great Western and ING? Not so much...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 07-09-2013, 10:23 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Tailgate View Post
Ok, I have a better handle on what we have. Still don't understand most of it, but at least it's a start...maybe this is a better question than yesterdays..

Account is Hartford 403b that says it's eligible to rollover to qualified IRA. Account was closed to new premiums and investors in Jan 2008 by Hartford, so it's been 6 years. In 2 more years there are no surrender charges according to prospectus. Annual maintenance fee is waived because it has 175k. Looks like only a 1.25% mortality risk expense associated with the account.

Is there something else I should look for? Account has been performing ok lately and I can rebalance it so it's self directed (am I right assuming that?).

Should I consider moving to an IRA at some point? I know nothing about variable annuities, but I'm more comfortable with the cost since I've read the paperwork.

Thanks from this noobie...
Hartford will also have sub account charges that might be close to 1% or so extra. Also may have a rider charge for death benefit or living benefit.

Also Hartford is doing a buyout for old annuity clients. Not sure if 403B is covered but does not hurt to ask.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 07-09-2013, 12:22 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,649
Hartfords position on their annuity holders was in WSJ Friday.
New Pressure on Annuity Holders - WSJ.com

Blurb:
But Hartford's new move may be the first that could result in owners inadvertently losing their long-held guarantees. The company is exercising what it says is a contractual right to impose new investing restrictions in order for owners to maintain guarantees, according to a letter dispatched last month by Hartford to annuity holders. It is requiring at least 40% of clients' money to be in fixed-income funds. If clients don't allocate their holdings accordingly by Oct. 4, the guarantee "WILL BE REVOKED," the letter declared in bold type.

I'm sure the 403b manager knows about this already...
__________________
sheehs1 is offline   Reply With Quote
Old 07-09-2013, 01:08 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Quote:
Originally Posted by sheehs1 View Post
Hartfords position on their annuity holders was in WSJ Friday.
New Pressure on Annuity Holders - WSJ.com

Blurb:
But Hartford's new move may be the first that could result in owners inadvertently losing their long-held guarantees. The company is exercising what it says is a contractual right to impose new investing restrictions in order for owners to maintain guarantees, according to a letter dispatched last month by Hartford to annuity holders. It is requiring at least 40% of clients' money to be in fixed-income funds. If clients don't allocate their holdings accordingly by Oct. 4, the guarantee "WILL BE REVOKED," the letter declared in bold type.

I'm sure the 403b manager knows about this already...
That's pretty funny with all the doom and gloom over fixed income future returns. Serve them right to make this move and then have to cover additional losses. Go equities!
__________________
Animorph is offline   Reply With Quote
Old 07-10-2013, 06:43 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,951
Quote:
Originally Posted by FinanceDude View Post
Because most companies that concentrate on 403Bs are insurance companies, and many of them have been in bed with universities and hospitals for many years. TIAA-Cref is one of the good ones. Principal and Great Western and ING? Not so much...........
Thanks for that input, FD. I was wondering the same thing. My daughter started teaching last year and she signed up for a Principal annuity in her 403b. She also has a mutual fund option from Fidelity (but Fido does not send sales reps to the teachers lounge) and I am pushing her to switch.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 07-10-2013, 07:25 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,379
Quote:
Originally Posted by jazz4cash View Post
Thanks for that input, FD. I was wondering the same thing. My daughter started teaching last year and she signed up for a Principal annuity in her 403b. She also has a mutual fund option from Fidelity (but Fido does not send sales reps to the teachers lounge) and I am pushing her to switch.
In my state anyways, I do not know why teachers buy 403b's even to begin with. As they will retire with a pension that is in a higher tax bracket than what they make salary wise for over half their career, minimum. Your daughter's state may not have as good as pension plan, but teachers still buy them here anyways. I am sure the salesmen says "It is a great deal to delay paying taxes from the 15% bracket, so you can withdraw an pay from the 25% bracket along with absorbing the costs of our onerous fees each year."
__________________
Mulligan is offline   Reply With Quote
Old 07-11-2013, 11:13 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Its as bad a Mulligan says. Teachers are remarkably bad in financial matters. The insurance agents push these products, should be illegal. My wife had a 403b that included an inhouse (Nationwide Insurance) fund which was supposed to mimic the Fidelity Contrafund (held the same assets). Over the years she held it she had a 9.7% return, if she had held this directly with Fidelity the return was 13.4% for the same period. There are a few places with decent 403bs but most teachers I know have terrible ones.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 07-13-2013, 05:43 PM   #19
Full time employment: Posting here.
 
Join Date: Oct 2012
Location: Reno
Posts: 556
Quote:
Originally Posted by yakers View Post
Its as bad a Mulligan says. Teachers are remarkably bad in financial matters. The insurance agents push these products, should be illegal. My wife had a 403b that included an inhouse (Nationwide Insurance) fund which was supposed to mimic the Fidelity Contrafund (held the same assets). Over the years she held it she had a 9.7% return, if she had held this directly with Fidelity the return was 13.4% for the same period. There are a few places with decent 403bs but most teachers I know have terrible ones.

Texas ERS is pretty good and decently funded. For higher ed you have to opt between ERS and ORP (the 403b) the first 60 days. Since my wife was an accountant I took the 403b, was with Valic the first 3 years, then shifted to a self-directed Fidelity. Contrafund and Low-Priced fund served me very well, so far. Last year I shifted to the self-directed Fidelity brokerage option to gain access to non-Fidelity funds. Valic didn't have many choices at the time, hence the shift to Fidelity (that was the early 90s).
__________________
RobLJ is offline   Reply With Quote
Old 07-13-2013, 06:26 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by FinanceDude View Post
Because most companies that concentrate on 403Bs are insurance companies, and many of them have been in bed with universities and hospitals for many years. TIAA-Cref is one of the good ones. Principal and Great Western and ING? Not so much...........
+1
403B.com has/had some interesting background on the history. I think TIAA maybe the only good one. I should add in some (but certainly not all) the unions get kickbacks, and the employers,hospitals, schools etc typicalyl get "free" plan administration from insurance companies. But of course TANSTFL and the employees pay the really high costs.
__________________

__________________
clifp is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 06:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.