Author Topic: Question about moving funds over- surrender fees?!  (Read 1206 times)

Lski'stash

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Question about moving funds over- surrender fees?!
« on: July 30, 2015, 10:43:19 AM »
I am working on moving my 403b over to a firm with lower fees and Vanguard funds. This has so far proved a little tricky, since in Michigan teachers only have a few places they can work with, and none are incredibly exceptional...

Anyway, I have $16,200 sitting in an AXA 403b annuity, and am trying to switch it over to Valic. As it turns out, AXA charges 5% of all assets placed into the accounts (yikes!!!) to move the money over to a different firm. This 'surrender fee' (a little over $750 for me right now) phases out as the time goes by, meaning that I wouldn't be able to get MY MONEY out of the account until 2022 'surrender fee' free.

With Valic, the fees are much lower annually (.6% compared to 1.13% of funds invested), and I can invest in a Vanguard LifeStrategy Growth account (there are some others to pick from, but this one was best out of the choices).

The current plan is to start trying to max out the Valic 403B ASAP once the paperwork is through the school. I'll be working up to it- but it should be achievable by the end of next school year.

Anyway, knowing all of this, should I move the current money over? The AXA account has actually LOST money instead of growing, so I'm pretty skeptical of it right now (I have place around $16,600 in funds, and it's currently worth $16,097).

grrrr...any advice would be appreciated.

KCM5

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Re: Question about moving funds over- surrender fees?!
« Reply #1 on: July 30, 2015, 11:09:51 AM »
So the difference between the AXA fund and the Valic funds are about .53%? In that case, if you waited until 2022 to move the funds it would cost you 3.77% in fees (1.0053^7). That's assuming the funds are equal in all other ways and there are no other fees for either company (like a front load or something?). If that's the case, waiting is better. But you can make the decision which you would prefer. I wouldn't worry too much about the AXA funds losing money recently as the stock market has been somewhere near flat for the year.

KCM5

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Re: Question about moving funds over- surrender fees?!
« Reply #2 on: July 30, 2015, 11:14:14 AM »
Och - I just realized you also have to consider the cost of the increased value. If you assume the funds increase at 8%/yr then in will cost you quite a bit more. I just did the math to figure $760 total in increased fees. Since it's a wash, I personally would move them now for simplification.

Gone Fishing

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Re: Question about moving funds over- surrender fees?!
« Reply #3 on: July 30, 2015, 11:15:36 AM »
Bastards!