403B with AXA - need help!

[mancityfan]

OK guys, need advice. The situation:

I am a 52 year old teacher. I signed up for a 403B with AXA years ago (yes I know!) and was putting money in a 403B (tax deferred) for 10 years. Came to my senses and stopped contributions about 3 years ago. However... I have about $75k in there. Not planning to access this money for 7 years. Looking at my options:

1. Keep it where it is and let it grow along with tax deferred money - but be subject to AXA management fees which will eat into gains. If I did this, at age 59/60 I was thinking about setting up a 10 year annuity to help bridge the gap until I take SS at 70 - yes I know it would be a small check, but would be some steady dependable income.

2. Rollover the money to an IRA with Vanguard - Can I do this without penalty? I did not pay taxes on this money so I am assuming I would have to pay tax on rollover?? Or can I avoid that? If I can do this, it would be my preferred option.

Disclaimer - We are doing pretty well with our investments and this 75k is only around 5% of our NW, so this will not be the end of the world if I leave it where it is, just trying to maximize. With AXA I feel like I made a mistake as it is an insurance company and takes advantage with fees. My inclination is to try to get out of AXA and into my Vanguard account. Basically, what is the smart way to achieve that?

[Psychstache]

Do you have other providers in your plan? I started with AXA but stopped contributing when I learned better. Our district offer something like 40 different 403b providers, so I started contributing to vanguard instead. Then I learned there was paperwork I could do to complete a within plan provider change and move all the AXA money to vanguard (after a small fee to AXA for their trouble, jerks)   

You might ask if this kind of transfer option is available to you.

Sent from my SM-G930V using Tapatalk

[Mr.GrowingMustache]

My wife is in the same boat with a stupid AXA 403B account, and I am trying to get her out of it and into something better.

Effectively the total AXA fees are about 2% or higher. AXAs 1% admin fee + maturity/mortality/transfer, and 1%+ funding option costs. This is such a travesty, and apparently EVERYONE my wife knows at school is on this plan... none the wiser!


We are in NJ and they have a list of approved 403B providers, but so far only one has returned our calls. Their option is basically 1% fee(0.25 quarterly) and Vanguard Funds (admiral shares), and no other BS fees(apparently). So effectively the cost will be around 1.1% with the vanguard funding options. This is NOT ideal, and in fact is still a real crappy deal, so I am torn on what we should do.

[Mr.GrowingMustache]

It is probably best to transfer the $$ out.

Use the compound calculator to make an estimate.
https://www.investor.gov/tools/calculators/compound-interest-calculator

Say here is my example.

Keep in AXA Estimate:
AXA Balance = $75k
Stock Market Growth Avg = 7% yr
AXA Fees =2%
AXA Stock Market Growth = 5% yr
7 years of AXA Compound Interest = $105,630.24 ($1 monthly contribution to make the calculator work)

Transfer from AXA Estimate:
AXA Balance = $75k
AXA transfer Fee = 5% (estimate)
New Balance = $71.250k
New Fees = 0.25%
New Stock Market Growth = 6.75%
7 years of NEW Compound Interest = $112,656.83 ($1 monthly contribution to make the calculator work)

As the years increase, those number significantly begin to differ, and AXA becomes A LOT MORE unreasonable. See what the fees on transferring the $75k are.



We found a low cost alternative to AXA in my wife's school district trough Aspire. You have to see what AXA's fees are on transferring the account. They will "advise you" against it of course.

http://forum.mrmoneymustache.com/investor-alley/403(b)-decision-advice/msg1188891/#msg1188891

[NoStacheOhio]

2. Rollover the money to an IRA with Vanguard - Can I do this without penalty? I did not pay taxes on this money so I am assuming I would have to pay tax on rollover?? Or can I avoid that? If I can do this, it would be my preferred option.

Disclaimer - We are doing pretty well with our investments and this 75k is only around 5% of our NW, so this will not be the end of the world if I leave it where it is, just trying to maximize. With AXA I feel like I made a mistake as it is an insurance company and takes advantage with fees. My inclination is to try to get out of AXA and into my Vanguard account. Basically, what is the smart way to achieve that?

A direct rollover from 403b to traditional IRA isn't a taxable event. The 403b provider may charge you a fee, or in-service rollovers may not be available, but that should all be in your plan documentation.