*An annual asset-based fee will apply as well as the internal expenses and fees of the underlying funds. Features: The amount of your income withdrawals under this feature will never decrease—unless of course you make early or excessive withdrawals as specified by the contract. Regular Mail: (with money): If you’re looking for protection from market risk, you may select the Structured Investment Option (SIO) available within certain EQUI-VEST variable annuities. The percentage can be as high as 7% and never less than 2.5%.”. There is no additional tax benefit to you when you buy this annuity inside a 403(b) or retirement plan. That could mean the difference between retiring early or late. A 403(b) plan is a high-visibility benefit that can help employees save for their retirement and enhance your value as an employer. Retirement Gateway, Momentum& Retirement Strategies Administrators, We are continuously improving our digital accessibility, recognizing the importance of having websites that are accessible to the widest possible audience. You’re paying for it with the M&E fee we talked about earlier. 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. No out-of-pocket expenses - they're covered through reasonable, ongoing deductions from participant accounts. 2018. However, variable annuities offer features and benefits that may not be available with other investment options. Annual fee: 1% of the participant’s Personal Income Benefit account value. Then the market takes a turn for the worse and drops by 30%. This option gives you different investment strategies designed to adjust with you as you move through the phases of your life and become more conservative. Yet, over 50% of teachers are using them to save for retirement. Tax-deferred Growth: One of this annuity’s main advantages is that the investments inside this product give you tax-deferred growth. A common trait among top savers is that they get help from a financial professional to guide smart choices and keep their plan on track as life evolves. In this case, AXA charges its contract holders a 5% penalty on any funds withdrawn that exceed the free withdrawal amount, but the duration of this fee starts over when you make a contribution. This information was gathered from their prospectus dated May 1st 2018 and is not a substitution for individual tax or legal advice. notice, Indexed A career devoted to helping others reach their full potential creates unique needs. The contract also offers death benefit protection and, as discussed earlier, it offers a Personal Income Benefit for an additional cost. You can obtain contract and sub-account prospectuses and summary prospectuses from your financial representative or by clicking on the prospectus link within this article. Underlying Portfolio Operating Expenses: This is another ongoing fee charged for the investments inside of the variable annuity. Statistically speaking, the chances of meeting with an untimely death when the market is down AND when you’ve lost a portion of your contributions may be relatively low. 25%. Application No. Competitive "All-In" Fee for Members Retirement Program Plans. These are typically 403(b)s offered by insurance companies (AXA, VALIC, MetLife, etc. Model that draws information from a data set of 24.9 million 401k participants as of December 31st, 2014. But you’re probably already getting this benefit. *The use of the terms of “financial advisor” or “advisor” for purposes of the survey questions and responses by both the consumers and the financial advisors queried does not necessarily imply that the individual is a registered investment adviser (RIA). For people who turn 50 by the end of the year a catch-up contribution allowance of $6,500 is permitted. A variable annuity is a type of deferred annuity, so there are two phases to your contract: the growth phase, and the income phase. 2000 A.M. Best Company, Inc. 20 Apr. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Browse and compare fees, returns and services to find your best option. Yes, it could happen. As previously noted, mutual funds may be less expensive, but do not offer the same features and benefits. Contributions to a 403(b) plan and earnings may not be withdrawn until you: 1) Attain age 59 1/2 ; 2) Sever from employment with the employer who provided the 403(b) funds ; 3) Die ; 4) Become disabled in accordance with the provisions of the Internal Revenue Code. Seeing how people of similar ages and incomes are saving can be inspirational. Helping you achieve your goals and build a tomorrow that’s worth looking forward to. The one rider I analyzed had a 1% fee and it locked in returns at the high-water mark. 403(b) TSA Application . a year. The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index. Bonds are subject to market and interest rate risk if sold prior to maturity. Investors have access to over 80 variable investment options including numerous equity and fixed income portfolios as well as various asset allocation and target date portfolios. Make adjustments and add in other savings to see how changes affect your goals. Contract (Please check one) ¨ 403(b) Public, Charter or Private Schools (K-12) ¨ 501(c)(3) ¨ Higher Education (Colleges and Universities) Is the Plan subject to ERISA? I am If you don’t need the benefits of an annuity at this time, then paying for these fees for the next 10 to 20 years may not be in your best interest. This independent review will cover the following information on the AXA Equi-Vest Annuity: How will this AXA annuity product review help you? Before purchasing any investment product, be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances. EQUI-VEST. 28 Railroad Ave, Suite 2B Let’s say hypothetically you’ve contributed $100,000 over a 15-year period, and the investment performance helped it grow to $150,000 over that time period. How about the Guaranteed Interest Option (GIO)? 2. 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. I am legally obligated to make recommendations that are in the best interest of my clients. 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). I did that for you. When your contract is annuitized, your money is converted into payouts (this being the payout phase). Furthermore, any investment that you purchase inside your 403(b) account can give you tax-deferred growth. month Source: Equitable's Value of the Advisor study, 2018. However, think carefully about whether or not this specific variable annuity with the structure of its surrender fees, agent commissions, and income rider options would best support your retirement goals. AXA Equitable may, upon advance notice, discontinue, suspend, or change Segment offerings. Says AXA: “The percentage varies depending on the type of contribution (e.g., payroll, rollover, or direct transfer) and the date of the contribution or transfer. Guarantees are based on the claims paying ability of the issuing insurance company. AXA Equitable Life Insurance Company . See how we can help meet your individual financial goals - tips, tools, advice and product information. A 403(b) is a retirement plan designed for educators and available through your school district. year Internal Revenue Code Section 403(b) places restrictions on certain withdrawals from 403(b) plans. 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. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI & TN). This fee comes right out of your account annually for the life of the investment, whether your investments earn money or not. Case in point: A class action lawsuit brought against Hartford Life on behalf of about 24,000 municipal employees in San Diego County and Los Angeles CA illustrates one potential outcome: The plaintiff’s lawyers asked Hartford Life during the discovery process how much in death benefits the company had paid in the 17 years that both the San Diego and Los Angeles plans had existed. The AXA EQUI-VEST® 201 series for 403(b) plan is a deferred annuity contract that is designed for school district employees. Some annuities that offer this fee add a guaranteed income base growth rate that typically range from 4.5-5.5% on top of the locked-in watermark. I was signed up with AXA at a school professional development meeting. Buying this variable annuity or any annuity cannot give you double tax-deferral because there’s no such thing. It compensates the insurance company for the risk it assumes under this particular annuity contract, and it applies to all variable investment options. HOW AN AGENT MIGHT TRY TO SELL YOU THIS POLICY. This fee is pretty standard for annuity contracts of this nature. In the year of 2006, I realized that I was fast approaching retirement age. I’m just reporting on the main facts; to find answers specific to your situation may require a review of the full prospectus for applicable the details. Furthermore, withdrawals may “significantly reduce” the future income payments of the Personal Income Benefit for which you’re paying that additional 1%. AXA states in the prospectus: “. AXA pays agents 1.5% to 2% commissions on every future dollar you contribute to your 403(b) annuity. Okay. 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. AXA pays agents 1.5% to 2% commissions on every future dollar you contribute to your 403(b) annuity. Type of. AXA also reminds you that you should buy this annuity based on its features and benefits, so let’s take a look at those. Second, this benefit doesn’t come free. Investment Options:  AXA EQUI-VEST variable annuity offers a wide range of investment options inside this contract. For example, if you are contributing $1,500 a month to your retirement plan, and 10 years into your contract you want to make a small withdrawal to pay off your home, you would have to pay 5% to AXA on any contributions made during the five previous years. They are sold only by prospectus. Petty, I know - I do think they might have lower fees as well. Brooklyn, NY 11245-0001 . life, Long-term Simple, Account 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). But how much can you protect? AXA Equivest® Series 201 Variable Annuity AXA Equitable’s Equi-Vest series 201 is a variable deferred annuity that offers a convenient way to contribute and invest for retirement and can be used as a funding option for 403(b) plans. such guarantees.”. Home » Blog » An Independent Review of: The AXA EQUI-VEST® (Series 201) contract for employer-sponsored 403(b) retirement plans. For many teachers, they have started saving for retirement inside of a Tax Sheltered Annuity (TSA). You listened and absorbed as much as you could, but there is a chance that some of the facts were not fully understood during the sales process. Find strategies tailor made for education professionals. “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. Before buying into an annuity, it’s important to understand how it works, what benefits it may provide, the cost to you in fees, and perhaps most importantly, the role it can help play in your overall retirement plan. 40 years offering 403(b) products under public employer retirement plans in the U.S. Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company with main administrative headquarters in Jersey City, NJ, and Equitable Distributors, LLC. Savings must be between $0 and $9,999,999. If you are interested in a more detailed analysis specific to your situation, feel free to contact me. I’ll be going into the details when we get to the benefits and features section. The use of these two terms is meant in a general sense of the word or phrase to describe working with an investment advisor, a licensed insurance agent or other financial professionals who may sell annuity products. With a variable annuity, in order to get the investment selection combined with the income options, you pay two types of fees: This is something you want to look very closely at if you are still working and making contributions to your retirement plan. I wanted to know if anyone knows if they are a good company to start a 403b with. AXA has entered into sub-advisory agreements with Fidelity, Goldman Sachs, Invesco, Ivy Funds, Lazard, MFS, Oppenheimer, PIMCO, Franklin Templeton and Van Eck. The fees on the current 403(b) can be drastically reduced. EQUI-VEST® (Series 201) Combination Fixed and Variable Deferred Annuity . The Personal Income Benefit investment option is available to plan participants between the ages of 45 and 85. They won’t charge you the $30 fee if your account value is $25,000 or more. # 150223 These ratings are the opinions of an operating insurance company’s financial capacity to meet the obligations of its insurance policies in accordance with their terms. Mailing Instructions: Express Mail: (with money): JPMorganChase 4 Chase Metrotech Center, 7th Floor . AXA Equitable pays contribution-based and asset-based compensation to their agents. Strategies. Should you require assistance or have a Customer Service need, please call. If you know a teacher or someone who is thinking about an annuity and might benefit from this post, feel free to forward it on to them via email. The internal expenses of the sub-accounts for this particular variable annuity range from 0.61% to 2.09% and average around 1.03%. If you are like many school district employees, there is a good chance you are using a 403(b) plan as a way to supplement your pension in order to build a healthier retirement. Guarantees are based on the claims paying ability of the issuer. This creates ongoing compensation for your broker. Third, you really have to ask yourself, what are the chances that you will die during the same year as a big market downturn? It enables compounding growth of your investments and can reduce the amount of tax you pay along the way. Investments growing tax-deferred can accumulate and compound untouched by federal, state, or local income taxes until you begin making withdrawals, which is usually after retirement. Whether you’re a few years away or counting the days, thinking about retirement is exciting. $ Over time, these additional costs can negatively impact your return potential. Our retirement education center provides resources and tools to support you throughout your journey. 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. Does that mean you get to earn higher returns? Withdrawal Charges: In addition to all the fees listed above, the AXA Equi-Vest variable annuity also charges a surrender fee (sometimes known as a withdrawal charge). 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. Maximum yearly contribution is $19,500 for people aged 49 and under. Knowing how your savings will support your passions, your health and your family is the peace of mind you’ve earned. APPLICATION FOR EQUI-VEST STRATEGIES EDC (SERIES 901) GROUP ... 2. acknowledge, understand and agree to: the elections made in this Application, the various levels of fees, charges, and funding arrangements under the Contract. Gain a much clearer sense of whether this annuity fits your individual savings needs so that you can make an informed decision. [1] “Can Annuities Pass Muster?” The Free Library. Thanks for reading this review. One in four workers currently in a qualified plan will take some form of an early withdrawal from a 401(k) or similar plan (according to the 17th annual Transamerica Center for Retirement Studies (TCRS) report). . If you currently own this annuity: Now may be a good time to take another look and evaluate this product in light of your long term goals. disability, Our . [1], Income Rider Benefits: Personal Income Benefit. This is a detailed post about a popular 403(b) annuity product, the AXA EQUI-VEST variable annuity. EQUI-VEST® is a deferred annuity contract issued by AXA Equitable. for retirement and contribute Even if you do die, your account didn’t drop below your total contributions, so the death benefit guarantee did not provide any guarantee in this example. 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. Separate Account Charges: This is what the AXA Variable Annuity calls the M&E or mortality and expense fee at 0.95%, and they add another 0.25% for a total fee of 1.20%. 1. In this case, the AXA Equi-Vest variable annuity agrees to pay out your total contributions even if your account takes a terrible market hit. While the difference between .25% and 1% might not sound like a lot, assuming a hypothetical investment of $100,000 earning a 4% annual return, in 20 years’ time, that difference could reduce your portfolio by nearly $30,000. © 2020 Equitable Holdings, Inc. All rights reserved. A variable annuity is the only type of annuity that charges the M&E fee. Please try again. Its an Equi-Vest TSA opened almost 15 years ago with a current balance of $350,000. According to one analysis from the independent investment research company Morningstar, the most popular version of the AXA Equi-Vest annuity has total annual operating costs that can range from 1.81% to 2.63%. Its benefits include providing for the accumulation of retirement savings via tax-deferred growth. This offers a guaranteed rate of interest and a guarantee of principal. But how good is the protection? Overall Fees: There are additional fees associated with variable annuities that are not found in other types of annuities or mutual funds. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. you achieve your goals and build a tomorrow that’s worth looking forward to. Fees and Expenses; Minimum Total Fees and Expenses: 1.12 [Find annuities with lower fees and expenses]: Maximum Total Fees and Expenses: 3.65 [Find annuities with lower fees and expenses]: Minimum Mortality and Expense Risk Charge "M&E Fee" 0.5 [Find annuities with lower mortality and expense fees]: Maximum Mortality and Expense Risk Charge "M&E Fee" every Personal Income Benefit investment options give you the ability to turn your retirement savings into an annual withdrawal benefit. Mutual funds typically do not charge you this fee. 2 Income taxes are due on contributions and earnings from pre-tax accounts. approach, Powerfully That might sound good for someone who is nearing retirement and wanting to protect their nest egg. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. But it’s never too early to dream about your future, and it’s never too early to start saving. They also typically allow a 10% free withdrawal amount subject to federal income tax withdrawal restrictions. You have a heart attack and go into the hospital. (12b1). What’s different about this annuity is that you remain invested in the stock market even while you are taking income withdrawals, which is why you have those additional fees. Should you require assistance or have a 403 ( b ) annuity the same features and benefits that may up... Withdrawal charge we deduct may be less expensive, but do not offer the same features and that. Should you require assistance or have a heart attack and go into the when..., advice and product information 25 % of any contribution can not be more than %. # 150223 we are trying to save for a specified period of.. Product review help you rep or agent that came to visit your school district review in any way nor. All the returns you ’ ve earned contains this and other important information about the guaranteed interest option ( ). 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