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Author: rdinardo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76392  
Subject: 403b vs. variable annuity Date: 11/17/1998 12:14 PM
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My company is changing our 403b from Fidelity to VALIC and all they offer are variable annuities on various funds: Putnam, TROW Price, Vandguard.... What are some advantages/disadvantages to the VA?
Thanks
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6650 of 76392
Subject: Re: 403b vs. variable annuity Date: 11/17/1998 9:34 PM
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Greetings, Rdinardo, and welcome. You asked:

<<,My company is changing our 403b from Fidelity to VALIC and all they offer are variable annuities on various funds: Putnam, TROW Price, Vandguard.... What are some advantages/disadvantages to the VA?>>

I don't know the terms of the VA offered by Valic, so I can't say. Perhaps someone who participates in their plan can help. I believe they also have a website that might help you understand their plan.

Regards….Pixy


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Author: BillEuclid Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6692 of 76392
Subject: Re: 403b vs. variable annuity Date: 11/21/1998 2:14 AM
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From what I have heard, the primary difference is that VALIC will charge participants 1% of total assets each and every year for the rest of the life of the plan, whereas I believe that Fidelity does not.

The next effect is that you can expect your total accumulation to be roughly 20% worse when you retire in 20-some years, than if the employer had stayed with Fidelity.

So why did they change? Quite possibly because VALIC bribed the employer (legally, in the technical sense of offering to give the employer a portion of that 1% excess surcharge, thereby making the employer's costs substantially less than if they had stayed with Fidelity).

If so, then clearly, the employer does not have the employee's best interests at heart.

You can check the veracity of the above by asking how a 100% investment in an S&P500 index fund would have done over the past few years, and compare that result with Fidelity's or Vanguard's. That would give you a comparison figure -- perhaps it will show I'm wrong (because maybe their policy is different from what I've heard).

Bill


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