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<< My husband is recently eligible for his company's 401K but we just discoved that the plan is offered in the form of variable annuities.

I am not familiar (nor am I comfortable) with this arrangement. In fact, I've never heard of a 401K offering anything other than mutual funds.

Is this unusual?

tish >>

It sounds as though your husband employer has purchased a group annuity contract from an insurance company. This is not uncommon. Insurance companies use group annuity contracts to market their turn-key qualified retirement plan services to employers.

The Insurance carrier typically will use outside funds in their investment portfolio. These investments may be known retail funds or institutional investment accounts for the asset class in question.

The bottom line - the group annuity will have some mortality cost which would not be present otherwise; however this alone does not make the 401(k) vendor a bad choice. Ask the employer's HR department to provide you with a full disclosure of the fees charged to the "employees" account" Be sure you ask for billed and non-billed fees -- if they say there are no fees and if the funds offered are known retail funds - ask if the employee accounts are receive investment returns on at Net Asset Value (nav)

If your husband works for a small employer - it is possible that the insurance company offering is the best deal available. Mutual Fund companies do not agressively market to small employers

Sorry for the long answer
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