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Subject:  Re: 403b vs. variable annuity Date:  11/21/1998  2:14 AM
Author:  BillEuclid Number:  6692 of 100419

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).


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