Jump to content

legacy variable annuity 401(k)


Recommended Posts

Sponsor acquired through a stock purchase a company that had a 401(k). some participants have variable annuities as investments in the plan. the new fiduciary wants to know what his options are as he doesn't want to have a legal duty to monitor the annuities. my thought is restrict new money investments and wait for the surrender charges to burn off and then force the participants to liquidate.  

are there any other alternatives for example like maybe quarantining the annuities in another plan and just writing a memo that says you didnt chose them have no expertise etc.  

Link to comment
Share on other sites

Any decision made here is a fiduciary decisions.  That darn pesky prudent "expert" comes into play.  If they don't have the expertise, they probably need to hire it.  Letting the annuities "waste away" probably isn't the best idea - as it is a planned action to render them worthless.

Link to comment
Share on other sites

The thing about individual variable annuities is that you have a choice of either surrendering them, and paying a steep surrender charge, or keeping them until the surrender charge burns off...but probably paying an equivalent amount (or more) in higher annual fees over the remaining time.  It's a really tough call to advise on paying the surrender charge, but probably "prudent."

I'm surprised anyone got away with selling these recently in light of the hoo-hah with the fiduciary rule.

18 hours ago, MoJo said:

Letting the annuities "waste away" probably isn't the best idea - as it is a planned action to render them worthless.

I'm not sure I understand that.

Link to comment
Share on other sites

I think it more likely than not that the annuities in question are similar to the TIAA annuities commonly found in 403(b) plans. Several insurance company recordkeepers developed these for use in 401(k) plans on their platform. There may be little to no cost to cashing them in. And keeping them may present a problem, as well incurring additional administrative expenses for maintaining them, if you change recordkeepers.  I would encourage you to contact the annuity issuer and/or bring in an insurance professional familiar with the product. 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...