Trade-Up to a Flat-Insurance Fee VA through a Tax-Free 1035 Exchange

Here is a guest post by Laurence Greenberg the CEO of Jefferson National, about flat insurance fee variable annuities available to US citizens. Let me state I know very little about annuities so I asked Greg Heiple of BalanceZone (Teeter Totter) fame and a US-based financial planner whom I respect, to investigate this for me.  The Amazing New Retirement Vehicle

He contacted Jefferson National and spoke with them. Here are his remarks which I have permission to post here,

“For the record, I like the Jefferson National Monument Advisor Variable Annuity.

Low fees, simple design, and lots of investment options.

In my opinion, his sites, and Variable Annuity are worthy of some attention for your blog.”

Trade-Up to a Flat-Insurance Fee VA through a Tax-Free 1035 Exchange

By Laurence Greenberg

Variable Annuities are “Ripe” for Exchange

In the ‘90s bull market, consumers purchased variable annuities (VAs), thinking they would drive greater tax-deferred growth and earn more on retirement savings. But with high asset-based insurance fees and a limited selection of investment option, many of those annuities haven’t delivered.

“Many people bought variable annuities and neglected them”, says Aaron Grey of the fee-based advisory firm Denver Money Manager. “Now, years later, these VAs have consistently underperformed investor’s expectations”. Even worse, investors are often locked into their underperforming VAs due to high surrender charges, which penalize withdrawals made in the first five to seven years.

Today, Morningstar estimates that there is more than $1 trillion in retirement savings tied up in variable annuities.1 With asset based insurance fees averaging 1.35% of invested assets per year2, that means consumers are spending roughly $14 Billion each year on asset-based insurance fees alone.

The Solution: A New Category of Flat-Insurance Fee VAs

Fortunately, a tax-free 1035 exchange can allow you to take advantage of cost-saving innovations, such as no-load, no-surrender charge, flat-insurance fee VAs. Just as you might choose to save more of your hard-earned money by refinancing a high cost mortgage, loan or credit card, a tax-free 1035 exchange may allow you to save considerably more each year on your variable annuity.3

Faced with longer life spans and a failing retirement safety net, consumers need to save more. Once employer-sponsored plans and IRAs are maxed out, VAs are a powerful alternative for long-term tax-deferred investing. But, if traditional “old school” variable annuities aren’t performing, a new flat-insurance fee VA might help you increase the power of tax-deferral so you can accumulate more and reach your savings goals faster.

The variable annuity Grey recommends most often has a flat-insurance fee of $20 per month, no matter how much you invest.4 On a $100,000 contract, that’s the difference between paying an average of $1,350 per year on a traditional variable annuity—versus just $240 per year with a new Flat-Insurance-Fee VA. And this new model offers 5x more funds than the typical VA2, to help you better manage risk, adjust to business trends and market cycles to improve the performance potential of your retirement portfolio.

More Money for You—Not Your Insurance Company

By eliminating excess fees, these new Flat-Insurance Fee VAs have the potential to “buy back” a lot of performance according to Grey. Rather than giving up 1.35% or more every year to the annuity company, that’s money you can re-invest into your account, giving you significantly more assets to compound and grow for retirement. “This is especially important in today’s low-return environment,” says Grey.

The way he sees it, a 1035 exchange simply makes sense for investors with underperforming VAs or “anyone who’s currently in a variable annuity and paying too much.”

Laurence P. Greenberg is President and CEO of Jefferson National, which developed the first flat insurance fee variable annuity. (

1 National Association of Variable Annuities (NAVA) and Morningstar quarterly data reported as of 12/31/2007.

2 Morningstar data as of 12/31/2007.

3Before exchanging, please review the policy and prospectus to identify any penalties, surrender charges or loss of benefits that may pertain to your existing variable annuity contract. Please consult with a tax advisor for any potential tax consequences of switching from one variable annuity to another. Please note this is not an endorsement to switch from your current variable annuity. You should review your particular situation to determine which variable annuity is appropriate for your needs

4Jefferson National’s Monument Advisor has a $20 flat insurance fee on more than 97% of our underlying funds. Certain funds also have a transaction fee ranging from $19.99 to $49.99 per transaction, depending on the number of transactions per year. See the prospectus for details. Like other variable annuities, the customer pays fees of the underlying funds selected plus the fees of any advisor hired.

Power of Tax Deferral

Annuity Rescue Center

You can visit two web sites via the links above for more details,

Leave a Reply

CommentLuv badge