It's Just an Option
Please remember that the Fixed Indexed Annuity is just an option added to the current list of investments. A plan participant can put any part, or none of, their account in the annuity.
We are not asking anyone to "start over" with a new 401(k).
This is just an additional investment option. The potential advantages and benefits to employees of having FIA as an additional saving/investment choice in a 401(k) plan are:
1. Since the principal amount of money put into the FIA is completely insulated from market risk, money is not lost if the markets meltdown. In fact, since the FIA has a minimum guaranteed rate of return, there will be positive growth even if the market declined every year going forward.
2. Over the past 15-years FIAs have performed quite well compared to mutual funds. The average annual crediting rate for the FIA we most recommend has been 6.37% over the past several years.
3. The FIA has no explicit sales charges and fees unless the employee chooses a more liberal option like a higher income account earnings rate during the holding period before they elect to turn on the income. Insurance companies, like banks, built their fees into the product design; thus, there are no surprises in the form of management fees or sales commissions. The insurance company designs the FIA to make a profit based on the risk management assumptions they build into their products.
4. The FIA's we will recommend for your 401(k) are designed for the “institutional setting” as opposed to the “retail market”; accordingly, the implicit fees are both reasonable and fixed. All rider fees are clearly disclosed and the employees may elect to enhance the FIA with additional riders or stay with the generic model that assesses no explicit fees. FIA contracts designed for the institutional market are priced to meet the “best in class” requirements contemplated by the IRS and DOL rules for “reasonable expense charges”.