Work at a nonprofit and planning to retire? You should read this.

Do you work at a nonprofit, and is Valic your retirement provider?

I’ve had Valic at two of the nonprofits I’ve worked for in San Francisco, and in both cases, it was a bad experience where over-priced retirement products, unclear information, and costly fees slowed down my retirement progress.

As I’ve shared with Valic, their costly products are especially problematic in the nonprofit world.

That’s because nonprofit employees often have lower salaries and so it’s even more important that their retirement money is growing- instead of being sucked away by their retirement company charging fees.

As somebody who works in the nonprofit world, and who knows that decision makers often have limited time, I am going to share my Valic experience to help other nonprofit employees and decision makers.

If you are in charge of HR or Operations at your nonprofit, I would strongly encourage you to find out what sorts of fees your retirement provider is charging, if your employees are aware of these fees, and of course, whether or not there are better companies that will help your employees achieve their retirement goals.

During my most recent experience with Valic, here were some of the issues I encountered, and I’d love to hear if you have had these “challenges” with Valic as well:

1) Valic helping itself to 5% of my retirement money. Now, I don’t know about you, but when I divert money out of my paycheck to put into my retirement accounts, I’m doing that because I want MY money to grow so I can retire one day.  So, imagine my surprise when my account finally got rolled over, and the rollover paperwork included a column that said MVA ADJ/Charges ($) $70.51. I didn’t know what this $70.51 was for, but I did know that my final rollover check was for $70.51 less than I would have expected it to be.  After about 30 minutes of phone calls and getting a manager on the phone, I was finally informed that Valic was charging me a whopping 5% fee to close my account because I hadn’t had it open for five years.  That is not a misprint. A whopping 5% fee!  Luckily for me, that five percent fee was only $70, but can you imagine if I’d had $10,000 in that account and Valic helped itself to 5% of my retirement?  Or $20,000?  Or even $30,000?  Ouch!

2) Unclear expenses and retirement options: My Valic representative had a very hard time telling me what my options were in terms of the mutual funds I could invest in- and what their costs were- until after I had opened an account. If Valic were truly interested in supporting nonprofit workers having a secure retirement, then they would make this information clear and easy to get to- before you open your account.  The reason I wanted to know about the mutual fund options and their expenses (before I opened the account) is because when I had Valic previously, all of funds I could choose from were wildly over-priced compared to their peers.

3) Mis-leading and inaccurate information when I tried to roll over my Valic retirement account. After leaving my job, I wanted to roll over my Valic account into my IRA, where I would have access to far cheaper retirement options at Vanguard.  However, the instructions for rolling over my Valic 403B account were contradicted by the customer service people at Valic.  These were things like whether or not my wife needed to sign the paperwork.  Or whether the program administrator needed to sign the paperwork.  Call me pessimistic, but I have to wonder if Valic does this intentionally to make it harder for people to get their money rolled over.  Have you had the same experience where Valic’s written instructions are contradicted by their customer service people?

I’ll be writing more about Valic and some of the legal issues it has faced in the coming weeks, but I’d also love to hear from other people who have used Valic.

Want to share your Valic experience?  Leave a comment on this post.  And, at the top of the post, let me know if I can share your experience, and if so, how you’d like to be attributed. For example, I’m happy to use your full name and city, just your initials, or just a description like “A Social Worker from Oakland.”  Or if you’d prefer I don’t publish your experience, that’s okay too.

Here’s some questions to get you started:

• Do you know what the expense ratios are on the funds you’re invested in with Valic? And do you know how they compare to some of Valic’s peers?
• Have you ever been hit with a 5% surrender fee by Valic?
• Tried to roll over your money out of Valic? How did it go?  Did you get clear instructions?