Redundant Fees Destroy Retirement Assets – What the Insurance Companies Do Not Want You to Know

The problem? More than 80% of 403(b) retirement assets are invested in tax sheltered annuities. On the surface this sounds like a good thing, but hiding just underneath the surface is a very profitable, and little talked about, secret that is costing investors billions of dollars, $3.3 billion to be exact.
Insurance companies developed annuities so investors could invest their money and have all interest, dividends and gains sheltered from taxation — thus the term "tax shelter." Sounds good, right? But if you can only remember one thing from this article, here it is: 401(k), 403(b) and 457 retirement plans are already tax shelters! You get no additional tax advantage by investing in annuity products in these plans.
If approached by an insurance salesperson, ask the agent why they would recommend putting a tax sheltered product (an annuity) inside of a tax shelter plan like a 403(b). You will likely receive a blank stare. The insurance companies and annuity salespeople are generally obligated to lookout for their stockholders, not their investors. So, do not expect them to volunteer how their costs are destroying your retirement assets.
In addition to the underlying expenses inside the actual investments, the insurance company applies a second set of expenses called Mortality and Expense risk charge (M&E). Even the U.S. Securities and Exchange Commission (SEC) cautions investors on utilizing annuities inside tax shelters.