Northwestern Mutual nightmare - help needed

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ZeldaMD
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Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 11:37 am

Forgive me Bogleheads for I have sinned. I am extricating myself from a nightmare Northwestern Mutual entanglement, where I've had a 3 year relationship with my fraudster insurance-salesman-in-financial-advisor's-clothing who sold me on whole life insurance, advised me to buy an annuity when I still have 6 figures of student loans, and was not maxing out tax advantaged retirement contributions. New to the forum and new to educating myself on financial wellness...So, seeking your help. I am already mad and embarrassed w myself so please don't be too hard :)

I am a 35yo physician sole breadwinner with stay at home husband and two kids under age 6.

I feel a rising sense of panic and want to get out of this relationship with NWM before my next "advising" meeting where I will be fleeced for another $1200 of my hard earned money. So I am making arrangements to move my holdings from NWM to literally anywhere else, and I'm not certain of the best way to proceed. I like Vanguard due to low fees and ease of use and frankly I need to learn more myself so I don't make expensive mistakes again.

1) I understand I am stuck with the annuities, basically, but would be better off moving it from NWM's clutches into a Vanguard annuity which is lower in fees? I am not actively contributing to the annuity anymore, and I'm tempted to yank the money out and have a simpler situation, but don't want to pay taxes/fees.

2) suggestions on what to do with the money market fund? I'm not quite maxing out my retirement contributions (have a 403b where employer contributes 24K annually, I am contributing 12,600 a year so not maxing my contribution but inching it up slowly as I am able). The emotional burden of my student loans is heavy and as much as I want to pay them off I also don't want to hurt my retirement funding since I know I got a relatively late start as a physician with high debt.

3) With regard to retirement contributions - my "advisor" has had me contributing 12,600 a year to my 403b (which is all Vanguard Target 2050) but these have been Roth 403b contributions - does this make any sense? Doesn't this mean I am paying taxes on this money now? I understand the basic concept of tax diversity but why the heck should I not take advantage of filling the non-Roth 403b bucket first??

Debt:
300K mortgage @ 4.125%
115K student loans @ 3.875% (have paid off 85K in last 2.5 years so chipping away at this and should be student debt free in next 3 years)

Assets:
55K emergency cash fund in high interest online savings act
403b: 185K in Vanguard Target Retirement 2050 (90/10, prob will switch to closer to 80/20 since I don't like this amount of risk)
Old Roth IRAs - 17,600 for husband, 5100 for me.
Northwestern Mutual money market fund - 15,000 (I don't really understand why we have this. I'm know dumb for signing up for it without knowing about it.)
NWM Variable annuity account B series RR. (cringe) 15,300. Ugh this is terrible. I just figured out how terrible this is.

I just dumped our tiny whole life policy that was 125K in death benefit for $250 a month that we have paid 8,000 into and just got a check back for $5100. Cutting my losses and moving on.

We have term life insurance with NWM but are dumping that after we get level term 20 year policies in place with another company, the ball is rolling on that and I am waiting for underwriting (I didn't realize when I bought my term insurance it was Term 80 - with rising premiums every few years - another horror. Who needs life insurance in their 80s?! Not most people I would wager).

grog
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Re: Northwestern Mutual nightmare - help needed

Post by grog » Wed Nov 14, 2018 1:10 pm

General rule with transfers, it's better to work with the company you're transferring funds to. The new brokerage that will be receiving new funds will be more than happy to help you with all that.

Money market is just cash. That won't have any taxable gains, so it shouldn't be a big deal.

With the annuity, you probably should determine how much of a taxable gain would you have on it. Personally, I'd be tempted just to surrender the thing, depending on the numbers. Vanguard does offer a variable annuity and you could probably do a 1035 into that product if you wanted. It has a wrap fee of around 0.50%. The VA gives you tax free accumulation but all withdrawals are taxed as regular income on the back end (so like a 401K without the tax deduction). But most of us here prefer regular taxable accounts. Seems plenty early enough to change course if you want.

Dottie57
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Re: Northwestern Mutual nightmare - help needed

Post by Dottie57 » Wed Nov 14, 2018 1:20 pm

Cut your losses with the annuity too. How much of it is cap gainsthat you will need to pay taxes on. I would take the money and apply it to student loans. Assume your cash flow isbetter without the loans.
Last edited by Dottie57 on Wed Nov 14, 2018 3:19 pm, edited 1 time in total.

delamer
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Re: Northwestern Mutual nightmare - help needed

Post by delamer » Wed Nov 14, 2018 1:38 pm

I think you are being too hard on yourself.

The one investment that is truly problematic is the annuity, and that is only about 5% of your investments. Given that you aren’t contributing to it any more, there is no great harm in just letting it ride. But cashing it out and taking the tax/penalty hit might be better for your peace of mind.

And I agree that given your likely income that you should be contributing a big chunk of your 403(b) money into a traditional IRA rather than a Roth. In fact, I’d suggest maxing out your 403(b). And setting up a spousal IRA for your husband.

I’d be tempted to use the mutual fund money to pay down the student loans if you are satisfied with your emergency fund. Once the loans are gone, you can get really aggressive with your savings.

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Mel Lindauer
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Re: Northwestern Mutual nightmare - help needed

Post by Mel Lindauer » Wed Nov 14, 2018 1:54 pm

In addition to the possible tax hit for cashing in the annuity, there probably are high surrender fees since you've only had your relationship for three years. Surrender fees normally are in place for five to seven years and sometimes even longer, so be sure to check that out before making your final decision.
Best Regards - Mel | | Semper Fi

Jack FFR1846
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Re: Northwestern Mutual nightmare - help needed

Post by Jack FFR1846 » Wed Nov 14, 2018 2:05 pm

Do not meet with this slime ball. Block his telephone number and simply don't show up. He's screwed you over. I wouldn't even give him the courtesy of a cancellation. Wherever you want to move these products to is who you talk to exclusively. There is no need to speak with Mr. Slime Ball ever again.
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BL
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Re: Northwestern Mutual nightmare - help needed

Post by BL » Wed Nov 14, 2018 2:21 pm

I doubt you even have a gain on the annuity. Surrender charges have to recoup the commission received by the salesman. There might be a lesser charge at your next anniversary of purchase. Call the company and ask how much you get when you surrender. Remember that what you put in is subtracted from that to get the gain, if any. Sorry, no tax break on losses. Regular income if gain.

Cash out that money market.

Fill your 403b. Change to trad. instead of Roth.

Check out "backdoor Roth" in Wiki. Both of you can do this Roth or spouse may be eligible for trad IRA if preferred.

I personally like Vanguard and would trust only them for investing advice, except for Boglehead's books and Jane Bryant Quinn's great reference to keep on hand for personal finance. Consider V PAS (50k min.) if wanting personal investing advice, and they could be easily dropped in a year or so to diy.

Don't feel bad. Most folks take a lot longer to wise up and lose more money. Consider it a fee to get smart.

Do you have personal disability insurance? Search threads here for advice.

Read this little pdf, especially Hurdle #5 for your situation:
https://www.etf.com/docs/IfYouCan.pdf
Last edited by BL on Wed Nov 14, 2018 2:32 pm, edited 1 time in total.

fabdog
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Re: Northwestern Mutual nightmare - help needed

Post by fabdog » Wed Nov 14, 2018 2:32 pm

good advice so far... a site you might find helpful

https://www.whitecoatinvestor.com/

Very good articles and discussions, focused on physicians

Mike

billfromct
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Re: Northwestern Mutual nightmare - help needed

Post by billfromct » Wed Nov 14, 2018 2:38 pm

I'm no expert on annuities, but I believe the surrender charges are a sliding scale that decreases each year.

If you had the annuity for 1 year, the surrender charge would be 7% decreasingly to 1% at 7 years & 0% after 7 years.

It may be worth the surrender charge to just move it to a Vanguard variable annuity & be done with it.

My kids have an annuity that was funded by their grandmother when they were 8 or 10 years old. She wanted to have the $5,000 gift invested in something that world remind them of her in 50 or 60 years.

Their Vanguard annuity is invested in the Capital Growth Fund (same as the Vanguard Primecap), Equity Income Fund, & the Mid-Cap Index. They have 30 or 40 years to go before they will use the annuity for retirement, so they are 100% stocks.

A variable annuity is the best way to convert long term capital gains into ordinary income.

I would never have recommended a variable annuity for my kids, but in this case, it fulfilled my mother's wishes.

bill

DarkHelmetII
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Re: Northwestern Mutual nightmare - help needed

Post by DarkHelmetII » Wed Nov 14, 2018 2:42 pm

On an annuity, there are two downsides relative to a vanilla taxable account: 1) insurance company imposed fees, and 2) less favorable tax treatment on equity gains. My point is that while transferring to a lower cost annuity platform may address #1, #2 will remain as a reality of Federal and State income taxes. Annuity gains are taxed at ordinary rates rather than more favorable capital gains. So you may consider going to a taxable account. This assumes you put tax efficient assets into taxable (e.g. Vanguard S&P 500, municipal bonds if you need fixed income etc...).

I am sure this is super annoying, frustrating etc... but really at your age, if you take a step back, you've got probably 20+ years of accumulation left. So rip off the band-aid now and every year forward will be better, you have a good bit of runway left.

My 2 cents.

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djpeteski
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Re: Northwestern Mutual nightmare - help needed

Post by djpeteski » Wed Nov 14, 2018 2:55 pm

You are not in all that bad a shape, and you can quickly recover. Many people have feel for the same old line of garbage. You thought this person was like you, only interested in caring for your patients, and that he was there to help you with your finances.

If it was me, I would evaluate, truly, how much of an emergency fund that you need. I would consider the money market fund part of your emergency fund so you have 70K. I also think you have a feel of this job, and your marketability. How much of an emergency fund do you really need? From what I am reading, 30K would be more than enough, and might consider going down to 20K. Depending on that, I would use the money market, and the money from the efund to reduce the student loan. Also the proceeds from the life insurance and cashing out the annuity should go to the student loan.

You'll have around 55k left on the student loan. How fast can you make that go away? I bet pretty darn fast.

Once you move away from NWM and you kill the student loan you will have a much more peaceful life. Also you can invest with impunity once those painful things are gone.

lassevirensghost
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Re: Northwestern Mutual nightmare - help needed

Post by lassevirensghost » Wed Nov 14, 2018 3:28 pm

What kind of fee does the advisor charge? That's what I would want to know in addition to the products they have you in.
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Watty
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Re: Northwestern Mutual nightmare - help needed

Post by Watty » Wed Nov 14, 2018 4:12 pm

ZeldaMD wrote:
Wed Nov 14, 2018 11:37 am
I feel a rising sense of panic and want to get out of this relationship with NWM before my next "advising" meeting where I will be fleeced for another $1200 of my hard earned money. .......

......
Northwestern Mutual money market fund - 15,000 (I don't really understand why we have this. I'm know dumb for signing up for it without knowing about it.)
NWM Variable annuity account B series RR. (cringe) 15,300. Ugh this is terrible. I just figured out how terrible this is.
I don't see how there would be any fees for the money market fund so I would move all of that today. You likely have a checkbook for that.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:14 pm

grog wrote:
Wed Nov 14, 2018 1:10 pm
...

With the annuity, you probably should determine how much of a taxable gain would you have on it. Personally, I'd be tempted just to surrender the thing, depending on the numbers....
Thanks for your insight! I'm trying to figure out how much I would owe. I am nearly 3 years into the annuity, so I think if I wait until Jan 2019 to act (which would be start of year 4), my surrender fee would drop from 6% to 5%. The account has added $1,300 in value from the initial 13,500 dumped in there over almost 4 years (this was an old IRA from residency that got transferred to the annuity).

I'm almost afraid to discuss with my existing advisor or any of the people in that office - I don't want to tip my hand that I'm scooting out until I have all my ducks in a row with my new life insurance and with firm plans to get out of these existing NWM accounts...

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:16 pm

delamer wrote:
Wed Nov 14, 2018 1:38 pm
I think you are being too hard on yourself.

I’d be tempted to use the mutual fund money to pay down the student loans if you are satisfied with your emergency fund. Once the loans are gone, you can get really aggressive with your savings.
This made me feel a tiny bit better. I think I might use the money market cash and knock another 15K off the loans.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:19 pm

djpeteski wrote:
Wed Nov 14, 2018 2:55 pm
You are not in all that bad a shape, and you can quickly recover. Many people have feel for the same old line of garbage. You thought this person was like you, only interested in caring for your patients, and that he was there to help you with your finances.

If it was me, I would evaluate, truly, how much of an emergency fund that you need. I would consider the money market fund part of your emergency fund so you have 70K. I also think you have a feel of this job, and your marketability. How much of an emergency fund do you really need? From what I am reading, 30K would be more than enough, and might consider going down to 20K. Depending on that, I would use the money market, and the money from the efund to reduce the student loan. Also the proceeds from the life insurance and cashing out the annuity should go to the student loan.

You'll have around 55k left on the student loan. How fast can you make that go away? I bet pretty darn fast.

Once you move away from NWM and you kill the student loan you will have a much more peaceful life. Also you can invest with impunity once those painful things are gone.
Thank you! I do feel so swindled. But can't say I educated myself on stuff enough before going in so it's my fault too. I had a bad feeling signing stuff when I was thinking "hmmmm, I don't really understand this....scribble scribble scribble"

I think I could easily use a chunk of the emergency funds to knock some of the loans back. Maybe 25K of that plus the 15K from the money market. I already used the 5K from the whole life to put to the loans. So I'd be down to about 70ish on the student loans.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:20 pm

fabdog wrote:
Wed Nov 14, 2018 2:32 pm
good advice so far... a site you might find helpful

https://www.whitecoatinvestor.com/

Very good articles and discussions, focused on physicians

Mike
Love WCI. Wish I had read him ten years ago. I learned about the horror of whole life from his blog.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:21 pm

lassevirensghost wrote:
Wed Nov 14, 2018 3:28 pm
What kind of fee does the advisor charge? That's what I would want to know in addition to the products they have you in.
$1200 annual fee plus god knows what other fees buried in these accounts....sigh

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Ged
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Re: Northwestern Mutual nightmare - help needed

Post by Ged » Wed Nov 14, 2018 5:28 pm

ZeldaMD wrote:
Wed Nov 14, 2018 11:37 am
Forgive me Bogleheads for I have sinned. I am extricating myself from a nightmare Northwestern Mutual entanglement, where I've had a 3 year relationship
Grats, you caught it early. Later you would have a dozen annuities, an assortment of non-marketable REITs, private investments and a variety of other scams designed to make extraction of the hook as painful as possible.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 5:53 pm

Mel Lindauer wrote:
Wed Nov 14, 2018 1:54 pm
In addition to the possible tax hit for cashing in the annuity, there probably are high surrender fees since you've only had your relationship for three years. Surrender fees normally are in place for five to seven years and sometimes even longer, so be sure to check that out before making your final decision.
Good point! Trying to figure this out now.

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BL
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Re: Northwestern Mutual nightmare - help needed

Post by BL » Wed Nov 14, 2018 6:26 pm

ZeldaMD wrote:
Wed Nov 14, 2018 5:14 pm
grog wrote:
Wed Nov 14, 2018 1:10 pm
...

With the annuity, you probably should determine how much of a taxable gain would you have on it. Personally, I'd be tempted just to surrender the thing, depending on the numbers....
Thanks for your insight! I'm trying to figure out how much I would owe. I am nearly 3 years into the annuity, so I think if I wait until Jan 2019 to act (which would be start of year 4), my surrender fee would drop from 6% to 5%. The account has added $1,300 in value from the initial 13,500 dumped in there over almost 4 years (this was an old IRA from residency that got transferred to the annuity).

I'm almost afraid to discuss with my existing advisor or any of the people in that office - I don't want to tip my hand that I'm scooting out until I have all my ducks in a row with my new life insurance and with firm plans to get out of these existing NWM accounts...
Ok, your annuity is an IRA. You will want it to land in another IRA, for example, at Vanguard. There is a strict ?60-day? time limit to get it rolled into another IRA or you do pay all the taxes now and lose the tax-deferred advantage. Not sure if Vanguard would pull the money directly from NWM. It doesn't really matter about gain or loss as far as taxes are concerned. When you finally cash it out of the IRA, it will all be taxable, just like any other traditional 403b, 401k, or IRA.

I would just wait until after the purchase anniversary and then make sure the money gets into another IRA, if I understand your IRA comment correctly. It might be better to have your brokerage-to-be (V, Fid, etc) help you get it transferred correctly.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 7:40 pm

BL wrote:
Wed Nov 14, 2018 6:26 pm

Ok, your annuity is an IRA. You will want it to land in another IRA, for example, at Vanguard. There is a strict ?60-day? time limit to get it rolled into another IRA or you do pay all the taxes now and lose the tax-deferred advantage. Not sure if Vanguard would pull the money directly from NWM. It doesn't really matter about gain or loss as far as taxes are concerned. When you finally cash it out of the IRA, it will all be taxable, just like any other traditional 403b, 401k, or IRA.

I would just wait until after the purchase anniversary and then make sure the money gets into another IRA, if I understand your IRA comment correctly. It might be better to have your brokerage-to-be (V, Fid, etc) help you get it transferred correctly.
I have no idea...sadly. When I was in medical residency I had an employer contribution that I didn't even know existed that I found out about after I had graduated and moved out of the state. Found a random document referencing some fund at Charles Schwab and called them and found out I had 8K sitting in a bucket with my name on it. Then from my chief year I had a different situation with monies being dumped in from the Teachers Retirement System (TRS) in Texas, which is a pension plan, but it was a 403(b). This money plus the Schwab money is what got turned into whatever it is that I'm calling an annuity at NWM.

I am clearly very confused, since the account on my NWM dashboard online says "Individual Retirement Annuity (IRA) - Front End Design", then under "product type" it says "Variable Annuity" with "Account B, RR series" after that.

So - is this account an annuity? Can you even tell from what I've told you? Could I roll it into my 403(b) account that I have at Vanguard already (the 2050 target retirement account)?

Also - I went to the library today - the bogelheads guide was out but I picked up Lazy Person's Guide and Making the Most of Your Money Now....

PaleoWorx
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Re: Northwestern Mutual nightmare - help needed

Post by PaleoWorx » Wed Nov 14, 2018 8:30 pm

another example how sales con artists take advantage of regular folk
another reason to DYI your strategy

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 8:39 pm

PaleoWorx wrote:
Wed Nov 14, 2018 8:30 pm
another example how sales con artists take advantage of regular folk
another reason to DYI your strategy
Absolutely. I don't know enough to do anything remotely complicated but I think for the next 2 years I won't have to....I am going to focus on saving (we have had a written budget for years), paying down student debt, maxing out my 403(b). Once my student loans are gone I will have a couple thousand a month to redirect to 529s and a spousal IRA and then I might need to get someone to help me....or maybe I can teach myself by then. Sigh.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 9:02 pm

BL wrote:
Wed Nov 14, 2018 2:21 pm

Read this little pdf, especially Hurdle #5 for your situation:
https://www.etf.com/docs/IfYouCan.pdf
Just read it - awesome. Thanks so much!

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Re: Northwestern Mutual nightmare - help needed

Post by AlphaLess » Wed Nov 14, 2018 9:14 pm

Jack FFR1846 wrote:
Wed Nov 14, 2018 2:05 pm
Do not meet with this slime ball. Block his telephone number and simply don't show up. He's screwed you over. I wouldn't even give him the courtesy of a cancellation. Wherever you want to move these products to is who you talk to exclusively. There is no need to speak with Mr. Slime Ball ever again.
Upvote!

No need to create a feedback loop for him so that he is incentivized to do this with other people.
"You can get more with a kind word and a gun than with just a kind word." George Washington

krow36
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Re: Northwestern Mutual nightmare - help needed

Post by krow36 » Wed Nov 14, 2018 9:15 pm

ZeldaMD wrote:
Wed Nov 14, 2018 7:40 pm
I am clearly very confused, since the account on my NWM dashboard online says "Individual Retirement Annuity (IRA) - Front End Design", then under "product type" it says "Variable Annuity" with "Account B, RR series" after that.

So - is this account an annuity? Can you even tell from what I've told you? Could I roll it into my 403(b) account that I have at Vanguard already (the 2050 target retirement account)?

Also - I went to the library today - the bogelheads guide was out but I picked up Lazy Person's Guide and Making the Most of Your Money Now....
The IRS uses IRA to stand for Individual Retirement Account or Individual Retirement Arrangement. I haven't seen the term Individual Retirement Annuity. I believe it is allowed to have an annuity within an IRA. The 403b money could have been cashed out and combined with the taxable? 8k at Schwab so that the annuity is not in an IRA. Or the 8k could have been some sort of tax-deferred account, and was combined with the 403b money to set up an IRA into which they put the annuity. You need to find out more about this annuity before you decide how to get rid of it!

Jane Bryant Quinn has a recent book that is more up to date than "Making the Most of Your Money Now". They are both excellent and I have read both several times. (Well, big parts of them.) The new one is "How to Make Your Money Last, The Indispensable Retirement Guide" and certainly worth buying.

ZeldaMD
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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Wed Nov 14, 2018 9:39 pm

krow36 wrote:
Wed Nov 14, 2018 9:15 pm


Jane Bryant Quinn has a recent book that is more up to date than "Making the Most of Your Money Now". They are both excellent and I have read both several times. (Well, big parts of them.) The new one is "How to Make Your Money Last, The Indispensable Retirement Guide" and certainly worth buying.
I have to confess I was alarmed at the size of MTMOYMN - it's like 1200+ pages!! :shock: The PDF someone linked above is a bit more digestible...

krow36
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Re: Northwestern Mutual nightmare - help needed

Post by krow36 » Wed Nov 14, 2018 9:49 pm

I suggest using "pick and choose" in reading both her books. I did read most of them the first time, with a lot of skimming of stuff not relevant to us.

Miriam2
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Re: Northwestern Mutual nightmare - help needed

Post by Miriam2 » Wed Nov 14, 2018 9:51 pm

ZeldaMD wrote:
krow36 wrote: Jane Bryant Quinn has a recent book that is more up to date than "Making the Most of Your Money Now". They are both excellent and I have read both several times. (Well, big parts of them.) The new one is "How to Make Your Money Last, The Indispensable Retirement Guide" and certainly worth buying.
I have to confess I was alarmed at the size of MTMOYMN - it's like 1200+ pages!! :shock: The PDF someone linked above is a bit more digestible...
Jane Bryant Quinn's books are more like a compendium of personal finance topics that we refer to as the topic comes up in our life, rather than a book we sit down and read cover to cover. I find her books are the best all-in-one reference books to go to for information to start my journey.

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Watty
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Re: Northwestern Mutual nightmare - help needed

Post by Watty » Wed Nov 14, 2018 9:56 pm

ZeldaMD wrote:
Wed Nov 14, 2018 5:19 pm
I do feel so swindled.
In the long term getting burned for a few thousands dollars may have been one of the best financial things that will ever happened to you since it will motivate you to invest better in the future.

Think it it as being sort of like you sometimes feel crummy the day after you get a vaccination.

There are people that often post here after investing with companies like that for decades.

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Dale_G
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Re: Northwestern Mutual nightmare - help needed

Post by Dale_G » Wed Nov 14, 2018 10:04 pm

Good that you caught on early Zelda.

On the annuity: It is unlikely that you will have much in the way of gains after deducting the surrender charge, so any taxes are likely to be negligible. The surrender fee could be as much as $3,500, but if you put the money toward the student loans, the payback period will be less than 3 years - and it will make a nice dent in the loan.

Dale
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Mel Lindauer
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Re: Northwestern Mutual nightmare - help needed

Post by Mel Lindauer » Wed Nov 14, 2018 10:37 pm

Call the Annuity folks at Vanguard (800-462-2391) and the Vanguard Retirement Group (800-284-7245). If this is in an IRA, you can transfer it into non-annuity investments at Vanguard. Fill out the proper IRA transfer paperwork and then let them do all the work for you. Other than the surrender fees, there should be no tax consequences since you're doing a custodian-to-custodian transfer.

Good luck!
Best Regards - Mel | | Semper Fi

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Re: Northwestern Mutual nightmare - help needed

Post by Oddball » Thu Nov 15, 2018 3:51 pm

About 6 months ago I decided to follow some of the info on this site and transfer all mine and my wife's accounts from NWM to vanguard. It was very stressful at the beginning but overall it went pretty smooth. I also had an annuity at NWM which was old 401k funds, I took the 3%(?) fee hit and transferred it to a tIRA at Vanguard.

The biggest pain in the butt was that fact that all of our accounts at NWM each had 10-15 different funds in them, so consolidating them after transferring to Vanguard wasn't very fun. But we are feeling much better about our accounts now! :sharebeer

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Re: Northwestern Mutual nightmare - help needed

Post by TSR » Thu Nov 15, 2018 4:15 pm

ZeldaMD wrote:
Wed Nov 14, 2018 11:37 am
3) With regard to retirement contributions - my "advisor" has had me contributing 12,600 a year to my 403b (which is all Vanguard Target 2050) but these have been Roth 403b contributions - does this make any sense? Doesn't this mean I am paying taxes on this money now? I understand the basic concept of tax diversity but why the heck should I not take advantage of filling the non-Roth 403b bucket first??
"Tax diversity" is a con-job that NWM has created to justify selling whole life policies. The idea is that whole life is somehow part of a three-legged tax-diverse stool, where it is "tax free" compared to tax deferred. (Of course, you only get "tax free" by dying....) When they tried to sell to me, they used a lot of FUD tactics to sell this concept. "You know the tax laws will have to change, so neither your Roth nor your traditional space is safe...." All of this was trying to justify the purportedly tax-free nature of whole life.

The point is that you should just get the concept of tax diversity out of your vocabulary. You want investments that are appropriate for your tax situation. Likely a traditional 403b is better for you, but you should evaluate your own circumstances. The good news is you probably won't be sad to have those Roth funds in the future, even if they weren't optimal for your needs.

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Re: Northwestern Mutual nightmare - help needed

Post by NAD83 » Thu Nov 15, 2018 4:30 pm

krow36 wrote:
Wed Nov 14, 2018 9:15 pm
ZeldaMD wrote:
Wed Nov 14, 2018 7:40 pm
I am clearly very confused, since the account on my NWM dashboard online says "Individual Retirement Annuity (IRA) - Front End Design", then under "product type" it says "Variable Annuity" with "Account B, RR series" after that.

So - is this account an annuity? Can you even tell from what I've told you? Could I roll it into my 403(b) account that I have at Vanguard already (the 2050 target retirement account)

My dad had an IRA--Individual Retirement Annuity. It is indeed very confusing use of the same acronym, which should not be allowed, IMO. It was indeed a traditional IRA, or, tax-qualified money. You should be able to transfer this to a trad IRA somewhere.

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Re: Northwestern Mutual nightmare - help needed

Post by Mel Lindauer » Thu Nov 15, 2018 5:24 pm

How ridiculous is it to try to justify placing a high-cost tax-deferred product like an annuity inside an already tax-deferred IRA? IMO, it's totally unethical and it should be against the law.
Best Regards - Mel | | Semper Fi

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Re: Northwestern Mutual nightmare - help needed

Post by ktip » Thu Nov 15, 2018 5:37 pm

I'd say in your case the nightmare is more psychological (because someone acted like your pal and then mislead you and took your money) then long-term financial (because they didn't take much). On the bright side, you have gotten on top of the situation early on minimizing your losses. It is easy to lose hundreds of thousands of dollars in that situation. Your loss is not anything close to that and more like having sort of expensive stuff break in your car and your house at the same time.

And even though the NWM guy had you contributing to a Roth 403b when a regular 403b would make more sense for your situation, at least he had you putting money in a low-cost Vanguard fund instead of putting more money in crappy products like the annuity or moving you in and out of expensive mutual funds. And the money market account also is not ideal but not really a loss. With 185k in 403b vanguard funds, 55k in high interest online account, Roths, lots of progress on student loans, no massive mortgage, you are in a fine situation.

So I second the advice above, emphasizing that Vanguard should walk you through this and there's a good chance you don't ever need to communicate with NWM again.

I personally would surrender the annuity rather than roll it over into a new one because it's not a good investment (particularly if it's in your IRA), it's not much in the scheme of things, it's likely a relatively small loss at this point, it's added complexity, and it's a reminder of NWM.

Also if you haven't gotten term life I suggest checking out term4sale.com which comparison shops for you.

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Re: Northwestern Mutual nightmare - help needed

Post by ladycat » Thu Nov 15, 2018 7:08 pm

BL wrote:
Wed Nov 14, 2018 2:21 pm

Read this little pdf, especially Hurdle #5 for your situation:
https://www.etf.com/docs/IfYouCan.pdf
Thanks for posting this. Just read it and checked out one of the "homework" books from the library.

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Thu Nov 15, 2018 9:22 pm

Oddball wrote:
Thu Nov 15, 2018 3:51 pm
About 6 months ago I decided to follow some of the info on this site and transfer all mine and my wife's accounts from NWM to vanguard. It was very stressful at the beginning but overall it went pretty smooth. I also had an annuity at NWM which was old 401k funds, I took the 3%(?) fee hit and transferred it to a tIRA at Vanguard.

The biggest pain in the butt was that fact that all of our accounts at NWM each had 10-15 different funds in them, so consolidating them after transferring to Vanguard wasn't very fun. But we are feeling much better about our accounts now! :sharebeer
This is encouraging!

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Re: Northwestern Mutual nightmare - help needed

Post by Stinky » Thu Nov 15, 2018 9:30 pm

Watty wrote:
Wed Nov 14, 2018 9:56 pm
ZeldaMD wrote:
Wed Nov 14, 2018 5:19 pm
I do feel so swindled.
In the long term getting burned for a few thousands dollars may have been one of the best financial things that will ever happened to you since it will motivate you to invest better in the future.

Think it it as being sort of like you sometimes feel crummy the day after you get a vaccination.

There are people that often post here after investing with companies like that for decades.
+1

Good for you for catching on to the NWM scam pretty early. It's cost you a little money, but in the grand scheme of things, it's not so bad.

I always told my now-adult children that they will make financial mistakes in their lives, and that I hope that all of their mistakes are little ones. Your mistake is a little one. Bully for you in recognizing it pretty early, and I trust that you've learned from it.

Don't meet with the NWM guy again. Spend your time reading the good advice on this board.
It's a GREAT day to be alive - Travis Tritt

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Thu Nov 15, 2018 9:37 pm

ktip wrote:
Thu Nov 15, 2018 5:37 pm
...
And even though the NWM guy had you contributing to a Roth 403b when a regular 403b would make more sense for your situation, at least he had you putting money in a low-cost Vanguard fund instead of putting more money in crappy products like the annuity or moving you in and out of expensive mutual funds. And the money market account also is not ideal but not really a loss. With 185k in 403b vanguard funds, 55k in high interest online account, Roths, lots of progress on student loans, no massive mortgage, you are in a fine situation.

So I second the advice above, emphasizing that Vanguard should walk you through this and there's a good chance you don't ever need to communicate with NWM again.

I personally would surrender the annuity rather than roll it over into a new one because it's not a good investment (particularly if it's in your IRA), it's not much in the scheme of things, it's likely a relatively small loss at this point, it's added complexity, and it's a reminder of NWM.

Also if you haven't gotten term life I suggest checking out term4sale.com which comparison shops for you.
The Vanguard fund was my pick - I plopped my first retirement contributions into a target date fund just because the fees were so low and it was "set it and forget it". The NWM rep actually wanted me to move the Vanguard stuff under NWM's umbrella and god knows what would have happened to it then but I said I preferred to keep it out.

Hoping to not have to communicate with them again! Have a call with Vanguard planned for tomorrow.

Thanks for the life insurance tip - I have a phone interview for medical history with American General tomorrow from terms4sale :) Also have to wrestle my disability insurance away from NWM so gotta line that up too.

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Thu Nov 15, 2018 9:42 pm

Stinky wrote:
Thu Nov 15, 2018 9:30 pm
+1

Good for you for catching on to the NWM scam pretty early. It's cost you a little money, but in the grand scheme of things, it's not so bad.

I always told my now-adult children that they will make financial mistakes in their lives, and that I hope that all of their mistakes are little ones. Your mistake is a little one. Bully for you in recognizing it pretty early, and I trust that you've learned from it.

Don't meet with the NWM guy again. Spend your time reading the good advice on this board.
Thank you. I have definitely learned. I am learning a ton just in the last couple weeks (started by reading White Coat Investor, then found Bogleheads Wiki and then this forum). I love love love the parts of Jane Quinn's Making the Most of Your Money Now that I've read - she has such a clear and understandable way of writing about finances and money and I suddenly understand things I never really did before.

I want to learn enough to teach my kids the things I had to learn the hard way. My parents had zero financial knowledge/skills, got divorced, made just about every mistake in the book, and are going to be on tight fixed incomes in retirement (both retirement age but both are still working...).

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Re: Northwestern Mutual nightmare - help needed

Post by BL » Fri Nov 16, 2018 9:34 am

Miriam2 wrote:
Wed Nov 14, 2018 9:51 pm
ZeldaMD wrote:
krow36 wrote: Jane Bryant Quinn has a recent book that is more up to date than "Making the Most of Your Money Now". They are both excellent and I have read both several times. (Well, big parts of them.) The new one is "How to Make Your Money Last, The Indispensable Retirement Guide" and certainly worth buying.
I have to confess I was alarmed at the size of MTMOYMN - it's like 1200+ pages!! :shock: The PDF someone linked above is a bit more digestible...
Jane Bryant Quinn's books are more like a compendium of personal finance topics that we refer to as the topic comes up in our life, rather than a book we sit down and read cover to cover. I find her books are the best all-in-one reference books to go to for information to start my journey.
+1
I have looked up various topics of interest over the years by using my public library. Now I check for used, but current, books at Amazon.com.

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Mon Nov 19, 2018 7:28 pm

Update - cut ties with my advisor today officially!

Roths - rolled to Vanguard (in process) (Target Date fund)

403b already at Vanguard (Target Date fund)

"money market fund" was not a money market fund after all, sadly, but a taxable investment account with American Fund class C(I am horrified at the expense ratio of 1.49% and I paid a nice chunk of money when we opened this account. lesson learned)

The annuity is an IRA with an annuity in it? which I still don't understand. But I am told by both Vanguard and NWM that the annuity redemption can be transferred over to an IRA at Vanguard without any surrender fees from NWM (again- it was front loaded so I paid at the beginning...).

I am leaning towards selling the American Fund holdings (which have gained around $700 in the couple years I've held it, so 15% of this isn't terrible), eat the capital gains tax and use this money to pay down student loan debt (117K remaining).

Also planning to call Vanguard again tomorrow and see if it's an option to roll over the American Funds to a taxable account with Vanguard and then buy something else, but I'm not sure if Vanguard will do that with AmFu.

Anyway, I have learned a lot and continue to thanks to this forum and other wise people on the internet. I didn't even know what an expense ratio was before a month ago.

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Re: Northwestern Mutual nightmare - help needed

Post by Duckie » Mon Nov 19, 2018 7:57 pm

ZeldaMD wrote:I am leaning towards selling the American Fund holdings (which have gained around $700 in the couple years I've held it, so 15% of this isn't terrible), eat the capital gains tax and use this money to pay down student loan debt (117K remaining).
A $700 gain. Jeez, just sell.
Also planning to call Vanguard again tomorrow and see if it's an option to roll over the American Funds to a taxable account with Vanguard and then buy something else, but I'm not sure if Vanguard will do that with AmFu.
Type the American Funds ticker symbol onto this page to see if Vanguard will take it. For example, when I typed in "AMCPX" I got "This fund can be transferred to your Vanguard brokerage account but isn't available for purchase through FundAccess." So you can move existing shares but not buy more.

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Re: Northwestern Mutual nightmare - help needed

Post by David Jay » Mon Nov 19, 2018 8:04 pm

Mel Lindauer wrote:
Thu Nov 15, 2018 5:24 pm
How ridiculous is it to try to justify placing a high-cost tax-deferred product like an annuity inside an already tax-deferred IRA? IMO, it's totally unethical and it should be against the law.
With any luck, from your mouth to Congress’ ear.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: Northwestern Mutual nightmare - help needed

Post by StopIroningShirts » Mon Nov 19, 2018 8:08 pm

ZeldaMD wrote:
Mon Nov 19, 2018 7:28 pm
Update - cut ties with my advisor today officially!

Roths - rolled to Vanguard (in process) (Target Date fund)

403b already at Vanguard (Target Date fund)

"money market fund" was not a money market fund after all, sadly, but a taxable investment account with American Fund class C(I am horrified at the expense ratio of 1.49% and I paid a nice chunk of money when we opened this account. lesson learned)

The annuity is an IRA with an annuity in it? which I still don't understand. But I am told by both Vanguard and NWM that the annuity redemption can be transferred over to an IRA at Vanguard without any surrender fees from NWM (again- it was front loaded so I paid at the beginning...).

I am leaning towards selling the American Fund holdings (which have gained around $700 in the couple years I've held it, so 15% of this isn't terrible), eat the capital gains tax and use this money to pay down student loan debt (117K remaining).

Also planning to call Vanguard again tomorrow and see if it's an option to roll over the American Funds to a taxable account with Vanguard and then buy something else, but I'm not sure if Vanguard will do that with AmFu.

Anyway, I have learned a lot and continue to thanks to this forum and other wise people on the internet. I didn't even know what an expense ratio was before a month ago.
Congratulations! You figured this stuff out relatively early in your career. You're going to do very well.

You might want to consider moving the emergency fund into a regular brokerage account at Vanguard. You've got a high income and the ability to make monthly deposits, its worth putting it to work. We waited until we had $100,000 in a brokerage account before attacking my wife's veterinary school loans. It worked out well.

Congrats on cutting the ties! Keep your housing, food, and transportation in check, then lower investment fees and taxes and you'll have more money than you could ever imagine.

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Mon Nov 19, 2018 8:38 pm

Duckie wrote:
Mon Nov 19, 2018 7:57 pm
ZeldaMD wrote:I am leaning towards selling the American Fund holdings (which have gained around $700 in the couple years I've held it, so 15% of this isn't terrible), eat the capital gains tax and use this money to pay down student loan debt (117K remaining).
A $700 gain. Jeez, just sell.
Also planning to call Vanguard again tomorrow and see if it's an option to roll over the American Funds to a taxable account with Vanguard and then buy something else, but I'm not sure if Vanguard will do that with AmFu.
Type the American Funds ticker symbol onto this page to see if Vanguard will take it. For example, when I typed in "AMCPX" I got "This fund can be transferred to your Vanguard brokerage account but isn't available for purchase through FundAccess." So you can move existing shares but not buy more.
Ha! thanks for the push Selling looks good to me.

Thanks for the tip - looks like Vanguard will accept the American Fund class C that I have but isn't available for purchase.

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Re: Northwestern Mutual nightmare - help needed

Post by ZeldaMD » Mon Nov 19, 2018 8:49 pm

StopIroningShirts wrote:
Mon Nov 19, 2018 8:08 pm

Congratulations! You figured this stuff out relatively early in your career. You're going to do very well.

You might want to consider moving the emergency fund into a regular brokerage account at Vanguard. You've got a high income and the ability to make monthly deposits, its worth putting it to work. We waited until we had $100,000 in a brokerage account before attacking my wife's veterinary school loans. It worked out well.

Congrats on cutting the ties! Keep your housing, food, and transportation in check, then lower investment fees and taxes and you'll have more money than you could ever imagine.
Thanks for the encouragement.

For my own education - why would I move the emergency fund cash to a brokerage account? What would you suggest holding in the brokerage account? Our AMEX savings account interest rate is currently 1.99%. Nervous to try to beat that and don't want to lose that money. I have a stable job and high income now, but did not grow up with much, and I think that influences my money management decisions (maybe more than it should).

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