A provider exchange is the movement of some or all of your 403b dollars from one RIC investment provider (active or inactive) to another RIC active provider.
Participants with assets invested in inactive provider products need to be aware that restrictions and/or penalties may exist. Depending on the provisions of your inactive policy, your options to exchange assets to an active RIC provider are most likely:
Exchange 100% of your policy value (surrender charges may apply)
Set up an automatic annual exchange of the penalty-free amount (typically 10% of contract value) until the total balance is exchanged without penalty (some inactive policies may not have this option)
You may use the Policy Review Data Sheet to help you ask your old provider questions about your policy. The answers to these questions will help you compare the old product with the active provider products.
Note
Exchanges between active providers are not recommended unless you have been dissatisfied with your current active provider services and/or investments. See instructions for completing a provider exchange.
List items for Provider Exchanges (ERE)
First, review the following list of product benefits offered by RICβs 403b providers. RIC providers have competitive products and services that typically include:
A large selection of investments to meet the savings goals and needs of conservative, moderate, and aggressive investors.
Detailed account statements sent to your home address quarterly (annually for fixed accounts).
Reasonable fees and no sales loads for mutual funds. Even lowering your fees by 1% can make a big difference over the long term of your investment.
Competitive fixed-rate investments.
Local investment representatives (some exceptions).
Customer support - 24-hour toll-free phone and internet access to your account information.
Ability to change your investment selection at any time.
No surrender fees or product restrictions for transfers and distributions.
No annual contract fees.
Access to self-directed brokerage account (not offered by all providers).
Second, review your policy or call your inactive provider and request information listed on the Policy Review Data Sheet (17.29 KB) .docx . Provider contact information may be found on your account statement.
And finally, compare the policy with the active provider investment options, benefits, and fees.
To access active provider information:
Call an active provider and tell them you are a 403b participant looking for alternatives to your current investments.
Ask them to meet you at your location to discuss the possible benefits of an exchange and explain investment options.
You may find one or a number of reasons to consider investing with a different RIC provider. Some providers do not always agree to give their investors the same products and services as are offered by RIC providers.
You may decide to make an exchange if...
Your investment choices are limited by your current provider
Your product offers limited distribution options
You find that you are paying unnecessary fees
You want to consolidate your investments with one provider
You want an investment representative in your area
Your investments have underperformed as compared with their peers for a number of years
Some of the active providers have no restrictions or fees for exchanges to RIC provider accounts.
Some providers may have surrender charges that limit your ability to exchange part or all of your assets without a penalty, be sure to ask for fee information.
A surrender charge is typically imposed for a set period (5, 10, 15 yrs, etc.) and decreases over the surrender period from the original date of your policy or from the date of each contribution. Check with your provider for possible penalties and the possible option to exchange your assets over a period of time to avoid penalties.
Be aware that an exchange is completed by selling your investment(s) with the old provider and purchasing new investments with a different provider. Talk to an active provider representative about whether or not exchanging your investments is appropriate for your retirement savings goals and objectives.
