1715 Treasure Coast Financial Wellness with Thomas Davies
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1715 Treasure Coast Financial Wellness with Thomas Davies
403(b) Annuities for Florida Educators: What You Must Know
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Picture this. You are sitting in a folding chair in the cafeteria, or uh maybe the media center.
SPEAKER_01Oh yeah, the classic school setup.
SPEAKER_00Right. If you are a Florida teacher, uh department head or you know, a school administrator, you know this exact scenario. It's the annual benefits enrollment meeting.
SPEAKER_01The one everyone just wants to sleep through.
SPEAKER_00Exactly. Someone in a nice suit is standing at the front, clicking through a presentation, and they're presenting this 403B annuity as the absolute undisputed ultimate retirement solution.
SPEAKER_01And it sounds so official.
SPEAKER_00It really does. It sounds incredibly safe, but um, that default option could quietly be draining hundreds of thousands of dollars from your future wealth.
SPEAKER_01Yeah. The stakes in that cafeteria go way, way beyond just a typical benefits enrollment. I mean, we are talking about the financial engine for your entire post-career life here.
SPEAKER_00Aaron Powell, which is huge.
SPEAKER_01It is. For mid-career professionals or retiring administrators, that engine often holds hundreds of thousands or sometimes even millions of dollars. Wow. Millions.
SPEAKER_00Millions.
SPEAKER_01Exactly. So understanding the actual mechanics of these contracts is basically the difference between keeping your wealth and, well, handing a massive percentage of it over to an insurance company.
SPEAKER_00So today we are pulling back the curtain on the Teacher's Lounge Benefits Fair. We're doing a deep dive into a definitive guide titled 403B Annuity: Seven Essential Facts for Florida Educators.
SPEAKER_01Which is a fantastic resource.
SPEAKER_00It really is. It comes from Thomas Davies of Davies Wealth Management. They're a fee-based fiduciary advisor in Stewart, Florida. And this whole thing is a core topic from the 1715 Treasure Coast Financial Wellness Podcast.
SPEAKER_01So we have some really solid groundwork here.
SPEAKER_00Right. Our mission for this deep dive is to cut through that, you know, 20-minute sales pitch and figure out the actual mechanics of these products. Are they wealth builders or just expensive traps?
SPEAKER_01Well, before we judge the annuity, we have to define the landscape. People get confused by the terminology. The 403B itself is just the nonprofit sector's equivalent of a 401k.
SPEAKER_00Okay, so it's just like a bucket.
SPEAKER_01Exactly. It's just a tax-sheltered container.
SPEAKER_00Aaron Powell The container is the key concept here. The 403B is literally just a tax code designation. Right. But within that structural container, you have two entirely different investment vehicles you can choose to hold your money in.
SPEAKER_01Okay, what are the two?
SPEAKER_00First, you have custodial accounts. These hold standard mutual funds. They're regulated under section 403B7. Got it. And second, you have annuity contracts, which are issued by insurance companies. But you know, at those enrollment meetings, everyone just assumes 403B automatically means annuity.
SPEAKER_01Aaron Powell They really do.
SPEAKER_00It feels like the annuity is um it's like the default web browser on a new computer.
SPEAKER_01Aaron Powell Oh, that's a perfect analogy. Trevor Burrus, Jr.
SPEAKER_00Right. People use it because it is already installed and sitting right there on the desktop, not because they actively research the best possible software.
SPEAKER_01Aaron Ross Powell Yeah. And the reason it is the default browser comes down to this really weird historical quirk.
SPEAKER_00Aaron Powell Oh, really?
SPEAKER_01Yeah. Decades ago, insurance companies actually managed to secure exclusive access to school payroll deduction systems.
SPEAKER_00Aaron Powell Wait, they owned the systems?
SPEAKER_01Basically, yeah. They literally built the pipes that moved money from a teacher's paycheck into a retirement account.
SPEAKER_00Aaron Powell That is wild.
SPEAKER_01I know. And because of that legacy distribution advantage, the 403B annuity remains just deeply, deeply embedded in school district benefit programs today.
SPEAKER_00Aaron Powell So it's just inertia at this point.
SPEAKER_01Aaron Powell Exactly. The insurance reps have the long-standing relationships with the district, so even when lower cost mutual fund accounts are available on the exact same school platform, the annuity is usually what gets pushed to the front of the line.
SPEAKER_00Aaron Powell So you walk into the room heavily tilted toward an insurance product simply because of old payroll systems. Aaron Powell Pretty much. And that default choice comes with a really heavy price tag. The Davies Wealth Management Guide lays out the actual costs, and uh the math is sobering, to say the least.
SPEAKER_01Aaron Powell It really is.
SPEAKER_00Aaron Ross Powell When you wrap your investments in an annuity, you are adding a significant layer of insurance company overhead, right?
SPEAKER_01Aaron Powell You are. A variable 403B annuity typically carries multiple layers of hidden costs. And by the way, you will rarely see these itemized clearly on your statement.
SPEAKER_00Aaron Powell Of course not. That would be too easy.
SPEAKER_01Trevor Burrus, Jr. Right. So the foundational fee is the M and E or mortality and expense risk charge.
SPEAKER_00Trevor Burrus Mortality and expense. Okay, what does that actually do?
SPEAKER_01Aaron Powell It mechanically pays for the insurance guarantees. Specifically the guarantee that the insurance company will pay out a certain death benefit or you know provide a stream of income you cannot outlive.
SPEAKER_00Aaron Powell Okay, that sounds nice in theory.
SPEAKER_01Trevor Burrus It does. But that M and E charge usually runs between 0.75% to 1.35% annually.
SPEAKER_00Aaron Powell Just to put that in perspective for you listening, you are paying for an insurance mechanism while you are in your accumulating years.
SPEAKER_01Exactly.
SPEAKER_00You're basically paying a premium to insure against outliving your money twenty years before you actually plan to spend it.
SPEAKER_01Aaron Powell Yeah. You're paying for a feature you aren't using yet. And that is just the first layer.
SPEAKER_00Aaron Powell Wait, there's more?
unknownOh yeah.
SPEAKER_01Then you add administrative fees, which might be a flat twenty-five to fifty bucks, or an additional percentage up to 0.30%. And then on top of all the insurance costs, you still have to pay the underlying fund expense ratios for the mutual fund-like sub-accounts you are actually invested in.
SPEAKER_00So you're paying fees on fees.
SPEAKER_01Pretty much. And finally, if you elect optional writers, like say enhanced death benefits or guaranteed minimum withdrawal benefits, those carry their own charges.
SPEAKER_00Aaron Powell How much do those run?
SPEAKER_01Often another 0.50% to 1.25% every single year.
SPEAKER_00Aaron Powell Okay, let's do the math on that. Because human psychology is just terrible at understanding percentages.
SPEAKER_01Aaron Powell It really is. A few percent doesn't sound like much.
SPEAKER_00Right. When someone hears two or three percent total, it sounds like I don't know, sales tax on a cup of coffee. It sounds totally harmless.
SPEAKER_01Exactly.
SPEAKER_00But let's look at a mid-career educator who has accumulated a $500,000 account balance.
SPEAKER_01Okay.
SPEAKER_00An all-in cost of two to three percent on a half million dollars is a drag of ten thousand to fifteen thousand dollars.
SPEAKER_01Every year.
SPEAKER_00That is not a one-time setup fee. That is fifteen grand evaporating from the account every single year.
SPEAKER_01Aaron Powell And you know the true devastation there is the loss of compounding.
SPEAKER_00Aaron Powell Right, because that money is gone.
SPEAKER_01Exactly. That $15,000 isn't just money leaving your account. It is money that is no longer in the market, doubling over the next decade.
SPEAKER_00Aaron Powell It's the opportunity cost.
SPEAKER_01Huge opportunity cost. Compare a 2.5% annuity fee to a low-cost mutual fund account under that section 403B7 we mentioned, which might only cost 0.05% to 0.50% annually.
SPEAKER_00The difference is staggering.
SPEAKER_01It is. The structural drag of the annuity over a 20-year career easily equals hundreds of thousands of dollars in lost retirement wealth.
SPEAKER_00Okay. So if my account is bleeding up to 15 grand a year, my immediate reaction is to just log in tomorrow and move the money into a low-cost index fund.
SPEAKER_01Naturally.
SPEAKER_00But if you try to do that, you hit a brick wall. And this is where the trap snaps shut, right? With surrender charges. Aaron Powell Yeah.
SPEAKER_01The surrender charge is basically the enforcement mechanism of the annuity contract.
SPEAKER_00Aaron Powell How does that work?
SPEAKER_01Well, the insurance company pays a hefty upfront commission to the person in the suit who sold you the product in the cafeteria.
SPEAKER_00Oh, of course.
SPEAKER_01To recoup that commission, the insurance company locks up your money. If you try to move your funds to a better vehicle, or even if you simply withdraw them for a life event before the surrender period ends, you are hit with a massive penalty.
SPEAKER_00Aaron Powell The Davies Guide mentions these penalties can be seven to ten percent of the amount you withdraw. That's huge.
SPEAKER_01Aaron Powell It's a massive hit. A standard schedule usually starts with an 8% penalty in year one.
SPEAKER_00Okay.
SPEAKER_01Then it declines by 1% each subsequent year until it finally hits zero, which is usually around year eight or nine.
SPEAKER_00Aaron Powell But the salesperson often counters that, right? They point out this uh 10% free withdrawal provision.
SPEAKER_01Aaron Powell Oh, they love talking about that. Aaron Powell Right.
SPEAKER_00They make it sound like a loophole where you have total liquidity. Like don't worry, you can always access your money.
SPEAKER_01Exactly. But let's go back to your example. If you have that $500,000 nested and you want to escape the high fees by moving the whole account to a new provider.
SPEAKER_00Aaron Powell Taking out 10% penalty free leaves $450,000 trapped behind the wall. Yeah. Subject to thousands of dollars in surrender fees. It is literally just an illusion of liquidity.
SPEAKER_01Aaron Powell It creates a severe constraint on your financial autonomy. I mean, life is unpredictable.
SPEAKER_00Obviously.
SPEAKER_01An educator might suddenly need funds for a child's education or, you know, a health crisis, or maybe they just want a career change. This lockup severely limits your options when you need them most.
SPEAKER_00Aaron Powell And there is also a major unforced error involving exchanges.
SPEAKER_01Aaron Powell Yes. This is a big one.
SPEAKER_00Aaron Powell Say a new salesperson comes to the school, they look at your statement, point out the high fees, and offer to exchange your old annuity for their shiny new annuity.
SPEAKER_01Aaron Powell This happens all the time. Doing a so-called 1035 exchange from an old contract to a new one entirely resets your surrender clock back to zero.
SPEAKER_00Aaron Powell Wait, back to zero.
SPEAKER_01Completely.
SPEAKER_00Completely.
SPEAKER_01You might have been in year seven of an eight-year lockup, you know, about to gain your freedom. Trevor Burrus, Jr.
SPEAKER_00Almost out of the woods.
SPEAKER_01Exactly. But by signing that exchange paperwork, you generate a brand new commission for the new salesperson and you lock yourself up for another seven to ten years.
SPEAKER_00Aaron Powell That should be illegal.
SPEAKER_01It's certainly problematic.
SPEAKER_00Aaron Powell I mean hearing the math on the fees and the brutal reality of those surrender charges, the natural reaction is to declare all annuities universally toxic.
SPEAKER_01Aaron Powell Sure, it sounds that way.
SPEAKER_00But the source of material from Davies Wealth Management introduces some really important nuance here. There are three main types of these contracts, and we have to separate the mechanics to see if they ever actually serve a purpose.
SPEAKER_01Aaron Powell Right. The product landscape is broad. They aren't inherently evil, they're just tools.
SPEAKER_00Aaron Powell So what's the first type?
SPEAKER_01Aaron Ross Powell First you have fixed annuities. The insurance company credits a guaranteed interest rate for a set period.
SPEAKER_00Trevor Burrus So it's safe.
SPEAKER_01Very safe. Your principal is protected from market downturns, which provides a really nice psychological safety net for a lot of people.
SPEAKER_00But the danger with that safety is inflation, right?
SPEAKER_01Aaron Powell Exactly.
SPEAKER_00Aaron Ross Powell If inflation is running at 4% and the fixed annuity guarantees a 2% return, you have mathematically guaranteed that your money is losing its purchasing power.
SPEAKER_01Aaron Powell Yeah. It is a slow, safe bleed.
SPEAKER_00Aaron Ross Powell Wow. Okay. What's the second type?
SPEAKER_01Aaron Powell Then you have the variable annuity, which is mostly what we have been discussing. It allows you to allocate your premiums into market-linked sub-accounts.
SPEAKER_00Aaron Powell So you get market exposure.
SPEAKER_01Aaron Powell Yes. You take on the market risk, but you also absorb those extreme layers of insurance fees we talked about.
SPEAKER_00Aaron Powell The 2-3% drag.
SPEAKER_01Exactly. Because of that heavy fee drag, a variable 403B annuity rarely outpaces a simple low-cost index fund portfolio over a long timeline.
SPEAKER_00Aaron Powell Makes sense mathematically. And the third category. Because this one seems to be the most heavily marketed one right now.
SPEAKER_01Aaron Powell Oh, yeah. The fixed indexed annuity.
SPEAKER_00Aaron Powell Right. The pitch is always you get the upside of the stock market, but zero downside risk, which sounds like magic.
SPEAKER_01Aaron Powell It does sound like magic, but the mechanics of a fixed index annuity are highly complex.
SPEAKER_00Aaron Powell How so?
SPEAKER_01Well, they tie your interest crediting to a market index like the S P 500, and they do provide a floor so you don't lose principle if the market crashes.
SPEAKER_00Okay.
SPEAKER_01But the insurance company does not give you that protection for free. They cap your upside.
SPEAKER_00Aaron Powell So if the market has a great year.
SPEAKER_01If the market goes up 20% in a year, your contract might cap your gains at six or seven percent.
SPEAKER_00Aaron Powell Oh, wow. It's like flipping a house where the bank guarantees you will never lose a dime of your original investment.
SPEAKER_01That's a good way to look at it.
SPEAKER_00Aaron Powell It sounds like a great deal until you read the fine print and realize the bank gets to keep 80% of the profit when the house finally sells. It limits your growth potential significantly.
SPEAKER_01Aaron Powell It really does. But you know, despite all these constraints, there are specific strategic scenarios where a 403B annuity genuinely does its job.
SPEAKER_00Aaron Powell Like why?
SPEAKER_01Well, an educator who is one year away from retirement and absolutely requires a guaranteed income stream they cannot outlive. That is a prime candidate.
SPEAKER_00Aaron Powell That makes sense. They need that specific insurance feature.
SPEAKER_01Trevor Burrus Exactly. Another example is a school employee without a traditional pension benefit who holds a large lump sum and prioritizes downside protection over growth.
SPEAKER_00Aaron Powell Okay. So they're willing to pay the fees for the safety.
SPEAKER_01Aaron Powell Right. Or a very high income earner who has already maxed out their 403B, their IRAs, and all other tax-advantaged accounts, and they just need an additional discipline savings vehicle that offers an income guarantee.
SPEAKER_00Aaron Powell But those are highly targeted late-stage financial needs.
SPEAKER_01Trevor Burrus Extremely targeted.
SPEAKER_00Aaron Ross Powell They are not the default setting for a 28-year-old teacher who needs three decades of compound growth.
SPEAKER_01Aaron Powell Absolutely not.
SPEAKER_00Aaron Powell But regardless of whether you choose the mutual fund lane or the annuity lane, building serious wealth requires maximizing the IRS rules.
SPEAKER_01Trevor Burrus That's all about the rules.
SPEAKER_00Aaron Powell And the guide dives into the contribution limits. And there are massive opportunities here that most HR departments barely even mention to people.
SPEAKER_01Aaron Powell It's a shame, really. Because the base limits dictate the foundation of your wealth. For 2026, the IRS elective deferral limit for 403B plans is $23,500.
SPEAKER_00Aaron Powell, which is a solid amount.
SPEAKER_01It is. And anyone 50 or older gets the standard catch-up contribution. But the Secure 2.0 Act introduced this really powerful new mechanism.
SPEAKER_00Aaron Powell The Super Catchup, right?
SPEAKER_01Yes. The super catch-up contribution. This is specifically targeted at participants aged 60 through 63.
SPEAKER_00Very specific window.
SPEAKER_01Very specific. If you fall into that exact four-year window, you are in your peak earning years, and the IRS allows a significantly higher deferral limit to help you literally sprint to the finish line.
SPEAKER_00But I think the most surprising mechanism in the Davies Guide is the 15-year service rule.
SPEAKER_01Oh, this one is a hidden gem.
SPEAKER_00It really is. If you have 15 or more years of service at the exact same qualifying organization, like the same school district, you unlock a hidden tier of contributions.
SPEAKER_01Aaron Powell A lot of people don't know about those.
SPEAKER_00You are suddenly eligible to contribute an additional $3,000 per year, up to a lifetime maximum of $15,000. It's huge. And under specific IRS rules, you can stack that 15-year rule right on top of the standard age 50 catch up.
SPEAKER_01Yes, you can.
SPEAKER_00You can shelter a massive amount of income, but you actually have to know to ask for it.
SPEAKER_01And so many educators leave that tax-advantaged wealth on the table because the 15-year rule is unique to the 403B space and it just isn't widely advertised.
SPEAKER_00Which is wild.
SPEAKER_01It is. When you consistently maximize those limits, the base 23.5, the age 50 catch-ups, the secure 2.0 super catch-ups, and the 15-year rule, you create a very, very different financial picture for yourself.
SPEAKER_00It's a game changer.
SPEAKER_01Trevor Burrus, Jr.: You transition from a mass market saver to someone managing a true high net worth portfolio.
SPEAKER_00Aaron Powell And the advice you give to a first-year teacher with five grand in an account is just, you know, save consistently.
SPEAKER_01Right. Keep it simple.
SPEAKER_00Aaron Powell But the advice for a retiring administrator with a $1.5 million portfolio requires microscopic precision, especially regarding taxes.
SPEAKER_01The taxes will get you if you aren't careful.
SPEAKER_00Aaron Powell And we are talking about Florida educators here. Florida has zero state income tax.
SPEAKER_01It's a great perk.
SPEAKER_00It is. In theory, keeping your money should be incredibly simple. But the guide outlines some massive unforced errors you can make when withdrawing that wealth.
SPEAKER_01Yeah. The federal tax code lays traps that catch high net worth retirees completely off guard.
SPEAKER_00Aaron Powell What's the biggest one?
SPEAKER_01The most dangerous one actually involves Medicare. It is called IRMA, or the income-related monthly adjustment amount.
SPEAKER_00Aaron Powell IRMA. Sounds harmless enough.
SPEAKER_01Aaron Powell It is not harmless. This is a federal surcharge applied to your Medicare Part B and Part D premiums, and it is entirely based on your income.
SPEAKER_00Aaron Powell The mechanics of IRMA are brutal because it is a cliff penalty, right?
SPEAKER_01Yes. It acts as a strict mathematical threshold. Medicare looks at your tax return from two years prior. Okay. If you pull a large lump sum out of your traditional 403B to, say, pay off a mortgage or maybe buy a boat, you spike your adjusted gross income for that specific year.
SPEAKER_00Right.
SPEAKER_01If that distribution pushes your income even one dollar over the Irma threshold, your Medicare premiums don't just edge up slightly. Trevor Burrus, Jr.
SPEAKER_00They don't.
SPEAKER_01No. They spike to a completely higher bracket. You can accidentally add thousands of dollars in unexpected surcharges to your health care costs.
SPEAKER_00Aaron Powell Just because you went one dollar over. That's insane. Aaron Powell It is. There is another advanced strategy mentioned in the guide for university employees or those who hold employer stock inside their plan. It's called net unrealized appreciation or NUA.
SPEAKER_01Aaron Powell Yes. NUA is incredibly powerful.
SPEAKER_00Aaron Ross Powell But if you don't understand the mechanics of NUA, you essentially end up volunteering to pay higher taxes.
SPEAKER_01Aaron Powell Exactly. So if you buy your employer's stock inside your retirement plan, you have a cost basis, which is what you paid for it, and you have the growth.
SPEAKER_00Aaron Powell Okay. That makes sense.
SPEAKER_01If you do a standard rollover of that stock into an IRA, every single dollar you eventually withdraw will be taxed as ordinary income.
SPEAKER_00Aaron Powell And ordinary income tax could be high.
SPEAKER_01It can be as high as 37%. But the NUA strategy allows you to distribute the stock into a taxable account instead.
SPEAKER_00Oh, interesting.
SPEAKER_01Yeah. And you pay ordinary income tax only on the original cost basis. The growth, the appreciation, is then taxed at the long-term capital gains rate, which is significantly lower. Trevor Burrus, Jr.
SPEAKER_00So it splits it up.
SPEAKER_01It separates the basis from the growth. But it requires flawless execution at the time of distribution. If you mess up the paperwork, you lose the benefit entirely.
SPEAKER_00Wow. And getting back to the state level, the biggest dynamic specific to Florida educators is coordinating 403B withdrawals with the Florida retirement system, the FRS.
SPEAKER_01The FRS is a huge factor here.
SPEAKER_00Aaron Powell Right. The FRS offers a defined benefit pension. And having a pension is phenomenal, but mathematically it creates a very high baseline floor of taxable income in retirement.
SPEAKER_01Aaron Powell It does. If your FRS pension pays you $60,000 a year, your taxable income is already sitting at that $60,000 floor.
SPEAKER_00Trevor Burrus Before you even touch your savings.
SPEAKER_01Exactly. Every single dollar you withdraw from a traditional pre-tax 403B piles directly on top of that pension income.
SPEAKER_00Aaron Powell So it pushes you up.
SPEAKER_01Right. If you withdraw heavily from the 403B without a strategy, that combined income pushes you into much higher tax brackets.
SPEAKER_00So how do you avoid that?
SPEAKER_01This is why Roth conversions become critical. Converting traditional funds to a Roth IRA during lower income years, like before your pension and social security fully kick in, allows you to control that tax bracket creep later on.
SPEAKER_00Aaron Powell That is such a smart move. But beyond the tax coordination, there's the logistical nightmare too. Local school districts in Florida operate like completely separate fiefdoms.
SPEAKER_01They really do. It's wild.
SPEAKER_00They have wildly varying vendor lists. Some counties give their teachers access to ultra-low-cost mutual funds right on the primary platform.
SPEAKER_01Which is how it should be.
SPEAKER_00But then other districts restrict their employees entirely to a list of expensive insurance companies. You are literally forced to navigate a maze just to find out what you are even allowed to buy.
SPEAKER_01Yeah. And armed with an understanding of ME fees, surrender charges, RMAA cliffs, and FRS coordination, the final step is practical defense.
SPEAKER_00Aaron Powell Defense. I like that.
SPEAKER_01When you walk back into that cafeteria for the next enrollment fair, you have to establish exactly who is standing at the front of the room.
SPEAKER_00Aaron Powell You have to know who you're dealing with.
SPEAKER_01Trevor Burrus You must differentiate between a fiduciary and a commissioned sales representative.
SPEAKER_00Aaron Powell And a fiduciary, like the team at Davies Wealth Management, is bound by a legal standard to act in your best financial interest, right?
SPEAKER_01Correct.
SPEAKER_00Well a commissioned rep operates under a totally different standard. They're not necessarily malicious, but their compensation is directly tied to the specific insurance contract they get you to sign.
SPEAKER_01Aaron Powell Exactly. The alignment of interests dictates the advice you receive. A commissioned representative's paycheck relies on selling the product, not optimizing your FRS pension coordination or protecting you from Medicare surcharges.
SPEAKER_00That makes total sense.
SPEAKER_01And that misalignment creates blaring red flags you can easily spot during the presentation.
SPEAKER_00Aaron Powell The checklist in the guide for spotting those red flags is super straightforward. First, demand everything in writing. Always. If the representative glosses over the mortality and expense charges or, you know, refuses to detail the underlying fund expense ratios on paper, that is a full stop.
SPEAKER_01Absolutely. The second flag is downplaying the surrender charges.
SPEAKER_00Oh, we talked about that.
SPEAKER_01Right. If they minimize the seven-year lockup by emphasizing that 10% free withdrawal provision, they are actively trying to distract you from a major constraint on your liquidity.
SPEAKER_00The third flag is pushing an exchange. If they look at your current annuity and immediately suggest trading it in for a newer model, they are attempting to reset your penalty clock to zero while generating a brand new commission for themselves.
SPEAKER_01It's a huge warning sign. The fourth is relying on aggressive hypothetical returns.
SPEAKER_00Like those fancy charts they show.
SPEAKER_01Exactly. Showing a chart where an indexed annuity rockets upward without clearly disclosing the upside caps and the fee drag is just manipulative.
SPEAKER_00It's telling half the story.
SPEAKER_01Yes. Finally, if they claim the annuity is your only option, verify that immediately. Always check your district's official plan documents yourself.
SPEAKER_00Aaron Powell Because they might be hiding something. Trevor Burrus, Jr.
SPEAKER_01You may have access to a low-cost mutual fund platform that the representative is ignoring simply because they do not sell it.
SPEAKER_00Aaron Powell The bottom line is that the 403B annuity is just a piece of financial hardware. It is a tool.
SPEAKER_01Just a tool.
SPEAKER_00It requires fiduciary grade analysis to determine if it is the precise tool needed for your specific tax bracket and your Florida retirement system track. You cannot build a million-dollar retirement by just clicking accept on the default settings.
SPEAKER_01You really can't.
SPEAKER_00As we wrap up this analysis, there is one final critical detail pulled from the Davies Guide that dictates the ultimate destination of your wealth. We have analyzed accumulation, fees, and tax traps. But consider the end of the road, your estate plan. You might pay an attorney thousands of dollars to set up a meticulous will or a trust, dictating exactly how your assets will be divided among your heirs.
SPEAKER_01And a will is a powerful legal document, of course. But it has a massive blind spot when it comes to retirement accounts.
SPEAKER_00This blew my mind when I read it.
SPEAKER_01The beneficiary designations listed directly on your annuity contract or your IRA absolutely override your will. Trevor Burrus, Jr.
SPEAKER_00Override it entirely.
SPEAKER_01Yes. It is a legal absolute. The contract dictates the distribution, not the will.
SPEAKER_00Aaron Powell So if you or your spouse have an old 403B annuity sitting around from a decade ago, maybe an account you opened in a rush in the cafeteria when you were first hired. Who is listed on that specific piece of paper?
SPEAKER_01It's a scary thought.
SPEAKER_00Is it an ex-spouse? Is it a parent who has since passed away? An outdated annuity form sitting in a dusty HR file cabinet could completely bypass your carefully crafted estate plan.
SPEAKER_01Sending your wealth exactly where you do not want it to go.
SPEAKER_00You need to check those documents today. Make sure the foundation of your wealth isn't sitting on a faulty default setting. Keep diving deep.
