Equitable (AXA) Annuities Review

The Investment Edge® variable annuity from Equitable is a relatively low-fee, tax-deferred account that allows annuitants to pick from a wide range of professionally managed investment funds that invest in indexes and various market sectors. These funds are typically organized by the type of security they’re focused on, as well as the risk profile they adhere to. You’ll also have access to automatic quarterly, semiannual or annual rebalancing to ensure your portfolio stays as diversified as it was intended to be.

This annuity comes with a free benefit rider Equitable calls the “Income Edge” program. If you choose to utilize this feature, your payments will be normally scheduled out over a set period of time, but part of each payout you receive will be part of your cost basis. As a result, this portion of your payments will be tax-free, saving you on taxes in the short-term.

The minimum initial premium for this account is $10,000. The maximum issue age is either 70 years old or 85 years old depending on the type of contract you open.

Fees

There are two main sets of fees to know about with the Investment Edge annuity: a $50 annual contract fee and a 1.10% combined annual operations, administration and distribution fee. The former is waivable if your account value is at least $50,000. There are also fees associated with the investment funds, as operating expenses can be anywhere from 0.58% to 3.89% depending on the fund.

There’s a five-year withdrawal fee schedule for anyone who takes out more than the allotted 10% fee-free withdrawal amount. Rates are as follows:

If you complete a withdrawal before you turn 59.5 years old, the IRS will charge you a 10% surtax. You’ll also still be on the hook for standard income taxes.

Realistic Return Expectations

Variable annuities are essentially investment products, so the returns you receive or the losses you incur are dependent on the performance of the investments you choose. For reference, Equitable offers funds and securities through investment managers like Fidelity, MFS Investment Management, T. Rowe Price and more.

One of Equitable’s premier retirement-focused products, the Retirement Cornerstone® Series B annuity is a variable contract. It calls for a $5,000 minimum opening payment and a maximum issue age of up to 85 years old, depending on the type of contract you want. 

There are two optional riders available with this annuity: the Guaranteed Minimum Income Benefit (GMIB) and the Guaranteed Minimum Death Benefits (GMDBs). The GMIB rider is focused on helping you protect your retirement income, whereas the GMDBs rider is intended to keep your death benefit intact to aid your beneficiaries. Each of these come with their own fees.

This annuity actually comes with two accounts: the “Investment Account” and the “Protected Benefit Account.” The former is your standard earnings account, as it houses the professionally managed portfolios you choose to invest in for your retirement. On the other hand, the latter account contains professionally managed portfolios that are used to fund your GMIB and/or GMDBs benefit riders.

Fees

The most prominent cost associated with the Retirement Cornerstone Series B annuity is its 1.30% combined operations, administration and distribution contract fees. In addition, your annual contract fee is $30, though Equitable will waive this if your account value is higher than $50,000.

As far as investment-specific fees go, the company states that investments in your Protected Benefit Account come with expenses that range from 0.58% to 2.37%. In your Investment Account, expenses range from 0.58% to 2.60%. Here are some of the rider benefit fees:

• Guaranteed Minimum Income Benefit in Protected Benefit Account: 1.25%
• Guaranteed Minimum Death Benefits in Protected Benefit Account: 0.35%
• RMD Wealth Guard Death Benefit: 0.60% - 1.00%, depending on your age
• “Greater of” Death Benefit: 1.25%

You can withdraw up to 10% of your Protected Benefit Account’s value at the dawn of each year you own the contract. Should you go beyond these bounds, withdrawal fees will kick in:

You will incur a 10% income surtax from the IRS when you withdraw money from your account before age 59.5.

Realistic Return Expectations

When you open a variable annuity, you become responsible for managing the investments that reside in your portfolio. As a result, the returns that any particular annuity could earn vary based on the investments’ performance. Equitable has a wide range of investment products available, including ones focused on either equities or bonds, with some being riskier than others.

The Structured Capital Strategies® Series C variable annuity has a maximum issue age of 85. You’ll also need to invest $25,000 to open an account. It’s a retirement-centric annuity that allows contract holders to subscribe to downside protection. This feature lets you limit how much value you’re willing to let your contract lose, with options to cap losses (10%, 15%, 20%, 25% or 30%).

Investing through this annuity gives you access to index funds that follow indexes like the S&P 500 index, the NASDAQ 100 index and more. You can choose between one-, three- and five-year durations for these investments, depending on what works best for your financial life.

Fees

For the Structured Capital Strategies Series C annuity, there is a hefty 1.65% variable investment option fee that’s paid annually. Furthermore, depending on the funds you decide to invest in, portfolio operating charges can range from 0.58% to 0.71%.

Equitable allows annuitants to withdraw up to 10% of their contract value annually without incurring fees. But if you surpass this limit, be prepared to pay the following charges:

With either of these annuities, withdrawing before the age of 59.5 could have tax implications. Annuitants younger than this age who take out money from their account will be subject to a 10% income tax penalty on top of standard income tax.

Realistic Return Expectations

Because this is a variable annuity that invests in the market, the returns are difficult to predict. While investing in index funds is less risky than investing in individual securities, there's still no way to be sure what your returns or losses will be.

The Structured Capital Strategies® Plus annuity is another version of the standard Structured Capital Strategies® annuity listed above. However, this contract offers stronger returns possibilities in concert with higher fund fees. Annuitants will save money on the variable investment option fee, though.

This contract's investment options are slightly less robust than the Series C contract, but it does add an optional return of premium death benefit for an extra fee. This benefit guarantees that your beneficiaries receive at least the value of your premium payment upon your death.

Fees

This contract comes with a standard variable investment option annual fee of 1.15%. In addition, you'll pay an annual operating expense fee for each fund you invest in, with these charges ranges from 0.71% to 1.00%. The contract's optional Return of Premium Death Benefit comes with a 0.20% annual fee.

You are allowed to withdraw up to 10% of your contract value annually before you're penalized. Should you surpass that amount, Equitable will charge you the following fee rates:

The IRS charges a 10% income surtax to any annuitants that withdraw money from their account prior to turning 59.5 years old.

Realistic Return Expectations

Variable annuities offer returns that are just that: variable. That you means you could lose or gain money depending on the market performance associated with the funds you invest in. As a result of this, it's essentially impossible to gauge what kinds of returns you might garner. Either way, tax deferral will be a major benefit for growth.