hi all,
I need some advice from you all.
We were stupid enough to open an offshore account with ITA via Japan based IFA few years back and really would like an advice on what to do.
I know generally most of people here think it’s best to surrender ASAP and reinvest elsewhere but with penalties and tax implications on capital gain if we were to bring back money now with cheap yen (good and bad)…etc we are not sure what to do next.
Basically a huge chunk of our money is in ITA’s access portfolio 8000 about 1M USD. This account charges about 1.2% admin charges + $720 policy fee annually which is obviously a huge chunk of money each year. We have 2 years left on this policy until the surrender charges are waived. We fired the IFA 3 years ago so no longer pay the FA fee but obviously with these fees, our fund is only up about 8% since we started in 2017. Our option is either to keep this and enjoy the benefit of having an offshore account after 2 years with only the policy fees thereafter (or withdraw at no surrender charge in 2 years)or to pay 2.4% surrender fees now and re-invest elsewhere?
To make things worse, we also put about $2500 each month into S&P 500 15 Year Plan USD – Series III on ITA which I think is an even bigger rip off account with 1.5% structure fee annum and admin charges of 1.7%. We still have about 9 years left for this and pretty much stuck as the penalty of stopping this would be massive. The whole point of this plan was you receive 40% guarantee return at the end of 15 year plan, but given S&P’s annual average return, it just doesn’t make sense and the only selling point of this by FA was that if the market was down, we’d be walking away with 40%.
Given how much we are paying in the fees, we would literally break even if not lose money at the end of the plan either way. Anyhow, the penalty to surrender right now is about half of the total amount we’ve already contributed so far. (With the gain, about 40% of the total amount we’ve already contributed). So our dilemma is we’d end up paying the same kind of fees now even if we end up surrendering so may as well keep it and get the guaranteed 40% back when the policy ends?
We know how big of a mistake signing up for these plans were but we are really struggling to come up with how to move forward. Should we take it as a big lesson learned, and keep it or surrender immediately with a massive loss on the penalty charges now and reinvest?
I know we have a lot of smart people here, would be grateful for your advice and thoughts.
by Broad_Glove4170