Exciting changes coming to ScholarShare!

Transcription

1 Exciting changes coming to ScholarShare!

2 What s Inside At-a-Glance Pre- and Post-Transition Plan...1 Important Dates to Remember... 2 Frequently Asked Questions Investment Map... 8 Dear ScholarShare Participant, Effective November 7, 2011, ScholarShare will transition to a new plan manager, TIAA-CREF Tuition Financing, Inc. (TFI). In anticipation of this transition, we are providing you with details about exciting changes planned for your ScholarShare College Savings Plan account. As you may know, the plan manager is responsible for performing a wide range of functions, such as investment management, processing contributions, issuing statements and providing a customer service call center, to name a few. TFI has been managing college savings plans for over 10 years, and we are excited to bring you several enhancements that will take place with this transition. First, there will be a reduction in plan fees, making ScholarShare among the lowestcost 529 plans in the country. You will also see the number of ScholarShare investment portfolios increase from 15 to 19, several of which will be invested in mutual funds managed by well-known fund companies. You ll also notice an enhanced website that will offer a number of account features and capabilities as well as an online calculator and mobile applications for your smartphone. Although these enhancements will take place as seamlessly as possible, there are some actions you may wish to take prior to or following the transition, as detailed in the enclosed FAQ. Be sure to read the enclosed information carefully as it outlines important differences between the pre- and post-transition plan, as well as the mapping of your existing investment portfolios to the new ScholarShare investment portfolios. We want to ensure a positive transition experience for participants, so if you have any questions, contact us by at scholarshare@treasurer.ca.gov or by phone at Thank you for your investment in ScholarShare. We look forward to helping you achieve your college savings goals in the months and years ahead. Sincerely, Zeny M. Agullana Executive Director ScholarShare Investment Board

3 At-a-Glance Comparison Pre- and Post-Transition Before After Plan name ScholarShare College Savings Plan ScholarShare College Savings Plan Plan Manager Fidelity Investments TIAA-CREF Tuition Financing, Inc. ScholarShare will be among the lowest-cost 529 plans in the country. Website Plan phone number Call center hours 24/7 8:00 a.m. 7:00 p.m. Pacific Time, Monday Friday Plan mailing address Fidelity Investments College Plan Service Center PO Box Cincinnati, OH ScholarShare College Savings Plan PO Box Boston, MA Investment portfolios 15 Investment Portfolios: 2 Age-Based options 6 Static portfolios 5 Individual fund portfolios 1 Social Choice portfolio 1 Bank Deposit portfolio 19 Investment Portfolios: 2 Age-Based options 12 Static portfolios 3 Individual fund portfolios 1 Social Choice portfolio 1 Principal Plus Interest portfolio Account number No change No change Minimum contributions $50 initial, $25 subsequent $25 initial per portfolio No minimum for subsequent contributions. Plan fees 0.25% 1.06% (depending on portfolio selected) 0.18% 0.62% (current estimate, depending on portfolio selected) Make contribution checks payable to Fidelity Investments ScholarShare College Savings Plan California s 529 Plan 1

4 Important Dates to Remember October 31, 1:00 P.M. Pacific Time November 7, 8:00 A.M. Pacific Time. No online, wire or paper transactions will be processed, including withdrawals, contributions or account change requests. Note that all Fidelity online Bill Pay transactions must be entered by October 28 to receive the final withdrawal date of October 31. Depending on the nature of any pending requests, you may be required to complete a new ScholarShare plan form before your transaction may be processed. November 4, 1:00 P.M. Pacific Time November 7, 8:00 A.M. Pacific Time Online account access will not be available until the transition is complete on November 7, at 8:00 A.M. Pacific Time. November 7, 8:00 A.M. Pacific Time Transition to the new plan manager is complete. Account information and transaction capability will be available at 8:00 A.M. Pacific Time. Frequently Asked Questions This section will help you understand how to conduct business following the transition. Why did the ScholarShare Investment Board decide to change plan managers? As the November 2011 expiration of the contract with current plan manager, Fidelity Investments approached, the ScholarShare Investment Board issued a competitive request for proposals (RFP). Following the RFP process, TIAA-CREF Tuition Financing, Inc. was selected as the new plan manager. What are the differences between the old and new plan? The main differences between the pre- and post-transition plan is that total plan fees will be lower, the investment portfolios will increase from 15 to 19 and there will be an enhanced plan website with new tools, including mobile account access for your smartphone. For more specific details about plan differences, refer to the comparison table on page 1. What will the new fees be? After transition, total plan fees will range from 0.18% 0.62% (currently estimated), depending upon the portfolio, making ScholarShare among the lowest-cost college savings plans in the country. Your Welcome Kit, to be mailed immediately after the transition, will include a new Disclosure Booklet with complete details about the plan, including plan fees. Will the transition result in any costs to me? No, there will be no costs to participants as a result of the transition. What do I need to do in preparation for the transition? We want the transition to be as seamless as possible for participants, so most activity will occur automatically. However, if you currently take advantage of automatic withdrawals, direct deposit by paycheck (excluding employees of the CA Senate & Assembly, State of California Employees, University of California Laboratories, and University of California) or if you are making contributions to your account using online banking, follow the instructions in the next section titled, Account and Transaction Information. We also encourage you to discard any current plan forms, investment slips and preaddressed envelopes prior to the transition. 2 ScholarShare

5 Account and Transaction Information Will my account number change? No, your ScholarShare account number will remain the same. Can I continue to conduct transactions in my account up to and during the transition? There will be a short period prior to the transition during which no account transactions will be processed. October 31, 1:00 P.M., Pacific Time until November 7, 8:00 A.M. Pacific Time. No online, wire or paper transactions will be processed, including withdrawals, contributions or account change requests. Note that all Fidelity online Bill Pay transactions must be entered by October 28 to receive the final withdrawal date of October 31. Depending on the nature of any pending requests, you may be required to complete a new ScholarShare plan form before your transaction is processed. Your account will be accessible starting Monday, November 7 at 8:00 A.M. Pacific Time. How can I access my account after the transition? Beginning November 7, you can access your ScholarShare account(s) either online or by automated phone access. Follow the instructions below to re-establish account access. Online account access. You will need to set up new log in credentials. The first time you attempt to log into your account online, you will be prompted to create a new user ID and password. Be sure to have your ScholarShare account number and Social Security number (or Taxpayer Identification number (TIN)) readily available. If you have a trust account, you will need to download and complete the Trustee Authorization for Online Account Access Form and send it to the new plan address (ScholarShare College Savings Plan, PO Box 55205, Boston, MA ) in order to access a trust account online. This form will be available at ScholarShare.com on November 7. Automated telephone access. To access your account and conduct certain transactions by automated phone access, you need to establish a new personal identification number (PIN). To establish a PIN, follow the prompts and have your ScholarShare account number and Social Security number (or TIN) readily available. Daily portfolio values are also available, but do not require a PIN. Helpful Definitions Automatic Contribution Plan: This refers to a recurring deduction from your bank to your ScholarShare account that you set up via Fidelity. Online Banking: Online banking refers to contributions you push from your bank account to ScholarShare using your bank s online banking capability. Contributions by Payroll Deduction: This refers to recurring contributions from your paycheck into your ScholarShare account for the following state agency employees: CA Senate & Assembly, State of California Employees, University of California Laboratories, and University of California. Direct Deposit by Paycheck: This refers to recurring contributions from your paycheck into your ScholarShare account (excluding employees of the CA Senate & Assembly, State of California Employees, University of California Laboratories, and University of California). Bill Pay: Bill Pay refers to any withdrawals you are directing out of your ScholarShare account using Fidelity s online Bill Pay service. California s 529 Plan 3

6 New ScholarShare Features starting on November 7! Lower fees More investment portfolios Website enhancements Mobile apps for your smartphone How will my contributions to the plan be affected by the transition? Contributions by check: Any checks made out to ScholarShare College Savings Plan that are mailed to Fidelity shortly before or after the transition will be forwarded to the new plan manager for processing during a brief grace period. To ensure your contribution checks are promptly invested and allocated after the transition on November 7, make any checks payable to ScholarShare College Savings Plan and mail them to the new plan address: ScholarShare College Savings Plan, PO Box 55205, Boston, MA Include a contribution slip from a post-transition statement for each portfolio. Note that any contribution checks made out to Fidelity Investments will be returned. Automatic contribution plan: No action will be needed if you are currently enrolled in an automatic contribution plan through Fidelity, as existing automatic contribution activity will continue after the transition and future contributions will be directed to your new ScholarShare investment portfolio(s) according to the investment map on pages 8 and 9. Note that a separate automatic contribution plan deduction will appear in your bank account for each portfolio. Any automatic contributions from your bank scheduled after October 31 will be processed after the transition. To sign up for or make changes to an automatic contribution plan after the transition, enter your bank information on the Plan s secure website or complete and submit the new ScholarShare Electronic Banking Information Form, available for download at ScholarShare.com on November 7. Online banking: If you have automatic or manual contributions set up through your bank (online banking), you will need to change the mailing address that your bank uses to send checks to ScholarShare (new address: ScholarShare College Savings Plan, PO Box 55205, Boston, MA ). You will need to create a separate transaction for each portfolio you wish to invest in. To do this, enter the unique 4-digit portfolio number in front of your 9-digit account number for each contribution you send to ScholarShare using online banking. Refer to the investment map on pages 8 and 9 to view the new portfolio numbers. Direct deposit by paycheck Non-State employees: Employees participating in direct deposit by paycheck who are not State of California employees will need to complete and submit a new Direct Deposit Allocation Form. The new Direct Deposit Allocation Form will be mailed to you under separate cover in October. The new form will also be available to download from ScholarShare.com on November 7. Be sure to complete this form and provide a copy to your payroll coordinator to ensure your contributions will be directed to the new plan address. Any direct deposits by paycheck that are submitted after October 31 without the new plan instructions will be returned. Contributions by payroll deduction State of California employees. Existing payroll deduction plans for the following State of California employees will continue after the transition: CA Senate & Assembly, State of California Employees, University of California Laboratories, and University of California. No further action will be required by you. 4 ScholarShare

7 How can I add money to my account after the transition? You may add money to your account by check or online. Contributions by check must be made payable to ScholarShare College Savings Plan. Be sure to include an investment slip from one of your post-transition statements for each investment portfolio. If your banking information is currently on file with Fidelity, this information will carry over after the transition and you will be able to transfer money from your bank into your ScholarShare account when logged into your account. To update or add bank instructions after the transition, enter your bank information while you are logged into your account online or complete the new Electronic Banking Information Form, available for download at ScholarShare.com on November 7. How can I withdraw assets from my account after the transition? You can request a withdrawal either by phone, online or by completing a Withdrawal Request Form, available for download at ScholarShare.com on November 7. Telephone redemptions will be available to anyone who has bank information on file, provided your bank information has not changed for at least 30 days prior to the request. For your protection, withdrawals requested over the phone may only be directed to your bank of record and may not be directed elsewhere. To add or change banking information, complete the new Electronic Banking Information Form, available by download at ScholarShare.com on November 7, or enter bank information while logged into your account online. Any automatic withdrawals or Bill Pay out of your ScholarShare account you have established prior to the transition will stop. However, you will be able to establish or re-establish periodic withdrawals to be paid to yourself, a beneficiary, or a school following the transition by completing and submitting a Withdrawal Request Form to the new plan address: ScholarShare College Savings Plan, PO Box 55205, Boston, MA The Withdrawal Request Form will be available for download at ScholarShare.com on November 7. To establish periodic withdrawals, complete the Systematic Withdrawal Information section on this form. In addition, you will be able to direct withdrawals to a school or your bank of record using online account access, provided banking information has been on file for at least 30 days prior to the request. Any Bill Pay transactions that are scheduled to move money out of your ScholarShare account during the blackout period (1:00 P.M. Pacific Time on October 31 until 8:00 A.M. Pacific Time on November 7) will not be processed. Therefore, all Bill Pay transactions must be entered by October 28 to receive the final withdrawal date of October 31. What will happen to my Fidelity Investments American Express 529 College Rewards card? Starting November 1, points will no longer be deposited into your ScholarShare account. Although you will still accumulate points on your card, you will need to direct them to another Fidelity account or redeem them through the worldwide points program (if available for your card). You will be receiving a mailing from Fidelity before the transition with details about how to use your rewards card after the transition. California s 529 Plan 5

8 Plan Reporting When will I receive my next statement? After the transition, you will receive a confirmation statement dated November 4 which will identify the sale of units in your ScholarShare account. You will also receive an opening statement confirming the purchase of your new units in the new investment portfolios. The dollar value of your account will be the same as your November 4 closing statement value but the investment portfolio(s), unit value(s) and number of units you own will be different after the transition. Will the transition create a taxable event? No, the transition will not have any tax consequences for ScholarShare participants. Can I receive my statements and other plan documents electronically? If you currently receive your ScholarShare account statement electronically, this will continue after the transition. If you have not elected edelivery and you would like to receive account statements and other plan documents online, sign up for edelivery when you log into your account after the transition. How do I download my new ScholarShare account information into Quicken after the transition? After the transition is completed, you will need to enter your new ScholarShare account log in credentials on your Quicken software. Will my power of attorney assignments be honored after the transition? If you have granted power of attorney to someone to act on your behalf with respect to your ScholarShare account, complete and submit a new Power of Attorney form available for download at ScholarShare.com on November 7. Can I still use my existing ScholarShare forms and documents after the transition? Discard any current plan envelopes, investment slips or forms before the transition so you do not mistakenly use them following the transition. The plan address will change and after a brief grace period, any mail sent to the old address will be returned to you. 6 ScholarShare

9 Investment Information What will happen to my current investments after the transition? The investment map on pages 8 and 9 illustrates how your current investments will be automatically transferred into the new ScholarShare investment portfolios during transition weekend. Although the goals and objectives of the new portfolios may be similar to your current investment lineup, the portfolios will not be exactly the same. Note that for assets currently allocated to any of the existing Age-Based Investment Portfolios, the age of your beneficiary will determine which age band your investments will be transferred to in the new Age-Based Investment Option. For instance, if you have money in the actively managed Portfolio 2030, and your beneficiary is four years old, your investments will transfer into the 0 4 age band in the Active Age-Based Option. Your ScholarShare Welcome Kit, to be mailed immediately after the transition, will include a Disclosure Booklet with more information about all the investment portfolios, including objectives, risks, allocations and fees. Will the Guaranteed Option be open to new investments after the transition? Yes, a guaranteed option, called the Principal Plus Interest Portfolio, will be open to new investments starting November 7. Your ScholarShare Welcome Kit will include a Disclosure Booklet with more information about the Principal Plus Interest Portfolio. Questions Who do I call if I have questions? If you have questions about the transition, contact ScholarShare by at scholarshare@treasurer.ca.gov or by phone at Beginning November 7, call the Plan s toll-free number at if you have any questions about the transition or your ScholarShare accounts. California s 529 Plan 7

10 Important Note Federal law permits a transfer of existing 529 plan account assets from one investment portfolio to another once per calendar year and when you make certain beneficiary changes. If you have not made a transfer among investment portfolios in 2011, you may do so any time before December 31, Note that performance information for the new plan investment portfolios will have an inception date of November 7, Investment Map The tables below illustrate how your current investments will be transferred to the new ScholarShare investment portfolios. Note that for assets currently allocated to any of the existing Age-Based Investment Portfolios, the age of your beneficiary will determine which age band your investments will be transferred to in the new Age-Based Investment Option. Your ScholarShare Welcome Kit will include a Disclosure Booklet with more information about all the investment portfolios, including objectives, risks, allocations and fees. Actively Managed Investment Options Current Portfolio } New Investment Portfolio Portfolio Number Portfolio 2030 Portfolio 2027 Portfolio 2024 Portfolio 2024 Portfolio 2021 } } Active Age-Based Portfolio, Ages 0 4 Active Age-Based Portfolio, Ages Portfolio 2021 Portfolio 2018 } Active Age-Based Portfolio, Ages Portfolio 2018 } Active Age-Based Portfolio, Ages Portfolio 2015 } Active Age-Based Portfolio, Ages Portfolio 2015 } Active Age-Based Portfolio, Age Portfolio 2012 } Active Age-Based Portfolio, Age Portfolio 2012 } Active Age-Based Portfolio, Age Portfolio 2012 College Portfolio } Active Age-Based Portfolio, Ages % Equity Portfolio } Active Diversified Equity Portfolio % Equity Portfolio } Active Growth Portfolio 2930 Conservative Portfolio } Active Conservative Portfolio 2932 Social Choice Portfolio } Social Choice Portfolio 2933 Money Market Portfolio } Guaranteed Option } Principal Plus Interest Portfolio 2954 New Portfolio* Active Moderate Growth Portfolio 2931 New Portfolio* Active International Equity Portfolio 2934 New Portfolio* Active Diversified Fixed Income Portfolio 2935 * None of your current investments will be mapped to these new Portfolios, but you may invest in them after the transition. 8 ScholarShare

11 Passively Managed Investment Options Current Portfolio } New Investment Portfolio Portfolio Number Index Portfolio 2030 Index Portfolio 2027 Index Portfolio 2024 Index Portfolio 2024 Index Portfolio 2021 } } Passive Age-Based Portfolio, Ages 0 4 Passive Age-Based Portfolio, Ages Index Portfolio 2021 Index Portfolio 2018 } Passive Age-Based Portfolio, Ages Index Portfolio 2018 } Passive Age-Based Portfolio, Ages Index Portfolio 2015 } Passive Age-Based Portfolio, Ages Index Portfolio 2015 } Passive Age-Based Portfolio, Age Index Portfolio 2012 } Passive Age-Based Portfolio, Age Index Portfolio 2012 } Passive Age-Based Portfolio, Age Index Portfolio 2012 Index College Portfolio } Passive Age-Based Portfolio, Ages Index 100% Equity Portfolio } Passive Diversified Equity Portfolio 2945 Index 70% Equity Portfolio } Passive Growth Portfolio 2946 Index Conservative Portfolio } Passive Conservative Portfolio 2948 Intermediate Treasury Index Portfolio } Index Bond Portfolio 2950 International Index Portfolio } Index International Equity Portfolio 2951 Spartan Index Portfolio } Index U.S. Large Cap Equity Portfolio 2952 Total Market Index Portfolio } Index U.S. Equity Portfolio 2953 Bank Deposit Portfolio } Principal Plus Interest Portfolio** 2954 New Portfolio* Passive Moderate Growth Portfolio 2947 New Portfolio* Passive Diversified Fixed Income Portfolio 2949 ** None of your current investments will be mapped to these new Portfolios, but you may invest in them after the transition. **The Principal Plus Interest Portfolio is not passively managed. California s 529 Plan 9

12 ScholarShare.com The ScholarShare College Savings Plan is administered by the ScholarShare Investment Board, an agency of the State of California. Neither the principal deposited nor the investment return is guaranteed by the State of California, ScholarShare Investment Board, or any affiliate thereof, or the federal government or any agency thereof. Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation. The information contained herein is subject to change.