A guide for the road to retirement. Announcing updates to the Eastern Michigan University Retirement Plan

Transcription

1 A guide for the road to retirement Announcing updates to the Eastern Michigan University Retirement Plan 1

2 Overview of topics we ll be covering today Why changes are being made What stays the same Plan enhancements/updates New investments What s happening to existing balances and future contributions Key dates Next steps you can take 2

3 Why changes are being made Eastern Michigan University believes these changes will benefit employees by providing: An improved participant experience Professional investment oversight Greater efficiencies leading to effective cost management The ability to meet regulatory requirements 3

4 What s staying the same Most aspects of your plan remain unchanged Eligibility requirements for participation Contribution schedule Vesting schedule Personalized retirement advice on the plan s investment options 4

5 Plan enhancements/updates New investment options, including from some well-known investment companies New accounts and Retirement Choice and Retirement Choice Plus contracts Roth option TIAA Brokerage Increased transparency on fees 5

6 Understanding and using your investment plan menu

7 More Aggressive More Conservative New investment options GUARANTEED* MONEY MARKET The Eastern Michigan University lineup includes a broad range of options so you can choose which ones suit your needs. FIXED INCOME REAL ESTATE EQUITIES For your specific investment options, go to: TIAA.org/emich. * Options offered in the Guaranteed asset class are subject to the claims-paying ability of the issuing company. Investing involves risk of loss of principal. Diversification is a technique to help reduce risk. It is not guaranteed to protect against loss. 7

8 How to use your investment menu Option 1 Option 2 Select a diversified, professionally managed portfolio Choose a target-date fund if you want a simple yet diversified approach to investing* Build your own portfolio Create an investment strategy, based upon your goals, with assistance from TIAA * Diversification is a technique to help reduce risk. It is not guaranteed to protect against loss. 8

9 Option 1: Select a target-date fund A target-date fund Each fund is invested in a broad range of investments, such as stocks, real estate and bonds. As the target date approaches, the mix of assets is adjusted to become more conservative. The target date approximates when investors may plan (but are not required) to start making withdrawals. Example: 2030 Fund g Fixed Income Funds g Equities and Real Estate Securities Funds A target-date fund is a fund of funds, primarily invested in shares of other mutual funds.* The fund s investments are adjusted from more aggressive to more conservative over time as the target retirement date approaches. The principal value of a target-date fund isn t guaranteed at any time and will fluctuate with market changes. The target date represents an approximate date when investors may plan to begin withdrawing from the fund. However, you are not required to withdraw the funds at that target date. Also, please note that the target-date fund is selected for you based on your projected retirement date (assuming a retirement age of 65). The charts are only visual representations of the target date, fixed income and equity percentages. Please refer to the prospectus for the funds for more details on asset allocation for each of the target-date funds. 9

10 More Aggressive More Conservative Option 1: Select a target-date fund Investment option/share class Ticker symbol Date range Vanguard Target Retirement Income Fund Investor VTINX Before 1948 Vanguard Target Retirement 2015 Fund Investor VTXVX Vanguard Target Retirement 2020 Fund Investor VTWNX Vanguard Target Retirement 2025 Fund Investor VTTVX Vanguard Target Retirement 2030 Fund Investor VTHRX Vanguard Target Retirement 2035 Fund Investor VTTHX Vanguard Target Retirement 2040 Fund Investor VFORX Vanguard Target Retirement 2045 Fund Investor VTIVX Vanguard Target Retirement 2050 Fund Investor VFIFX Vanguard Target Retirement 2055 Fund Investor VFFVX Vanguard Target Retirement 2060 Fund Investor VTTSX Vanguard Target Retirement 2065 Fund Investor VLXVX 1998-Present Also the default fund for your plan: If you don t choose any investment options, your contributions will be invested in the target-date fund closest to the year you turn 65. Investing involves risk of loss of principal. Diversification is a technique to help reduce risk. It is not guaranteed to protect against loss. 10

11 Option 2: Build your own portfolio You can: Choose from among the plan s investment options to create a portfolio. Go to TIAA.org/tools. Select the Asset Allocation Evaluator located under the Saving & Investing tab. Work with a TIAA financial consultant. Keep in mind that there are risks associated with investing in securities including possible loss of principal. 11

12 What s happening to future contributions and existing balances?

13 Your transition experience All actively contributing employees or those with an existing mutual fund balance will be enrolled in new Retirement Choice and Retirement Choice Plus contracts. The new contracts will be issued on or about September 10, Your current beneficiary designation(s) will be applied to your new accounts. You may change the way contributions are directed before and after new lineup takes effect. Future contributions will be directed according to the transfer chart in the Transition Guide as instructed by Eastern Michigan University. Plan Name Current contract New contract 403(b) Defined Contribution Retirement Plan 403(b) Group Supplemental Retirement Annuity Plan 457(b) Deferred Compensation Plan Group Retirement Annuity (GRA) Group Retirement Annuity (GRA) Group Supplemental Retirement Annuity (GSRA) Retirement Annuity (RA) Supplemental Retirement Annuity (SRA) Group Supplemental Retirement Annuity (GSRA) Retirement Choice (RC) Retirement Choice Plus (RCP) Retirement Choice Plus (RCP) 13

14 What s happening to my mutual fund balances and future contributions? Existing mutual fund balances and future contributions will transfer automatically to similar funds in the new account. The Vanguard Target Date fund will be used if a similar fund is not available. Mutual fund balances will transfer to the new accounts during the week of September 17, Contributions to the new accounts start on September 27 or 28, 2018 (depending on your payroll date). See the transfer charts in the Transition Guide that was mailed to your home for a complete list. 14

15 What s happening to my existing annuity balances? Existing contracts are no longer open to future contributions after September 14, Balances in the annuities listed below will remain where they are, but they will not allow new contributions, transfers in, or rollovers. You may continue to transfer balances only among TIAA Traditional, CREF Stock, and CREF Money Market. You also have the option of transferring your annuity balances to the new contracts. We encourage you to talk to a financial consultant before transferring these assets to ensure you understand your options. Moving money to the new contracts is a permanent decision as it cannot be moved back to the old contracts. Current investment option/current accounts Ticker symbol Possible Action CREF Bond Market Account - R2 (variable annuity) QCBMPX CREF Inflation-Linked Bond Account - R2 (variable annuity) QCILPX CREF Equity Index Account - R2 (variable annuity) CREF Global Equities Account - R2 (variable annuity) CREF Growth Account - R2 (variable annuity) CREF Money Market Account - R2 (variable annuity) CREF Social Choice Account - R2 (variable annuity) QCEQPX QCGLPX QCGRPX QCMMPX QCSCPX Available for transfer to new accounts. No action is required; you may leave your existing assets in these investment options. CREF Stock Account - R2 (variable annuity) QCSTPX TIAA Real Estate Account (variable annuity) QREARX TIAA Traditional Annuity (guaranteed annuity) N/A 15

16 Important changes to TIAA Traditional Annuity In the new Retirement Choice and Retirement Choice Plus contracts, the TIAA Traditional guaranteed rate is between 1% and 3% (determined annually) 1 This adjustable rate in the new contracts allows TIAA to be more responsive to the prevailing interest rate environment, and may potentially pay you additional amounts 2 You can transfer your TIAA Traditional balances to the new contracts, but the new guaranteed rate may be lower than the rate in the current contract Moving money from your current contract to the new contract is permanent money cannot be moved back TIAA Traditional balances in the RC contract can be liquidated within a shorter timeframe than the existing RA and GRA contracts. 1. Guarantees are subject to Teachers Insurance and Annuity Association of America's claims-paying ability. 2. TIAA s Board of Trustees declares whether additional amounts will be paid in March of each year. Such additional amounts, when declared, remain in effect for the declaration year which begins each March 1 for accumulating annuities and January 1 for payout annuities. Additional amounts are not guaranteed for periods other than the period for which they were declared. 16

17 Other retirement plan updates

18 Roth option for the 457(b) Deferred Compensation Plan Current contributions: Contributions with the Roth option: Made with pretax dollars, which may lower your current taxable income Made on an after-tax basis, with no impact (or does not affect) on your current taxable income Taxable when you withdraw them* Withdrawals are tax free in retirement** 2018 IRS maximum of pre- and post-tax contribution amounts: $18,500 Includes an additional catch-up provision of $6,000 for individuals 50 years of age or older The choice is yours: the current plan, the Roth option or both. * Withdrawals made prior to age 59½ may be subject to an additional 10% penalty, in addition to ordinary income tax. ** Withdrawals of earnings prior to age 59½ are subject to ordinary income tax and a 10% penalty may apply. Earnings can be distributed tax free if distribution is no earlier than five years after contributions were first made and you meet at least one of the following conditions: age 59½ or older or permanently disabled. Beneficiaries may receive a distribution in the event of your death. For governmental 457(b) plans, withdrawals are only allowed following separation from service or when you reach age 70½. 18

19 TIAA Brokerage Features: You can choose your own investments Access thousands of mutual funds Buy, sell or transfer funds online or by phone Minimum $1,000 investment Brokerage service fees for transactions may apply Reminder: Eastern Michigan University will not monitor performance of brokerage services investment options TIAA does not offer investment advice for brokerage investment options Some securities may not be suitable for all investors. By opening a brokerage account, you will be charged a commission on all transactions and other account-related fees in accordance with the TIAA Commission and Fee Schedule. Visit TIAA.org/SDA_CAA and click on Learn about fees for a complete list of commissions and fees. Other fees and expenses apply to a continued investment in the funds and are described in the fund s current prospectus. The Brokerage Account option is available to participants who maintain both a legitimate U.S. residential address and a legitimate U.S. mailing address. 19

20 Changes to the fee structure Annual Fee effective October 1, 2018 Pays for How it will be assessed What you will see on your quarterly statement up to 0.085% ($0.85 per $1,000 invested) recordkeeping, legal, accounting, investment advisory, and other plan and participant services (only deducted from RC and RCP contracts) a fee or credit is assessed to each investment you choose within the plan deducted proportionally from each of your investments quarterly Each fee or credit will be applied to your account on the last business day of each quarter TIAA Plan Servicing Fee/Credit 0.012% ($0.12 per $1,000 invested) EMU s independent advisor and other non-tiaa retirement plan expenses Divided into quarterly payments deducted proportionally from each investment in your account on the last business day of each quarter Non-TIAA Plan Servicing Fee 20

21 Investment fee & credits Investment-specific services Each of the plan s investment options has a fee for investment management and associated services. Plan participants generally pay for these costs through what is called an expense ratio (displayed as a percentage of assets). Example: If the expense ratio for an investment option is 0.50%, a plan participant pays $5 annually for every $1,000 in assets. Investment s revenue sharing amount is > 0.085% = Credit < 0.085% = Fee Revenue sharing is when investment providers share in the cost of plan administration. An investment company may pay a portion of an investment option s expense ratio to TIAA, the recordkeeper, to help offset the cost of plan administration. The amount of any associated fee or credit is determined by comparing the Total Administration Cost to the Revenue Sharing amount. Refer to the Transition Guide that was mailed to your home for a full list of the investments and associated fees on your menu. You can find the expense ratios and other fees and expenses at TIAA.org/emich or in the prospectuses at TIAA.org/performance. 21

22 Next steps you can take and how to learn more

23 Next steps you can take Review the Transition Guide transfer chart Enroll, update beneficiaries and more at TIAA.org/emich Manage the day-to-day at TIAA.org Use the advice tools at TIAA.org/tools Get personalized retirement plan advice at no additional cost from a TIAA financial consultant 23

24 Learn more See the Transition Guide for more details. Mailed to you and available online at TIAA.org/emich. 24

25 Learn more FPO Learn more about your retirement plans at TIAA.org/emich. 25

26 Next steps you can take Log in to your account and review Actions 1. Review investment options 2. Manage your portfolio 3. Update beneficiary information 4. Change your contributions 26

27 Next steps you can take Get personalized retirement plan advice from a TIAA financial consultant This service is currently available, at no additional cost to you Sessions available in person or by phone Based on your time horizon, investment goals and risk tolerance This transition may be a good time to take a fresh look at your account. TIAA.org/schedulenow Call TIAA at Weekdays, 8 a.m. to 8 p.m. (ET) 27

28 Next steps you can take You can also get advice through our online tool, Retirement Advisor. To access it, log in at TIAA.org/retirementadvisor. IMPORTANT: The projections or other information generated by the retirement advisor tool regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time. 28

29 The TIAA app With the TIAA app, you can: See account details at a glance Monitor your contributions and asset allocations Contact your advisor or get in touch with a TIAA financial consultant anytime, anywhere Manage your account anytime, wherever you are Apple, the Apple logo, iphone, and ipad are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android and Google Play are trademarks of Google Inc. 29

30 Key dates

31 Key dates Date September 10, 2018 September 13 or 14, 2018 Week of September 17, 2018 September 27 or 28, 2018 Event Any contributing participant or participant who holds mutual fund balances will be enrolled in new TIAA account(s) and TIAA will send you a confirmation with important information. Last contribution to your current retirement account(s) (based on your payroll date). Mutual fund balances will be transferred to the new account(s). All contributions will be directed to your new account(s) (based on your payroll date). 31

32 Questions?

33 This material is for informational or educational purposes only and does not constitute investment advice under ERISA. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor s own objectives and circumstances. Investment products may be subject to market and other risk factors. See the applicable product literature or visit TIAA.org/emich. Distributions from 403(b) plans before age 59½, severance from employment, death, or disability may be prohibited, limited, and/or subject to substantial tax penalties. Different restrictions may apply to other types of plans. Investment, insurance, and annuity products are not FDIC insured, are not bank guaranteed, are not bank deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value. You should consider the investment objectives, risks, charges, and expenses carefully before investing. Go to TIAA.org/emich for current product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing. TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations. TIAA Brokerage, a division of TIAA-CREF Individual & Institutional Services, LLC, Member FINRA/SIPC, distributes securities. Brokerage accounts are carried by Pershing, LLC, a subsidiary of the The Bank of New York Mellon Corporation, Member FINRA, NYSE, SIPC Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY MT