RETIREMENT PLANNING SIMPLIFIED

Transcription

1 RETIREMENT PLANNING SIMPLIFIED

2 Helping you invest in your financial future is important to the University of Virginia (UVA). As a result of our research and review, we are implementing changes to improve your retirement investing experience. UVA is introducing: A streamlined, three-tier investment structure to better align choices with your investment style A consistent structure across all of the university s retirement plans A simplified investment menu within each tier that offers many competitive fund choices 2

3 Introducing the new University of Virginia Retirement and Savings Plans investment structure Three-tiered investment structure To help guide you toward the investment approach that best suits your style, we ve created a simpler, three-tiered investment menu in all of the UVA Retirement and Savings Plans, including the Optional Retirement Plan (ORP), Medical Center Retirement Plan (MCRP), 403(b) Plan and Cash Match Plan. Tier 1: Do it for me investor Using target date funds, we provide access to diversified portfolios to meet your investment goals. Investors are directed to a target date fund tailored to their expected retirement age. The investments automatically adjust as investors move through their careers. Tier 2: Help me do it investor We provide access to mostly passive funds, and you make the selections. Investors wanting to build a portfolio with a focus on diversification and indexing at a lower cost can use the funds in this tier to accomplish their goals. Investors should account for changes to their personal circumstances and adjust their portfolios as they approach retirement. Tier 3: Expanded choice investor We provide access to select actively managed funds and self-directed brokerage that provides a wide range of mutual funds. Investors who want diverse fund options and plan to actively manage their own portfolios fit in this group. This tier focuses on choice and relies on investors to determine the risk and asset allocation that will meet their goals. More information about self-directed brokerage can be found on page 10 of this brochure. To maximize flexibility, you are not limited to one tier, and you may make investments within each tier. Regardless of your investment style, each tier is built to provide you with the opportunity to create a diversified portfolio that matches your investment goals and preferences. What is not changing? Although we are simplifying the plans and their investments, the plans rules are not changing. Eligibility, vesting and employer contributions will all remain as they are today. TIAA and Fidelity will remain the investment providers of the University of Virginia Retirement and Savings Plans. These changes do not affect the Virginia Retirement System (VRS) or the Commonwealth of Virginia 457 Deferred Compensation Plan. 3

4 The new investments located within each tier were carefully selected to give you the opportunity to create a diversified retirement portfolio that matches your investment goals and preferences. What will happen to old funds not in the new streamlined lineup? Many existing fund options will be eliminated or frozen to new contributions. If you take no action, the assets in those funds will be moved into similar funds, when available, or else into a Tier 1 target date fund. However, many of the eliminated or frozen investments will be available through the self-directed brokerage in Tier 3. Action on your part will be required to access these options through the brokerage window. Details about these changes and your options will be sent to you in early November. These changes will not take effect until February 1, 2017, to give you time to make informed investment decisions. Key dates Review the calendar of events to understand and prepare for the upcoming changes. Key dates September 26 Early November Early November mid-january February 1, 2017 Event New investments will be available at TIAA and Fidelity. More detailed information regarding the new fund lineup and the fund options that will be eliminated or frozen to new contributions will be sent to you. Seminars and one-on-one counseling will be available. Additional communications will be sent in November. Transfers to the new fund lineup will occur. Retirement plan assistance You have access to personalized advice from TIAA and retirement guidance from Fidelity as part of your UVA Retirement and Savings Plans. You can schedule a one-on-one consultation to get answers to your financial questions or develop an action plan with clear steps that help address your retirement goals. Investment provider TIAA Fidelity Phone , weekdays from 8 a.m. to 8 p.m. (ET) to schedule a consultation , weekdays from 8 a.m. to 10 p.m. (ET) to schedule a consultation Web address TIAA.org/uva uva 4 Additional resources All plan information and resources are also available on the University of Virginia HR website at Do you need help with financial basics? The Hoo s Well financial wellness program has a number of resources to help you. Please visit the website at

5 Think about your investment style When investing, the first step is to choose the approach you want to take. What type of investor are you? I like it to be super easy, with a single choice. I do not have much time to engage in retirement planning. You may want to consider Tier 1. I like to make my own investment choices and favor passive, index-based types of investments. I am willing to spend some time understanding the markets and have a long-term outlook as an investor. You may want to consider choosing from the mostly passively managed investment choices available in Tier 2. I am comfortable making my own choices and want a broad array of diversified options to meet my specific needs. I spend a lot of time evaluating my retirement portfolio. You may want to consider investments available in Tier 3. Find the right mix for the right time Your age and the number of years until you retire are key factors in choosing appropriate investments. A more aggressive approach means taking more risk, but also greater potential for growth in your account. As you move closer to retirement, consider a more conservative approach to help reduce your risk. The key is to match your investments to your financial goals, risk tolerance and time horizon at regular checkpoints up to and through retirement. Consider investments that balance risk and reward Different investments have different risks and potential returns. Depending on your age, savings goals and comfort with risk, some may appeal to you more than others. Choosing a variety of stocks (equities), bonds (fixed income), real estate, money market and guaranteed options may help manage your risks and potential returns. Investment basics Savings goals: Financial experts estimate that to sustain your preretirement lifestyle, you will likely need to save enough to replace 80% of your after-tax income for each year you live in retirement. Be sure you re on track to meet your savings goals. Schedule a meeting today with a financial advisor. See page 4 for contact information. 5

6 Tier 1: Do it for me investor target date funds Target date funds are an easy, one-step investment option, offering a diversified portfolio in a single fund. The investment mix is regularly rebalanced and gradually becomes more conservative as your likely year of retirement approaches, reducing overall risk. Each target date fund is a fund of funds, primarily invested in shares of other mutual funds.* You should select a target date fund based on your anticipated retirement age. * Target date funds are invested in stocks, bonds and cash and can suffer losses in periods of declining markets. Target date funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. In addition to the fees and expenses associated with the target date funds, there is exposure to the fees and expenses associated with the underlying mutual funds. Target date funds that will be available through TIAA and Fidelity Retirement Income Vanguard Target Retirement Income Fund Vanguard Target Retirement 2010 Fund Vanguard Target Retirement 2015 Fund Vanguard Target Retirement 2020 Fund Vanguard Target Retirement 2025 Fund Vanguard Target Retirement 2030 Fund Vanguard Target Retirement 2035 Fund Vanguard Target Retirement 2040 Fund Vanguard Target Retirement 2045 Fund Vanguard Target Retirement 2050 Fund Vanguard Target Retirement 2055 Fund Vanguard Target Retirement 2060 Fund VITRX VIRTX VITVX VITWX VRIVX VTTWX VITFX VIRSX VITLX VTRLX VIVLX VILVX Please note: When the market closes (generally 4 p.m. Eastern time) on September 23, 2016, the share class of the Vanguard Target Retirement Funds offered through Fidelity will change from Investor Shares to Institutional Shares. As a result, the fund codes, ticker symbols and expense ratios will change. The new share class will offer you the same investment strategy and risk, but the overall expenses will be lower. The transfer of balances will appear as an exchange on your account history and quarterly statement. You may also receive a prospectus as a result of this transaction. 6

7 Target date funds that will be available through TIAA only Retirement Income TIAA-CREF Lifecycle Retirement Income Fund (Institutional) TLRIX Target Date TIAA-CREF Lifecycle 2010 Fund (Institutional) TCTIX Target Date TIAA-CREF Lifecycle 2015 Fund (Institutional) TCNIX Target Date TIAA-CREF Lifecycle 2020 Fund (Institutional) TCWIX Target Date TIAA-CREF Lifecycle 2025 Fund (Institutional) TCYIX Target Date TIAA-CREF Lifecycle 2030 Fund (Institutional) TCRIX Target Date TIAA-CREF Lifecycle 2035 Fund (Institutional) TCIIX Target Date TIAA-CREF Lifecycle 2040 Fund (Institutional) TCOIX Target Date TIAA-CREF Lifecycle 2045 Fund (Institutional) TTFIX Target Date TIAA-CREF Lifecycle 2050 Fund (Institutional) TFTIX Target Date TIAA-CREF Lifecycle 2055 Fund (Institutional) TTRIX Target Date TIAA-CREF Lifecycle 2060 Fund (Institutional) TLXNX Target date funds that will be available through Fidelity only Target retirement years Investment name Symbol Retired before 2003 Fidelity Freedom K Income Fund FFKAX Target Years Fidelity Freedom K 2005 Fund FFKVX Target Years Fidelity Freedom K 2010 Fund FFKCX Target Years Fidelity Freedom K 2015 Fund FKVFX Target Years Fidelity Freedom K 2020 Fund FFKDX Target Years Fidelity Freedom K 2025 Fund FKTWX Target Years Fidelity Freedom K 2030 Fund FFKEX Target Years Fidelity Freedom K 2035 Fund FKTHX Target Years Fidelity Freedom K 2040 Fund FFKFX Target Years Fidelity Freedom K 2045 Fund FFKGX Target Years Fidelity Freedom K 2050 Fund FFKHX Target Years Fidelity Freedom K 2055 Fund FDENX Target Years 2058 and beyond Fidelity Freedom K 2060 Fund FDKNX 7

8 Tier 2: Help me do it investor seeking market returns at reasonable costs To invest in these funds, you should know your tolerance for risk, understand diversification and be familiar with stocks and bonds. This tier contains mostly passively managed investments that offer broader diversification at a lower cost. Index funds, or passively managed funds, are mutual funds that attempt to match the performance of various market indices (e.g., Standard & Poor s 500 Index). They provide a broad mix of individual securities within one fund. Investments that will be available at TIAA and Fidelity listed in risk order (from least to most risk) Money Market Short-Term Bond Intermediate-Term Bond Inflation-Protected Bond Long-Term Bond Vanguard Federal Money Market Fund (Investor Shares) Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Inflation-Protected Securities Fund Vanguard Long-Term Bond Index Fund (Investor Shares) VMFXX VBITX* VBTIX* VIPIX* VBLTX High-Yield Bond Vanguard High-Yield Corporate Fund (Admiral Shares) VWEAX Large-Cap Blend Vanguard Total Stock Market Index Fund (Institutional Plus Shares) VSMPX* Mid-Cap Blend Vanguard Mid-Cap Index Fund VMCIX* Small-Cap Blend Vanguard Small-Cap Index Fund VSCIX* 8 Foreign Large-Cap Blend Diversified Emerging Markets Vanguard Developed Markets Index Fund (Institutional Shares) Vanguard Emerging Markets Stock Index Fund VTMNX* VEMIX Real Estate Vanguard REIT Index Fund VGSNX*

9 Using online tools available under the Insights & Guidance tab at TIAA.org/uva and the Fidelity Planning & Guidance Center at you can answer a few simple questions to help you understand your tolerance for risk. Investments that will be available at TIAA Money Market CREF Money Market Account (R3) Variable Annuity QCMMIX Stable Value TIAA Traditional Guaranteed Annuity Investment that will be available at Fidelity Stable Value New York Life Guaranteed Interest Account N/A * When the market closes (generally 4 p.m. Eastern time) on September 23, 2016, the share class of eight Tier 2 investment options offered through Fidelity will change. As a result, the fund codes, ticker symbols and expense ratios will change. The new share class will offer you the same investment strategy and risk, but the overall expenses will be lower. The transfer of balances will appear as an exchange on your account history and quarterly statement. You may also receive a prospectus as a result of this transaction. 9

10 Tier 3: Expanded choice investor incorporate actively managed funds or use self-directed brokerage This tier is geared toward the more active investor who is looking for broader options than those that are available in Tiers 1 and 2. Through Tier 3 investors can also use actively managed funds as part of their strategy or open a self-directed brokerage account. The actively managed investments provided in Tier 3 have significant assets and interest among the University of Virginia participants and meet the criteria according to the retirement plan s investment policy statement established by the university. These investments have portfolio managers who use financial analysis, forecasts and their own judgment and experience to make investment decisions on what securities to buy, hold and sell within each portfolio. Moreover, through TIAA Brokerage and Fidelity BrokerageLink you can invest in thousands of available mutual funds, many of which have no transaction fees. This means that you do not pay a fee when you buy or sell the investments. You ll be able to select investments to help you meet your financial goal(s) on your own or with support from your advisor. This tier may be suitable for you if you are willing to assume responsibility for selecting investments among a broad range of mutual fund choices and monitoring your portfolio. If you lack the time or expertise to manage your portfolio, these options may not be appropriate for you. We encourage you to speak with a financial consultant to find out. The plan fiduciary neither evaluates nor monitors the investments available through TIAA Brokerage and Fidelity BrokerageLink. Investments that will be available at TIAA listed in risk order (from least to most risk) Socially Responsible CREF Social Choice Account (R3) Variable Annuity QCSCIX Large-Cap Blend CREF Stock Account (R3) Variable Annuity QCSTIX Real Estate TIAA Real Estate Account Variable Annuity QREARX TIAA-CREF Self-Directed Brokerage Account To view the mutual fund families available through TIAA Brokerage, simply visit TIAA.org/brokerage. For questions on specific funds, please contact TIAA Brokerage at

11 Investments that will be available at Fidelity listed in risk order (from least to most risk) Socially Responsible Parnassus Fund PFPRX Large-Cap Growth Fidelity Contrafund Fund (Class K) FCNKX Large-Cap Growth Vanguard PRIMECAP Fund (Admiral Shares) VPMAX Mid-Cap Value Fidelity Low-Priced Stock Fund (Class K) FLPKX Foreign Large-Cap Growth Fidelity Diversified International Fund (Class K) FDIKX Fidelity Self-Directed Brokerage Window (Fidelity BrokerageLink ) The Fidelity BrokerageLink feature includes investments beyond those in your plan s lineup. It is intended for those who are comfortable managing a portfolio of expanded investment choices. Remember, the plan fiduciary neither evaluates nor monitors the investments available through BrokerageLink. It is your responsibility to ensure the investments you select are suitable for your situation, including your goals, time horizon and risk tolerance. Please refer to the fact sheet and commission schedule for applicable fees and risks. To utilize the BrokerageLink feature, you must first open a separate brokerage account within the Plan. If you have questions or would like to open an account, please log on to Fidelity NetBenefits at or call Once you have opened an account, you may access, monitor or change investments by contacting Fidelity. 11

12 What if I have further questions? TIAA participants Please visit TIAA.org/uva or call TIAA at , Monday to Friday, 8 a.m. to 10 p.m. and Saturday, 9 a.m. to 6 p.m. (ET). For specific questions about the Brokerage option, please contact TIAA Brokerage at Fidelity participants Please visit or call Fidelity at , Monday through Friday (excluding holidays), 8 a.m. to midnight (ET). For specific questions about the Brokerage option, please contact Fidelity at Additional questions? Call the UVA HR Service Team at or askhr@virginia.edu. Help is available Monday to Friday, 8 a.m. to 5 p.m. (ET). Before investing in any fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. The TIAA family of companies and Fidelity Investments are independent entities and are not legally affiliated. Brokerage Services are provided by TIAA Brokerage Services, a division of TIAA-CREF Individual & Institutional Services, LLC. Member FINRA/SIPC. 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 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. Call or access TIAA.org/uva 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 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY _ (09/16)