Williams College Retirement Income Plan Transition Guide

Transcription

1 Williams College Retirement Income Plan Transition Guide Fall 2012

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3 Table of Contents 4 Introducing ENHANCEMENTS TO the WILLIAMS COLLEGE RETIREMENT INCOME PLAN 5 BUILDING YOUR RETIREMENT PORTFOLIO 6 Enhanced Investment Menu 8 TRANSITIONING TO THE ENHANCED INVESTMENT MENU 9 RETIREMENT PLAN ADVICE 10 Q&A 11 Glossary of investment terms

4 Williams College Retirement Income Plan Introducing Enhancements to the Williams College Retirement Income Plan Williams College is pleased to introduce enhancements that will improve the quality of the plan s investment menu, make it easier for you to build the retirement portfolio you want and need, reduce investment management fees and other costs, and allow the University to more effectively comply with new plan regulations and fiduciary responsibilities. Contribution rates, eligibility requirements, and other aspects of the plan design will remain the same. TIAA-CREF s Consultants can help you pursue your retirement investment goals. Call , Monday through Friday, 8 a.m. to 10 p.m., and Saturday, 9 a.m. to 6 p.m. (ET). Enhanced investment menu. Williams College periodically reviews the investment menu to ensure each option is meeting performance expectations relative to its established benchmarks. The plan s new menu of investment options offers a wide array of lower-cost funds to diversify your portfolio. On-site events. Williams College has scheduled a series of Transition Seminars to help you understand the important changes taking place, the actions you can choose to take and key dates to remember. You re also welcome to attend Retirement 101, a seminar on the basics and advantages of the Williams College Retirement Income Plan. You can reserve a seat by registering at One-on-one counseling. All employees will have access to objective investment advice from TIAA-CREF on their retirement plan assets.* During a one-on-one advice session, a TIAA-CREF Consultant will help you determine whether you are saving enough for retirement and help you create a portfolio tailored to your financial situation and goals. Telephone and online assistance. TIAA-CREF Consultants are available by phone to help you with any questions you may have. You can use the customized website, anytime for tools and resources to help you better plan for your financial future. * Using an advice methodology from Ibbotson Associates, Inc. 4 WILLIAMS COLLEGE

5 Williams TWO WAYS College TO INVEST Retirement FOR RETIREMENT Income Plan Building Your Retirement Portfolio What type of investor are you? OPTION 1: One-Step Investing Choose Option 1 if you prefer a hands-off approach to investing. You select a Target Retirement Fund offering a complete retirement portfolio in a single fund. Target Retirement Funds available through the enhanced investment menu offer a convenient way to have your retirement savings professionally managed, broadly diversified, and automatically rebalanced. With Target Retirement Funds, you only need to select the fund closest to the year of your expected retirement and the fund s professional management will do the rest. If you expect to retire in about 20 years, for example, you would choose the 2030 fund. Each Target Retirement Fund seeks a high total return over time through a combination of capital appreciation and income. Each Target Retirement Fund consists of underlying mutual funds investing in a broad range of stocks and bonds. The initial proportions and risk levels depend on the number of years remaining until you expect to retire. Over time, the fund automatically readjusts the mix of stocks, bonds, and other asset types to reduce the level of risk as you move through your career and into retirement. As with all mutual funds, the principal value of a Target Retirement Fund isn t guaranteed and will fluctuate with market changes. Also, the target date represents an approximate date when investors may plan to begin making withdrawals from the fund. After the target date has been reached, some of these funds may be merged into a fund with a more stable asset allocation.* A TIAA-CREF Consultant can help you decide whether one-step investing is right for you. Option 2: active investing Choose Option 2 if you are comfortable choosing investments and managing your portfolio. You can create your portfolio by choosing options from the enhanced investment menu, offering a wide range of annuity accounts and mutual funds from some of the leading providers. These investment choices cover the major asset classes stocks, bonds, real estate, guaranteed, and money market providing building blocks for a diversified retirement savings portfolio. * Target Retirement 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 Retirement Funds, there is exposure to the fees and expenses associated with the underlying mutual funds as well. WILLIAMS COLLEGE 5

6 Williams College Retirement Income Plan Enhanced Investment Menu Effective December 3, 2012 Carefully selected annuity accounts and mutual funds will include: Guaranteed Account: The TIAA Traditional Annuity is a guaranteed annuity backed by TIAA s claims-paying ability that guarantees principal and a minimum interest rate, plus the opportunity for additional amounts in excess of the guaranteed rate. These additional amounts, when declared by the TIAA Board of Trustees, remain in effect for the declaration year, which begins each March 1. Additional amounts are not guaranteed for future years. 1 Lifecycle Funds: These pre-mixed, multi-asset class funds allow you to make one selection to have a diversified, multi-asset class portfolio. These funds are low-cost Vanguard index funds. Single Investment Options: These are index funds managed by Vanguard that have low costs and span the risk/return spectrum. See details on the new investment options online at Click on Plans & Investments and then select Investment Choices to view information on the individual account or fund. Guaranteed Money Market Fixed Income Multi-Asset Real Estate Equities Lower Risk TIAA Traditional Annuity (guaranteed annuity) 2 Higher Risk CREF Stock Account (variable annuity) CREF Money Market Account (variable annuity) Vanguard Total Bond Market Index Signal (VBTSX) Vanguard Inflation- Protected Securities Fund Admiral (VAIPX) CREF Social Choice Account (variable annuity) 2010 Fund Investor (VTENX) 2015 Fund Investor (VTXVX) TIAA Real Estate Account (variable annuity) Vanguard 500 Index Signal (VIFSX) Vanguard Extended Market Index Fund Signal (VEMSX) 2020 Fund Investor (VTWNX) 2025 Fund Investor (VTTVX) 2030 Fund Investor (VTHRX) Vanguard Emerging Markets Stock Index Fund Signal (VERSX) TIAA-CREF International Equity Index Fund (TCIEX) 2035 Fund Investor (VTTHX) 2040 Fund Investor (VFORX) 2045 Fund Investor (VTIVX) 2050 Fund Investor (VFIFX) 2055 Fund Investor (VFFVX) 2060 Fund Investor (VTTSX) Income Fund Investor (VTINX) 1 Guarantees are subject to TIAA s claims-paying ability. 2 The TIAA Traditional Annuity is a guaranteed insurance contract and not an investment for Federal Securities Law purposes. Any guarantees under annuities issued by TIAA are subject to TIAA s claims-paying ability. Please note that there are risks associated with investing in securities, including loss of principal. 6 WILLIAMS COLLEGE

7 Williams College Retirement Income Plan Mapping future contributions and existing assets to replacement funds On or about December 3, 2012, your future contributions to the following annuity accounts will be directed to the replacement funds shown on the right in the chart below. Your existing assets/account balances will remain where they are (in the restricted funds) unless you choose to transfer them to the new investment menu. However, no new contributions or transfers will be directed into the restricted funds. Check your most recent TIAA-CREF quarterly account statement to determine whether any of your current investments are being restricted. Current Funds TICKER SYMBOL ESTIMATED Expense Ratio Replacement Fund for Asset Transfers TICKER SYMBOL NeW Expense Ratio CREF Equity Index Account (variable annuity) 0.43% Vanguard 500 Index Fund Signal VIFSX 0.06% CREF Global Equities Account (variable annuity) 0.52% Vanguard Age-Appropriate Target Retirement Fund CREF Growth Account (variable annuity) 0.47% Vanguard 500 Index Fund Signal VIFSX 0.06% CREF Bond Market Account (variable annuity) 0.45% Vanguard Total Bond Market Index Fund Signal VBTSX 0.11% CREF Inflation-Linked Bond Account (variable annuity) 0.45% Vanguard Inflation-Protected Securities Fund Admiral VAIPX 0.11% On or about December 3, 2012, the funds shown on the left in the chart below will close and your future contributions and existing assets/account balances from these closing funds will be directed and transferred to the corresponding replacement fund (shown on the right in the chart below) unless you choose to direct or transfer them to the new investment options. Check your Quarterly Investment Statement to determine whether any of your current investments are being closed. Current Funds TIAA-CREF International Equity TIAA-CREF Large-Cap Value TIAA-CREF Mid-Cap Growth TIAA-CREF Mid-Cap Value TIAA-CREF Small-Cap Equity TIAA-CREF Lifecycle 2010 TIAA-CREF Lifecycle 2015 TIAA-CREF Lifecycle 2020 TIAA-CREF Lifecycle 2025 TIAA-CREF Lifecycle 2030 TIAA-CREF Lifecycle 2035 TIAA-CREF Lifecycle 2040 TIAA-CREF Lifecycle 2045 TIAA-CREF Lifecycle 2050 TIAA-CREF Lifecycle Retirement Income TICKER SYMBOL current Expense Ratio TIIEX 0.53% Replacement Fund for Asset Transfers TIAA-CREF International Equity Index Fund Institutional TICKER SYMBOL NeW Expense Ratio TCIEX 0.09% TRLIX 0.47% Vanguard 500 Index Fund Signal VIFSX 0.06% TRPWX 0.49% Vanguard Extended Market Index Fund Signal VEMSX 0.14% TIMVX 0.46% Vanguard Extended Market Index Fund Signal VEMSX 0.14% TISEX 0.53% Vanguard Extended Market Index Fund Signal VEMSX 0.14% TCTIX 0.39% 2010 Fund Investor VTENX 0.17% TCNIX 0.41% 2015 Fund Investor VTXVX 0.17% TCWIX 0.42% 2020 Fund Investor VTWNX 0.17% TCYIX 0.43% 2025 Fund Investor VTTVX 0.18% TCRIX 0.44% 2030 Fund Investor VTHRX 0.18% TCIIX 0.45% 2035 Fund Investor VTTHX 0.19% TCOIX 0.45% 2040 Fund Investor VFORX 0.19% TTFIX 0.46% 2045 Fund Investor VTIVX 0.19% TFTIX 0.46% 2050 Fund Investor VFIFX 0.19% TLRIX 0.38% Income Investor VTINX 0.17% Annuity account options are available through annuity contracts and certificates are issued by TIAA or CREF. These contracts are designed for retirement or other long-term goals, and offer a variety of income options, including lifetime income. Payments from the variable annuity accounts are not guaranteed and will rise or fall based on investment performance. WILLIAMS COLLEGE 7

8 Williams College Retirement Income Plan Transitioning to the Enhanced Investment Menu As we transition to the enhanced investment menu, several investment options on the existing menu will be replaced by new funds in the same investment categories. Beginning November 1, 2012, you can update your beneficiary designation and direct both your existing assets and future contributions to other options on the enhanced investment menu. You will receive assistance updating your retirement portfolio when you schedule an individual counseling session, attend a seminar, or call TIAA-CREF at , Monday through Friday, 8 a.m. to 8 p.m. (ET). Beginning December 3, 2012, your future contributions will be redirected to the enhanced investment menu as described on pages 6 and 7. Recommended Steps to take during the transition 1. Review the enhanced investment menu, along with any replacements for your current investments (if applicable). Join Us! Retirement 101 Seminar Transition Seminar Space is limited. Reserve your seat early! Register for both seminars at Williams. 2. Plan on attending a Transition Seminar to get details about the important changes taking place, the actions you can choose to take and key dates to remember. Also, consider attending Retirement 101, a seminar on the basics and advantages of the Williams College Retirement Income Plan. See the schedule of on-site events from the September mailing or visit 3. Schedule a one-on-one counseling session with a TIAA-CREF Consultant. Bring your most recent Quarterly Investment Statement(s) to your session. 4. When you have made your investment decisions, update your portfolio online or by phone. You will need the following information: Your TIAA-CREF Contract Number(s) or current login information Investment choices and allocation percentages based on the enhanced investment menu for your existing assets/balances and future contributions Your beneficiary s Social Security number (if available), birth date and address; if your beneficiary is a trust, include trust name, date the trust was established and type of trust 8 WILLIAMS COLLEGE

9 Retirement Plan Advice As a participant in the retirement plan, you can receive personalized, objective asset allocation advice from TIAA-CREF.* A TIAA-CREF Consultant can help you select the mix of accounts and funds appropriate for your retirement savings goals and risk tolerance. TIAA-CREF s objective advice is designed to help you answer three questions: 1. Am I on track to reach my retirement goals? 2. What asset allocation mix and investment strategy is best for me? 3. How can I meet my income needs in retirement? To schedule your one-on-one counseling session: Call TIAA-CREF at , Monday through Friday, 8 a.m. to 8 p.m. (ET). Introducing online personalized advice! TIAA-CREF s new online advice tool, called Retirement Advisor, can help you determine if your retirement savings are on track. To use Retirement Advisor, simply visit and log into your accounts with your User ID and password. Update your portfolio Online To update your portfolio online, go to Follow the instructions to access and update your account. Be sure to base your investment choices and allocations on the enhanced investment menu. Phone If you prefer, you can update your retirement portfolio by calling TIAA-CREF at , Monday through Friday, 8 a.m. to 10 p.m. or Saturday, 9 a.m. to 6 p.m. (ET). * Provided by TIAA-CREF, using an advice methodology from Ibbotson Associates, Inc. WILLIAMS COLLEGE 9

10 Q&A 1. Why did Williams College decide to make changes to the retirement plan investment menu? The College s Retirement Plan Governance Committee, assisted by an independent advisory firm, Fiduciary Investment Advisors, has conducted a thoughtful and thorough review of the Plan. The review was done in consultation with the Faculty Compensation Committee, the Benefits Committee, and Senior Staff, and included a briefing with the Board of Trustees Budget and Financial Planning Committee. As a result, the College has identified ways to reduce administrative and investment management costs and to offer more competitive investment choices and the services to assist you in pursuing your savings goals including the introduction of low-cost Vanguard and TIAA-CREF Index Funds. 2. Where can I review the new investment menu online? Go to the dedicated retirement plan website at If you do not update your account on or about December 3, 2012, your future contributions will be redirected to the new investment menu as described on pages 6 and 7. Your assets will remain in the restricted accounts or funds unless you choose to transfer them. You can receive assistance updating your retirement portfolio when you schedule an individual counseling session or call TIAA-CREF. See the mapping strategy for details. 3. I am currently contributing to the plan. What happens to my existing assets and future contributions? Certain annuity accounts will be restricted during the transition and others will be closed. Your future contributions to restricted and closed investment options will be redirected to replacement funds on the enhanced investment menu (see the charts on page 6 and 7). During the election window, or anytime after the transition is completed, you can direct both your existing TIAA-CREF assets and future contributions to other options on the enhanced investment menu. 4. Can I keep my current investment selections? Please check whether your current investment selections are included on the enhanced menu. All future contributions will be directed to the enhanced menu, including replacements for some current investment options. 5. How do I get help choosing an appropriate mix of investments? TIAA-CREF Consultants can provide personalized, fund-specific advice and planning services using investment choices on the new menu. During a one-on-one counseling session, a Consultant will help you determine if you re saving enough for retirement and create an investment portfolio that s tailored to your unique financial situation and goals. To schedule a session, call TIAA-CREF at , Monday through Friday, 8 a.m. to 8 p.m. (ET). 6. What should I bring to a TIAA-CREF investment counseling session? Bring all your investment account statements, including any retirement investments outside of the retirement plan, and your most recent Social Security statement, if available. The TIAA-CREF Consultant will use this information to understand your current financial situation and help you select the appropriate investment options given your outside investments. 7. How long does a one-on-one counseling session last? Counseling sessions last approximately one hour. You can schedule follow-up appointments to review or refine your retirement investment strategy. 8. My spouse/partner/friend handles all my finances. Can I bring this person to a meeting? Yes. Employees can bring anyone they choose to seminars or individual counseling sessions. Your Consultant can consider your spouse s or partner s retirement assets when providing investment advice. 9. Will loans remain available? Yes, loans are still available through the retirement plan. Contact TIAA-CREF for more information. 10. What is the difference between an annuity account and a mutual fund? A mutual fund is a type of investment in which the money of many investors is pooled together to buy a portfolio of different securities. The fund is managed by professionals who invest in stocks, bonds, money market instruments or other securities. In contrast, an annuity is a contract by which an insurance company agrees to make regular payments to someone for life or for a fixed period. Generally, there are two types of annuities. A guaranteed annuity is backed by an insurance company s claims-paying ability and guarantees principal and a specified minimum interest rate. It may also offer the opportunity for additional amounts in excess of the guaranteed rate. 1, 2 A variable annuity is a contract that provides future payments, usually at retirement. Future payments depend on the performance of the portfolio s securities and may rise or fall based on investment performance. 1, 2 1 Please note that annuities are intended for retirement investing and are not short-term investments. 2 Withdrawals before age 59 ½ may be subject to an additional 10% IRS early withdrawal penalty in addition to ordinary income tax. 10 WILLIAMS COLLEGE

11 Glossary of Investment Terms Equity Funds: Mutual funds that invest exclusively or primarily in equities (stocks). Bond Funds: Mutual funds that invest solely or primarily in fixed-income investments, such as bonds or certificates of deposit. Global Equity Funds: Mutual funds that seek long-term capital appreciation and income from a broadly diversified portfolio that consists primarily of non-u.s. common stocks. Guaranteed Annuity: An annuity that offers a guaranteed rate of return.* The TIAA Traditional Annuity is a guaranteed annuity backed by TIAA s claims-paying ability that guarantees principal and a minimum interest rate, plus the opportunity for additional amounts in excess of the guaranteed rate. These additional amounts, when declared by the TIAA Board of Trustees, remain in effect for the declaration year, which begins each March 1. Inflation-Protected Bond Funds: Mutual funds that seek a long-term rate of return exceeding inflation by investing primarily in inflation-indexed bonds fixed-income securities designed to track a specified inflation index over the life of the bond. International Equity Funds: Mutual funds that seek long-term capital appreciation by investing in stocks of non-u.s. companies. Funds that invest in foreign securities are subject to special risks, including currency fluctuation and political and economic instability. Large-Cap Value Funds: Mutual funds that seek long-term capital appreciation by investing primarily in large U.S. company stocks that are considered undervalued. Mid-Cap Blend Funds: Mutual funds that seek long-term capital appreciation by investing in stocks from companies of different sizes and with various characteristics. Mid-cap funds may have limited marketability and may be subject to more abrupt or erratic market movements than large-cap stocks. Money Market Funds: Mutual funds that invest in short-term debt obligations, such as Treasury bills, certificates of deposit, and commercial paper. Money market funds seek current income consistent with maintaining liquidity and preserving capital. An investment in the CREF Money Market Account is not a deposit of any bank and is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. It is possible to lose money in this Account. Mutual Funds: Professionally managed investments that pool the assets of many investors to purchase stocks, bonds, or other assets. Mutual funds allow investors to achieve diversified exposure to a given asset class at lower cost and with potentially less risk than investing in individual securities. The value of mutual fund investments fluctuates with the market value of securities in which they invest. Small-Cap Funds: Mutual funds that seek long-term capital appreciation by investing primarily in stocks of small U.S. companies. Small-cap funds may have limited marketability and may be subject to more abrupt or erratic market movements than large-cap stocks. Social Choice Funds: Mutual funds that invest only in companies meeting predetermined ethical or moral standards. For instance, some socially responsible funds do not invest in cigarette manufacturers or companies that sell alcoholic beverages. Green funds may invest only in companies that are deemed environmentally friendly. Because their social screens exclude some investments, these funds may not be able to take advantage of the same opportunities or market trends as accounts that do not use such criteria. Variable Annuity: A variable annuity is a contract with an insurance company in which the investor makes a lump-sum payment or series of payments. In return, the insurer makes periodic payments beginning immediately or at some future date, including the option to receive lifetime income in retirement.* Investors can choose from a range of investment accounts. The value of a variable annuity will fluctuate and can rise or fall depending on the performance of the type of investment selected. * Guarantees are subject to the claims-paying ability of the issuer. WILLIAMS COLLEGE 11

12 Contact Us Phone To speak with a TIAA-CREF Consultant, call , Monday through Friday, 8 a.m. to 10 p.m. or Saturday, 9 a.m. to 6 p.m. (ET). Online Visit to learn more about the plans investment choices, make transactions, and access retirement planning tools. 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. Investment products may be subject to market and other risk factors. See the applicable product literature, or visit for details. You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call or go to for a current prospectus that contains this and other information. Please read the prospectus carefully before investing. TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY C _ (09/12)