New opportunities for your retirement strategy. Announcing updates to the St. Olaf College Retirement Program

Transcription

1 New opportunities for your retirement strategy Announcing updates to the St. Olaf College Retirement Program

2 A new chapter is about to start Helping you plan and save for the future is important. That s why we re pleased to announce updates to the St. Olaf College Retirement Program, effective January 4, What you need to know St. Olaf College is updating the 403(b) Retirement Plan investment menu. These changes are being made in an effort to give you the ability to create a diversified retirement portfolio with lower fees. There will be increased transparency on fees. St. Olaf College is implementing a new flat fee structure that is more equitable to all participants by ensuring that everyone pays their fair share for plan administration. Changes will be made to the way retirement plan loans will be administered. Participants who borrow against their retirement plan account will no longer be issued collateralized loans. If you have to take out a loan, it will be funded directly from your account and repaid via payroll deduction. This change will only affect new loans taken on or after January 4, Any existing loans taken before this date will not be affected. Retirement Plan Portfolio Manager will be available. This optional service is designed to monitor your retirement account, providing investment advice based on your needs and goals. Also known as a managed account, this voluntary service gives you professional oversight and a systematic, disciplined approach to managing your money for a fee. You can receive personalized advice on the plan s investment options from a TIAA financial consultant. This service is available as part of your retirement program, at no additional cost to you. Investment advice is available online, by phone or through an on-site individual financial counseling session. You are receiving this guide because you have investments in one or more of the St. Olaf College Retirement Plans. Even though you are not actively contributing, you should review this information carefully to learn how your account could be affected. Table of contents Changes to the investment menu 1 Understanding your retirement plan fees 1-2 Investment option fees 3-4 Changes to how retirement plan loans will be offered 4 Retirement Plan Portfolio Manager 5 We're here to help Back cover Questions? Call or visit TIAA.org/stolaf

3 Changes to the investment menu Effective January 4, 2018, a new investment option will be added to the investment menu for the 403(b) Retirement Plan. New Investment Option Vanguard Total World Stock Index Fund Institutional Ticker Symbol VTWIX Also effective January 4, 2018, the CREF Stock Account will be removed from the 403(b) Retirement Plan. Any assets and all future contributions will be directed to your new investment as shown in the chart below. Any balances in the frozen matched and supplemental retirement plans will remain in those plans and are not affected by this change. If you wish to transfer your assets to other options or redirect your future allocation, you may make changes to your account at any time. Removed Investment Option Ticker Symbol Gross/Net Expense Ratio Replacement Investment Option Ticker Symbol Gross/Net Expense Ratio CREF Stock Account R2 (variable annuity) QCSTPX 0.43% Vanguard Total World Stock Index Fund Institutional VTWIX 0.10% Understanding your retirement plan fees St. Olaf College strives to keep the retirement program current with industry best practices. Please know that there have always been costs to participate in the program. Under the new arrangement, your fees will be transparent and itemized on your quarterly statements. Investment-specific services Each of the retirement program s investment options has a fee for investment management and associated services. You generally pay for these costs through what is called an expense ratio. Expense ratios are displayed as a percentage of assets. For example, an expense ratio of 0.50% means a participant pays $5 annually for every $1,000 in assets. Knowing the expense ratio helps you to compare fees among your investment options. In some cases, an investment provider may pay a portion of an investment s expense ratio to TIAA, the recordkeeper, to help offset the cost of retirement plan administration. This practice is called revenue sharing. General administrative services The way fees are deducted from your account will depend upon whether or not you have a balance in the current Retirement Choice (RC) contract or if you have balances in any of the older contracts, which may include a Retirement Annuity (RA) contract, Group Supplemental Retirement Annuity (GSRA) contract, or a Supplemental Retirement Annuity (SRA) contract. For more information, please refer to the plan chart on page 2. Effective January 1, 2018, the St. Olaf College retirement plan will assess a $ annual fee, which will be divided into quarterly payments. The fee will be deducted proportionally from each investment in your account on the last business day of each quarter (beginning on March 30, 2018) and will be identified as a TIAA Plan Servicing Fee on your quarterly statements. This fee pays for the services provided by TIAA as the recordkeeper (i.e., on-site individual financial counseling, online tools and resources, required notices, telephone support, etc.). Participants in the 403(b) Retirement Plan will be assessed a $35.00 annual fee* for plan administration services, which will be divided into quarterly payments. This fee is deducted proportionally from each investment in your account on the last business day of each quarter (beginning on March 30, 2018) and will be identified as Non-TIAA Plan Servicing Fee on your quarterly statements. These fees go to St. Olaf to pay for administrative services (i.e., annual auditing of the plan, independent consultants, legal counsel, etc.). continued * Plan servicing fees can be deducted from Retirement Choice contracts. However, plan servicing fees cannot be deducted from Retirement Annuity, Group Retirement Annuity, Supplemental Retirement Annuity and Group Supplemental Retirement Annuity contracts. Questions? Call or visit TIAA.org/stolaf 1

4 Understanding your retirement plan fees continued St. Olaf College Retirement Plans Plan Name Contract Type You have balances in this plan if Current Plan 403(b) Retirement Plan Retirement Choice (RC) contract Contributions were made on or after January 1, Frozen Plans/ Legacy contracts Matched Savings Plan Salary Reduction Savings Plan Group Supplemental Retirement Annuity (GSRA) contract Retirement Annuity (RA) contract Supplemental Retirement Annuity (SRA) contract Group Supplemental Retirement Annuity (GSRA) contract Retirement Annuity (RA) contract Supplemental Retirement Annuity (SRA) contract Contributions were made before January 1, Contributions were made before January 1, The following chart shows how these fees and credits may be applied to your account. If you only have an RC contract The annual TIAA plan servicing fee will be deducted from your account, and you will receive a credit if you have investments that revenue share. If you have both an RC contract and an RA, GSRA, or SRA contract The annual TIAA plan servicing fee will be deducted first from your RC account, and if any unpaid balance remains, it will be deducted from your credit if you have investments that revenue share.* If you only have a GSRA, RA, or SRA contract The annual TIAA plan servicing fee will be deducted from your credit if you have investments that revenue share.* If your credit is equal to or less than the quarterly plan servicing fee, no credit will be issued to you. Quarterly statement fee and credit calculation The hypothetical example below illustrates how fees and credits may be applied to your account, if you have both an RC contract and an RA, GSRA, or SRA contract Example: $100,000 balance, invested: 50% TIAA Traditional (in a RA contract) and 50% CREF Social Choice (in a RC contract) Fees: $40.00 TIAA Plan Servicing fee: $31.25 ($ quarterly payments) Non-TIAA Plan Servicing fee: $8.75 ($ quarterly payments) Credits: $43.75 ($50, x 0.15% = $ quarterly payments) $18.75 ($50, x 0.20% = $ quarterly payments) $25.00 In this example, the fees and credits would result in a credit of $3.75. This is a hypothetical example for illustrative purposes only. * See pages 3-4 for the revenue share attributable to each investment option. 2 Questions? Call or visit TIAA.org/stolaf

5 Investment option fees The chart below details each investment option in the 403(b) Retirement Plan/(RC) contract and any associated fees. Annual Fund Operating Expenses Plan Servicing Calculations Investment option Ticker Gross Expense Ratio 1 (%) Net Expense Ratio 1 (%) Revenue Sharing 2 (%) Plan Servicing Credit(%) CREF Money Market Account R2 (variable annuity) QCMMPX (0.200) CREF Social Choice Account R2 (variable annuity) QCSCPX (0.200) Eaton Vance Atlanta Capital SMID Cap Fund I EISMX (0.150) Goldman Sachs Bond Fund 3 Institutional GSNIX (0.100) JPMorgan US Equity Fund R6 JUEMX MFS Institutional International Equity Fund MIEIX PIMCO Inflation Response MultiAsst Fund 3 Institutional PIRMX TIAA Stable Value 4, 5 (guaranteed annuity) N/A TIAA Traditional Annuity 5 (guaranteed annuity) N/A (0.150) TIAA-CREF Lifecycle Index 2010 Fund 3 Institutional TLTIX TIAA-CREF Lifecycle Index 2015 Fund 3 Institutional TLFIX TIAA-CREF Lifecycle Index 2020 Fund 3 Institutional TLWIX TIAA-CREF Lifecycle Index 2025 Fund 3 Institutional TLQIX TIAA-CREF Lifecycle Index 2030 Fund 3 Institutional TLHIX TIAA-CREF Lifecycle Index 2035 Fund 3 Institutional TLYIX TIAA-CREF Lifecycle Index 2040 Fund 3 Institutional TLZIX TIAA-CREF Lifecycle Index 2045 Fund 3 Institutional TLXIX TIAA-CREF Lifecycle Index 2050 Fund 3 Institutional TLLIX TIAA-CREF Lifecycle Index 2055 Fund 3 Institutional TTIIX TIAA-CREF Lifecycle Index 2060 Fund 3 Institutional TVIIX TIAA-CREF Lifecycle Index Retirement Income Fund 3 Institutional TRILX Vanguard 500 Index Fund Admiral VFIAX Vanguard Extended Market Index Fund Admiral VEXAX Vanguard FTSE All-World ex-us Index Fund Admiral VFWAX Vanguard Total Bond Market Index Fund Admiral VBTLX Vanguard Total World Stock Index Fund Institutional VTWIX continued 1 Gross expense ratio includes all of an investment s expenses. Net expense ratio takes into account any investment fee waivers and expense reductions, giving an indication of what is currently being charged. 2 Revenue Sharing is a term that describes the practice when investment providers share in the cost of plan administration. Please note that TIAA Traditional, TIAA Real Estate, TIAA Stable Value, and all CREF Annuity accounts do not have an explicit revenue share. Rather, a portion of the plan's administrative and recordkeeping costs are returned back to you. 3 A contractual fee waiver applies. See prospectus for the fee waiver expiration date. 4 In order to provide the performance, stability, and liquidity attributes of a stable value option, participant transfers from stable value options are subject to an industry standard 90-day equity wash rule. This means participants are prohibited from transferring from TIAA Stable Value directly to competing funds. Competing funds are plan investment options that exhibit a pattern of performance consistent with stability and include money market investments. Participants wishing to transfer amounts from TIAA Stable Value to competing funds must first transfer to non-competing funds, where the amount originally transferred must remain for 90 days before the participant can then transfer the amount to one or more competing funds. In addition, to minimize the negative effects of frequent trading, transfers into TIAA Stable Value are restricted for 30 days following a transfer out. 5 TIAA Traditional Annuity and TIAA Stable Value are guaranteed insurance contracts and not investments for federal securities law purposes. Any guarantees under annuities issued by TIAA are subject to TIAA s claims-paying ability. Interest credited includes a guaranteed rate, plus additional amounts as may be established by the TIAA Board of Trustees. 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. Investment products may be subject to market and other risk factors. See the applicable product literature, or visit TIAA.org and enter a ticker symbol in the site s search feature for details. Annuity account options are available through annuity contracts 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. Questions? Call or visit TIAA.org/stolaf 3

6 Investment option fees continued The chart below details each restricted annuity option within your frozen plans/legacy (RA, GSRA, SRA) contracts that are no longer available for contributions. Annual Fund Operating Expenses Plan Servicing Calculations Investment option Ticker Gross Expense Ratio 1 (%) Net Expense Ratio 1 (%) A. Revenue Sharing 2 (%) B. Plan Servicing Credit (%) CREF Bond Market Account R2 (variable annuity) QCBMPX (0.200) CREF Equity Index Account R2 (variable annuity) QCEQPX (0.200) CREF Global Equities Account R2 (variable annuity) QCGLPX (0.200) CREF Growth Account R2 (variable annuity) QCGRPX (0.200) CREF Inflation-Linked Bond Account R2 (variable annuity) QCILPX (0.200) CREF Money Market Account 3 R2 (variable annuity) QCMMPX (0.200) CREF Social Choice Account R2 (variable annuity) QCSCPX (0.200) CREF Stock Account 3 R2 (variable annuity) QCSTPX (0.200) TIAA Real Estate Account (variable annuity) QREARX (0.240) TIAA Traditional Annuity 3 (guaranteed annuity) N/A (0.150) Changes to how retirement plan loans will be offered Starting January 4, 2018, changes will be made to the way loans are issued in your RC contract. The retirement program is moving from collateralized loans to Retirement Plan Loans. Retirement Plan Loans are funded directly from your account via payroll deduction and offer a fixed rate of interest. Principal and interest are paid back to your retirement account based on your investment allocation for your contributions. If there is no allocation on file, the repayment is paid to the default investment, which is the TIAA-CREF Lifecycle Index Fund, closest to your projected date of retirement at age 65. Please note, if you currently have an outstanding loan, it will not be affected by this change. Retirement Plan Loans (issued on or after January 1, 2018) Collateralized Loans (issued before January 1, 2018) Contract type RC RA/GSRA/SRA Maximum loan amount The lesser of 50% of the vested balance or $50,000 4 The lesser of 50% of the vested balance or $50,000 4 Investment account funding loan Participant balance 5 TIAA general account Collateral N/A Restricted TIAA and CREF annuity assets 6 Loan terms Loan origination fee Conventional, 1-5 years or primary residence, 5 years or more Yes. $75 for a conventional loan and $125 for a primary residence loan Conventional, 1-5 years or primary residence, up to 30 years No Loan disbursement Check or Electronic Funds Transfer Check or Electronic Funds Transfer Loan repayment Payroll deduction ACH, checks, or online single deduction 1 Gross expense ratio includes all of an investment s expenses. Net expense ratio takes into account any investment fee waivers and expense reductions, giving an indication of what is currently being charged. 2 Revenue Sharing is a term that describes the practice when investment providers share in the cost of plan administration. Please note that TIAA Traditional, TIAA Real Estate, TIAA Stable Value, and all CREF Annuity accounts do not have an explicit revenue share. Rather, a portion of the plan's administrative and recordkeeping costs are returned back to you. 3 These annuity options allow internal transfers, which means you can transfer these options within your existing legacy account, or contract. 4 Internal Revenue Code limit 72(p). 5 Includes balances in mutual funds and annuities, excluding TIAA Traditional. 6 Collateralized assets are restricted from taking withdrawals, transfers, or annuity income. For GSRA, collateralized assets are commingled with other assets in the contract. For RA, GRA, RC or RCP, a separate contract for the collateralized assets is set up. 4 Questions? Call or visit TIAA.org/stolaf

7 Retirement Plan Portfolio Manager A new service is coming soon to your retirement plan. Instead of wondering if your portfolio needs adjusting every few months, Retirement Plan Portfolio Manager lets you delegate the job. Retirement Plan Portfolio Manager is an optional service designed to monitor your retirement account so you don't have to do all the work. Retirement Plan Portfolio Manager provides independent investment advice using Morningstar, based on your goals and needs. Also known as a managed account, this voluntary service gives you professional oversight and a systematic, disciplined approach to managing your money for a fee. Your portfolio is reviewed on a quarterly basis and adjusted as needed to help keep it on track with your chosen allocations. Features include: Customized advice: Based on your goals, we'll help you decide how much to save, an appropriate asset mix and specific investment options. Ongoing monitoring and portfolio adjustments: We'll make adjustments based on market conditions and other factors that may affect your investments. These adjustments include quarterly asset reallocation and rebalancing. Modify direction as needed: You can update your preferences anytime and we'll fine-tune our recommendations. Quarterly statements: Show adjustments made to your portfolio so you can see your current investment mix. How much does it cost? If you enroll in this service, an annual fee of 0.30% would be deducted from your account on a quarterly basis. The fee is based on an average daily balance of your enrolled plan during the quarter. For example: If you had an average balance of $10,000 in your account, the annual fee would be $10,000 x 0.30% = $30, a quarterly fee of $7.50 which would be deducted on the first day of the subsequent quarter. Service for the retirement plans begins January 4, You can get started by contacting a TIAA financial consultant. Just call , weekdays, 7 a.m. to 6 p.m. (CT). Or if you prefer to enroll online, visit TIAA.org to log in to the secure site, and access the Retirement Advisor online tool under the Insights section on the What We Offer tab. Follow the steps in the tool to get your recommendations and sign up for the Retirement Plan Portfolio Manager. Questions? Call or visit TIAA.org/stolaf 5

8 We re here to help Not sure where to begin? Let us help you take the next step! In person Phone Online You can schedule a one-on-one advice session by calling TIAA at , weekdays, 7 a.m. to 7 p.m. (CT) or visit TIAA.org/ schedulenow. There is no additional cost to you for this service. If you have any questions or would like assistance selecting your new investment options, you can call TIAA at , weekdays, 7 a.m. to 9 p.m. or Saturday, 8 a.m. to 5 p.m. (CT). You can update your account online by going to TIAA.org/stolaf and selecting Log In. If you re new to TIAA, select Log in, then click on Register for Online Access. Follow the on-screen directions to gain online access to your account. This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. 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 in consultation with an investor s personal advisor based on the investor s own objectives and circumstances. 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. Please call or go to TIAA.org/stolaf 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 MT (11/17)