A new chapter for the Harvard-Westlake School Retirement Plan

Transcription

1 A new chapter for the Harvard-Westlake School Retirement Plan Key Dates May 3 and 4, 2017 On-site transition seminars available. May 23, 2017 Updates take effect and new investment menu goes live. You will be enrolled in a new account and receive a confirmation in the mail. May 26, 2017 Future contributions will be directed to your new account. Week of June 13, 2017 Your mutual fund balances will be transferred to your new TIAA account. Harvard-Westlake School is committed to providing you with competitive retirement benefits. Based on this commitment, the school recently conducted a review of the retirement plan and has elected to make some updates. These updates are necessary to help Harvard-Westlake School better administer the plan. They may also put you in a better position to pursue your retirement savings goals. Harvard-Westlake School is pleased to announce these updates will begin on May 23, The highlights: Harvard-Westlake negotiated a new contract with TIAA. As a result, you will be issued a new account for the plan. Your new account helps Harvard-Westlake better ensure that the retirement plan continues to address the interests of its plan participants. Harvard-Westlake is introducing a revised and expanded investment lineup with lower fees for some investments. The new investments were selected by Harvard- Westlake to provide you with a more complete and diversified menu of investment choices. Some of the current investment options have also been replaced with lowercost options of the same investment. The way the plan recordkeeping fees are charged will be revised to provide greater transparency and parity. Harvard-Westlake has contracted a fixed annual rate of 0.09% with TIAA to pay for the recordkeeping, education and servicing of the plan. The new fee structure costs plan participants 50% less than the current plan and is more equitable across all investments, so that regardless of the investments selected, all participants will share equally in the cost of the plan. New TIAA Brokerage Services option. The new investment options are designed to help meet the needs of the majority of plan participants. For plan participants whose situation calls for more investment choices, Harvard-Westlake School is adding a Brokerage Services option. Please note: Harvard-Westlake School will not monitor the performance of the funds in your personal brokerage account and TIAA does not offer investment advice for brokerage assets.

2 Your new options Harvard-Westlake School has added some new investments to provide you with a more complete and diversified lineup of investment choices and replaced some investments with lower-cost options. Using lower-cost funds means more of your retirement savings stay in the plan working for you. Your new contract introduces an annual TIAA Plan Servicing Fee* of 0.09% that pays the cost of plan recordkeeping and other services (see next page for more details). Some investment options pay a share in the cost of administering the plan by revenue sharing with TIAA. For those investments that provide revenue share, these proceeds will be credited directly back to the participant quarterly. This structure helps all participants share equally in the cost of plan administration. Your Guaranteed option (TIAA Traditional**) is a fixed annuity that pays you interest at competitive crediting rates that are announced in advance. There is no explicit expense ratio because this is a fixed annuity. Annual Fund Operating Expenses Plan Servicing Credits Fund Ticker Gross Expense Ratio Net Expense Ratio Revenue Sharing*** Plan Servicing Credits American Funds Europacific Growth R6 (Variable Annuity) RERGX 0.50% 0.50% 0.00% 0.00% CREF Social Choice Account R2 (Variable Annuity) QCSCPX 0.43% 0.43% 0.20% (0.20%) CREF Stock Account R2 (Variable Annuity) QCSTPX 0.49% 0.49% 0.20% (0.20%) Invesco Diversified Dividend R6 LCEFX 0.45% 0.44% 0.00% 0.00% Northern Small Cap Value 1 NOSGX 1.24% 1.01% 0.25% (0.25%) TIAA Traditional Annuity (Guaranteed Annuity)** N/A 0.00% 0.00% 0.15% (0.15%) TIAA-CREF Bond Plus Institutional 1 TIBFX 0.31% 0.31% 0.00% 0.00% TIAA-CREF Large-Cap Growth Institutional 1 TILGX 0.44% 0.44% 0.00% 0.00% TIAA-CREF Lifecycle Index 2010 Institutional 1 TLTIX 0.27% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2015 Institutional 1 TLFIX 0.25% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2020 Institutional 1 TLWIX 0.22% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2025 Institutional 1 TLQIX 0.22% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2030 Institutional 1 TLHIX 0.21% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2035 Institutional 1 TLYIX 0.21% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2040 Institutional 1 TLZIX 0.20% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2045 Institutional 1 TLXIX 0.22% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2050 Institutional 1 TLLIX 0.23% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2055 Institutional 1 TTIIX 0.40% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index 2060 Institutional 1 TVIIX 1.27% 0.10% 0.00% 0.00% TIAA-CREF Lifecycle Index Ret Inc Institutional 1 TRILX 0.41% 0.10% 0.00% 0.00% TIAA-CREF Mid-Cap Value Institutional 1 TIMVX 0.42% 0.42% 0.00% 0.00% Vanguard Federal Money Market Investor VMFXX 0.11% 0.11% 0.00% 0.00% Vanguard Inflation-Protected Secs Admiral VAIPX 0.10% 0.10% 0.00% 0.00% Vanguard REIT Index Admiral VGSLX 0.12% 0.12% 0.00% 0.00% Vanguard Small Cap Growth Index Admiral VSGAX 0.08% 0.08% 0.00% 0.00% Vanguard Total Bond Market Index Admiral VBTLX 0.06% 0.06% 0.00% 0.00% Vanguard Total Intl Stock Index Admiral VTIAX 0.12% 0.12% 0.00% 0.00% Vanguard Total Stock Mkt Index Admiral VTSAX 0.05% 0.05% 0.00% 0.00% 1 A contractual fee waiver may apply. See fund prospectus for details. * Plan servicing fees can be deducted under Retirement Choice and Retirement Choice Plus contracts. However, plan servicing fees cannot be deducted from Retirement Annuity, Group Retirement Annuity, Supplemental Retirement Annuity and Group Supplemental Retirement Annuity contracts. ** 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. 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/harvardwestlake 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. *** 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 they have a plan services offset that is applied to your plan s administrative and recordkeeping costs. 2 Questions? Call or visit TIAA.org/harvardwestlake

3 Understanding your retirement plan fees At TIAA, we are committed to providing you with the information you need to take full advantage of the Harvard- Westlake School Retirement Plan. Participating in your employer s retirement plan is an important step toward generating adequate retirement income. When making investment decisions about your account, you should keep in mind how long you have until retirement, your tolerance for risk, your financial goals and the impact of plan fees. Harvard-Westlake School will make the following changes, effective May 23, Please review the detailed information below regarding the change(s) and how they may affect you. No action is required from you. Important update regarding how your retirement plan s recordkeeping and investment management fees are charged You may not be aware that fees and expenses have always been part of your retirement plan. Some fees are associated with the administration of the plan (e.g., the annual plan audit) and may be paid by your employer. Others are paid by participants based on the specific investments and services they choose. Costs typically fall into three categories of services: investment-specific, general administrative or personalized. Investment-specific services Each investment option offered within the plan charges a fee for investment management and associated services. Plan participants generally pay for these costs through what is commonly referred to as an expense ratio. Expense ratios are displayed as a percentage of assets. For instance, an expense ratio of 0.50% means you d pay $5.00 annually for every $1,000 in assets. Taking this expense ratio into consideration lets you compare investment fees so you can make informed investment decisions. In some cases, investment providers may share in the cost of plan administration. As mentioned above, this practice is commonly called revenue sharing, whereby an investment provider pays a portion of a fund s expense ratio to TIAA, the recordkeeper, to help offset the cost of plan administration. You can always find the expense ratios and any other fees and expenses at TIAA.org/harvardwestlake or in the prospectus at TIAA.org/performance. General administrative services In addition to investment expenses described, your plan assesses an annual fee to cover general administration services such as recordkeeping, investment advisory, and other plan and participant services. An annual TIAA Plan Servicing Fee of 0.09% ($0.90 per $1,000 invested), will be deducted from your account on a quarterly basis. The first fee will be deducted pro rata from each investment in your account on July 1, 2017, and will be identified as TIAA Plan Servicing Fee on your quarterly statements. In some cases, investments may rebate a portion of the investment management and associated services fees for the fund. This practice is commonly called revenue sharing, whereby an investment shares back a portion of a fund s expense ratio to help offset the cost of plan administration. Any annuities in your Harvard-Westlake School individual (legacy) contracts whose revenue shares are greater than the 0.09% being charged plan participants will be credited back to the participant. Personalized services Personalized services refer to a number of plan features and investments that you pay for only if you use them. The personalized services used most often are: Loan issuance: This is a one-time fee that s deducted directly from your account at the time a loan is issued. A loan issuance fee would apply if you choose a general purpose and/or primary residence plan loan. The costs of these loans are $75 per loan for a general purpose loan and $125 per loan for a residential loan. Self-directed brokerage: If you open 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. Please review the TIAA Brokerage Account Customer Agreement using the following link: TIAA.org/public/pdf/brokerage/ pensionsdacaa.pdf. The Agreement contains important information about the brokerage account, as well as the TIAA Commission and Fee Schedule. Other fees and expenses that apply to a continued investment in the funds are described in the fund s current prospectus. Questions? Call or visit TIAA.org/harvardwestlake 3

4 For all Harvard-Westlake School plan participants Establishment of your new Retirement Choice (RC) contracts You will be enrolled in a new Retirement Choice (RC) account during the week of May 22, 2017, and sent an enrollment confirmation. Your current beneficiary designation(s) will be applied to your new account(s). Understanding your Harvard-Westlake School account balances Any annuity balances will remain in your current contracts and you may continue to transfer among the current investment options. However, no new contributions, rollovers or transfers can be made to these contracts. Your mutual funds will transfer as shown in the transfer chart on the next page. Before considering a transfer, please note that a transfer to the new Retirement Choice contract is a permanent decision. Money cannot be moved back to an old contract. There are differences between the old and new contracts that relate to TIAA Traditional that you should be aware of before considering a transfer: T he TIAA Traditional Annuity in the Retirement Choice contract has a guaranteed minimum interest rate* between 1% and 3%, which may be lower than your current guaranteed rate. W hen TIAA Traditional assets are transferred out of an old contract, you risk giving up favorable crediting rates on older contributions. Retirement Choice contracts have different liquidity rules. For details, see the Contract Comparison located at TIAA.org/contractcomparison. If you have questions or would like to request a transfer to the new contract, call to speak to a TIAA financial consultant. There are certain investment options, namely the individual annuities listed below, that Harvard-Westlake School cannot direct TIAA to transfer to your new account. This is because the annuity contract is between you and TIAA. As part of this plan update, the annuity investment options noted in the table below will no longer accept new contributions or any rollovers or transfers. Legacy Annuity Chart CREF Bond Market Account R2 (Variable Annuity) CREF Money Market Account R2 (Variable Annuity) CREF Equity Index Account R2 (Variable Annuity) CREF Social Choice Account R2 (Variable Annuity)** CREF Bond Global Equities Account R2 (Variable Annuity) CREF Stock Account R2 (Variable Annuity)** CREF Growth Account R2 (Variable Annuity) TIAA Real Estate Account (Variable Annuity) CREF Inflation-Linked Bond Account R2 (Variable Annuity) TIAA Traditional Annuity (Guaranteed Annuity) Note: If you are no longer contributing to the plan, you will not be issued a new contract. However, you are eligible to open a new contract and transfer some or all of your current balances to the new investment options. * Guarantees are subject to TIAA s claims paying ability. ** Any balance(s) you have in these annuities will remain in your existing account and no new contributions, rollovers or transfers may be made to these accounts. You can, however, continue to invest in these annuities through your new RC contract. 4 Questions? Call or visit TIAA.org/harvardwestlake

5 Transfer chart for TIAA participants The chart below shows how Harvard-Westlake School will direct future contributions to the new investment options. How your future contributions and current account balances will be affected Starting May 26, 2017, your future contributions and mutual fund balance(s) will be directed to your new account and the new investment options. Your prior mutual fund balances will be transferred to your new account June 13, After your balances have transferred to your new RC contracts into the replacement options below, you can update your investment choices for these transferred balances, if you prefer alternate investment options. Any annuity balance(s) you have with TIAA will remain in your existing account, although no new contributions, rollovers or transfers may be made to these accounts. You can continue to transfer balances among the available annuity options. If you would like to transfer balances to your new account, contact a TIAA financial consultant for more information. Current Option Ticker Replacement Option Ticker CREF Bond Market Account R2 (Variable Annuity) QCBMPX TIAA-CREF Bond Plus Institutional TIBFX CREF Equity Index Account R2 (Variable Annuity) QCEQPX Vanguard Total Stock Market Index Admiral VTSAX CREF Global Equities Account R2 (Variable Annuity) QCGLPX Vanguard Total Intl Stock Index Admiral VTIAX CREF Growth Account R2 (Variable Annuity) QCGRPX TIAA-CREF Large-Cap Growth Institutional TILGX CREF Inflation-Linked Bond Account R2 (Variable Annuity) QCILPX Vanguard Inflation-Protected Secs Admiral VAIPX CREF Money Market Account R2 (Variable Annuity) QCMMPX Vanguard Federal Money Market Investor VMFXX TIAA-CREF International Eq Premier TREPX American Funds Europacific Growth R6 RERGX TIAA-CREF Large-Cap Value Premier TRCPX Invesco Diversified Dividend R6 LCEFX TIAA-CREF Lifecycle 2010 Premier TCTPX TIAA-CREF Lifecycle Index 2010 Institutional TLTIX TIAA-CREF Lifecycle 2015 Premier TCFPX TIAA-CREF Lifecycle Index 2015 Institutional TLFIX TIAA-CREF Lifecycle 2020 Premier TCWPX TIAA-CREF Lifecycle Index 2020 Institutional TLWIX TIAA-CREF Lifecycle 2025 Premier TCQPX TIAA-CREF Lifecycle Index 2025 Institutional TLQIX TIAA-CREF Lifecycle 2030 Premier TCHPX TIAA-CREF Lifecycle Index 2030 Institutional TLHIX TIAA-CREF Lifecycle 2035 Premier TCYPX TIAA-CREF Lifecycle Index 2035 Institutional TLYIX TIAA-CREF Lifecycle 2040 Premier TCZPX TIAA-CREF Lifecycle Index 2040 Institutional TLZIX TIAA-CREF Lifecycle 2045 Premier TTFPX TIAA-CREF Lifecycle Index 2045 Institutional TLXIX TIAA-CREF Lifecycle 2050 Premier TCLPX TIAA-CREF Lifecycle Index 2050 Institutional TLLIX TIAA-CREF Lifecycle 2055 Premier TTRPX TIAA-CREF Lifecycle Index 2055 Institutional TTIIX TIAA-CREF Lifecycle 2060 Premier TLXPX TIAA-CREF Lifecycle Index 2060 Institutional TVIIX TIAA-CREF Lifecycle Retire Inc Premier TPILX TIAA-CREF Lifecycle Index Ret Inc Institutional TRILX TIAA-CREF Mid-Cap Growth Premier TRGPX TIAA-CREF Mid-Cap Value Institutional TIMVX TIAA-CREF Mid-Cap Value Premier TRVPX TIAA-CREF Mid-Cap Value Institutional TIMVX TIAA Real Estate Account (Variable Annuity) QREARX Vanguard REIT Index Admiral VGSLX TIAA-CREF Small-Cap Equity Premier TSRPX Vanguard Small Cap Growth Index Admiral VSGAX Questions? Call or visit TIAA.org/harvardwestlake 5

6 TIAA Brokerage Services Before investing in a brokerage account, contact TIAA to learn more. To open a brokerage account,* contact us at , weekdays, 5 a.m. to 4 p.m. (PT). Harvard-Westlake School is adding a new self-directed brokerage option to the plan: The new investment menu is designed to help meet the needs of the vast majority of participants. Harvard-Westlake School is adding a brokerage option for participants who would like investment choices beyond the core investment menu. The brokerage option for retirement plans gives participants a choice of thousands of mutual funds and many well-known fund families beyond the core investment options.1 It s important to understand Harvard-Westlake School will not monitor the performance of the funds offered through the Brokerage Services Account and TIAA does not offer investment advice for brokerage assets. Plan participants will bear the risk of investing through the brokerage account. Harvard-Westlake School recommends that you exercise caution and consider seeking professional guidance when investing through a TIAA Brokerage Services Account. The brokerage account option is available to participants who maintain both a legitimate U.S. residential address and a legitimate U.S. mailing address. Certain securities may not be suitable for all investors. Securities are subject to investment risk, including possible loss of the principal amount invested. * By opening a brokerage account, you will be charged a commission only on applicable transactions and other account-related fees in accordance with the TIAA Commission and Fee Schedule. Please visit TIAA.org/public/pdf/forms/SDA_Customer_Account_Agreement. pdf. Other fees and expenses apply to a continued investment in the funds and are described in the fund s current prospectus. 1 6 Questions? Call or visit TIAA.org/harvardwestlake

7 Q&A 1. Why is Harvard-Westlake School updating the retirement plan? Harvard-Westlake School is committed to providing you with competitive retirement benefits and recently conducted a review of the retirement plan. The resulting updates are intended to give you the investments, services and tools you need to pursue your retirement savings goals. 2. How can I learn about the new investment options? A list of the new investment options is included in this guide. You can visit the dedicated retirement plan website at TIAA.org/harvardwestlake for additional information. 3. What if I would like help making investment choices? You can get 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. To schedule an advice session, call TIAA at , weekdays, 5 a.m. to 5 p.m. (PT). You can also schedule online at TIAA.org/schedulenow. 4. How do lifecycle funds work? Each lifecycle fund consists of underlying mutual funds that invest in a broad range of assets. The allocations and risk level depend on how many years remain until the fund s target date. To help reduce risk as the fund s target date approaches, the fund s mix of stocks, bonds and other asset types is adjusted to a more conservative mix. As with all mutual funds, the principal value of a lifecycle fund isn t guaranteed and will fluctuate with market changes. The target date indicates when investors may plan to start making withdrawals. However, you are not required to withdraw your money at the target date. After the target date, some of your money may be merged into a fund with a more stable asset allocation. 1 A TIAA financial consultant can help you decide whether a lifecycle fund is right for you. 1 Lifecycle 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 lifecycle funds, there is exposure to the fees and expenses associated with the underlying mutual funds. Questions? Call or visit TIAA.org/harvardwestlake 7

8 We re here to help Not sure where to begin? Let us help you take the next step! Online Phone In person To update your account online, go to TIAA.org/harvardwestlake and select Log In. If you re new to TIAA, click on Register for Access to set up online access to your account. If you have any questions or would like assistance selecting your new investment options, call TIAA at , weekdays, 5 a.m. to 7 p.m., or Saturday, 6 a.m. to 3 p.m. (PT). We encourage you to schedule a one-on-one advice session. To schedule an advice session with TIAA, call , weekdays, 5 a.m. to 5 p.m. (PT) or visit TIAA.org/schedulenow. There is no additional cost to you for this service. Consider attending a one-hour seminar presented by a TIAA financial consultant to learn more about the updates to the Harvard-Westlake School Retirement Plan. Or if you just have one or two questions to ask? Consider stopping by our information desk. You can also receive personalized retirement plan advice on the plan s investment options from a TIAA financial consultant. This service is available as part of your retirement plan at no additional cost to you. Campus Activity Room Location Date(s) Session Times Upper Presentation Rugby Auditorium 5/3 7:45 a.m. 8:30 a.m. 11:20 a.m. 12:05 p.m. 2:45 p.m. 3:30 p.m. Upper Informational Table Deans conference room 5/3 9 a.m. 11 a.m. 1 p.m. 2:30 p.m. Middle Presentation Bing 123 5/4 7:45 a.m. 8:30 a.m. 9:30 a.m. 10:15 a.m. 3:15 p.m. 4 p.m. Middle Informational Table Bing 123 5/4 12 p.m. 2 p.m. Upper 1:1s (during class periods) Alumni Conference Room 5/22, 5/24, 5/26 8 a.m. 4 p.m. Middle 1:1s (during class periods) HC 336 Conference Room 5/23, 5/25 8 a.m. 4 p.m. 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/harvardwestlake 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. Brokerage Services are provided by TIAA Brokerage Services, a division of TIAA-CREF Individual & Institutional Services, LLC, Member FINRA/SIPC Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY (04/17)