Hundreds of CU employees are taking to campus workshops to ask why the university’s retirement plans are changing, how their investments will be affected and where their money will be invested come July.
Last month, the university announced that it will streamline its 401(a) and 403(b) retirement plans by switching to a best-in-class set of investment options, such as funds from Vanguard, BlackRock, Voya, Wells Fargo and other top investment companies. To provide Plan administration, education and customer service, CU has contracted with TIAA-CREF. Plan changes are scheduled to go into effect in mid-July 2015. (Learn more by visitingwww.cu.edu/nestegg.)
The Retirement Transition Workshops, running through April 17, have provided employees a platform for learning about the various steps of the changeover as well as an outlet for airing questions and concerns. In the first week of workshops, more than 600 employees attended the campus sessions to learn about the environment that prompted these changes, the committee that undertook an extensive review of the Plans, and the resulting recommendations and transition process already underway.
Question: I already have my CU retirement Plan(s) through TIAA-CREF. Do I really need to do anything?
That depends on your unique situation and the funds in which you invest. Some things to note:
While many TIAA-CREF funds will automatically transfer to their like counterparts in the new investment menu, some—such as annuities—will not transfer without your meeting with a TIAA-CREF representative in person or by phone.
In June, TIAA-CREF will assign all Plan participants new accounts—even existing TIAA-CREF members. If you have an existing online account with TIAA-CREF, you can log in to www.tiaa-cref.org/cu in June and will see both your current account(s) and your new one(s). Once you have your new account(s), log in to review and/or update your beneficiary information.
Question: Will my designated Plan beneficiary/beneficiaries stay intact during this transition?
- Current TIAA-CREF participants: TIAA-CREF will automatically transfer your beneficiary information into your new TIAA-CREF account. In June, you may log in to your account to verify or update your beneficiary information.
- Fidelity and Vanguard participants: Your beneficiary information will not automatically transfer into your new TIAA-CREF account. Instead, it will default to “estate” until you log in to your account in June to update it. The beneficiaries you’ve designated on your current Fidelity and Vanguard accounts will remain in effect until the date in July when your assets transfer into the TIAA-CREF platform. On that date, the beneficiary listed in your TIAA-CREF account will become effective.
Note: While you are encouraged to update your beneficiary information, CU’s Plan agreement, which has specified who will receive your assets in the event of death, will supersede your designations in the TIAA-CREF system. The succession line is as follows:
- Surviving spouse
- Surviving child(ren)
- Surviving parent(s)
- Personal representative of your estate
Participants of all other vendors: Information will be forthcoming and available at www.cu.edu/nestegg.
Question: Are there fees or penalties associated with transferring my funds into the new investment lineup?
- There are no fees or penalties for the transfer of any Fidelity and Vanguard account balances.
- There are no fees or penalties for TIAA-CREF mutual funds that automatically transfer.
- If you have investments that will not automatically transfer into the new lineup such as individual contracts (e.g., annuities), you may incur transfer fees, penalties or liquidity constraints if you decide to move these investments out of your old account. Check with your vendor directly or ask a TIAA-CREF financial consultant for help in finding this information before you decide to move these balances.
Question: I heard that if I’m age 59 ½ or older, I don’t have to transfer my CU retirement plan funds. Is this true?
If you’re age 59 ½ or older, new contributions made to your account after the July transition will automatically flow into the new fund lineup. However, you have a few options for what you can do with your existing balances:
- Before the transition, you can roll your balances out of the CU Plan(s) and into an IRA with the vendor of your choosing. Before you decide to roll over these funds, consider meeting with your financial planner and/or a TIAA-CREF financial consultant to:
- Compare the retail fees that you’ll be paying in an IRA to the institutional fund fees that you’ll have access to in CU’s Plans.
- Understand how well protected your assets are within a qualified retirement plans such as CU’s versus through an IRA.
Note that any Plan contributions made after the date of your rollover will be placed into your CU Plan(s) account(s).
- You can take no action, and any balances you have that can be transferred into the new plan automatically will be. Those that cannot be automatically transferred will remain with your current vendor until you take action to move them, either into the CU Plan(s) or into an external IRA.
Question: I am currently investing in funds that my vendor has closed to new investors. After the transition, will I still be able to invest in such closed funds that are available through the new self-directed brokerage option?
The retirement transition team is investigating this issue to see if affected Plan participants may access these closed funds in the new menu or, for those age 59 ½ and older, by rolling their Plan funds into a personal IRA.
If neither of these options is available, however, many vendors who have closed funds may have opened new, comparable funds, which may be available through the CU Plans' new self-directed brokerage option.
CU will provide an update on this issue online at www.cu.edu/nestegg, or you may call an Employee Services benefits professional at 303-860-4200, option 3, in the coming weeks to check for information.
Question: I’m interested in increasing my contributions to my 403(b) Plan. Should I wait to do so until after the transition?
Question: Will I have access to my account(s) with my current vendor(s) after the transition?
This depends on your specific situation:
- Many vendors do allow participants to access their accounts for a certain period of time after balances have been transferred out of the account. This allows participants to download transaction and balance history for reference. Please check with your vendor for specific details.
- If your current investments include annuities or other individual contracts, then those balances will not be automatically transferred, and your account access will not be impacted by the transition. You will receive a new account with TIAA-CREF, in which your new contributions will flow after the transition. Please note that you may still contact TIAA-CREF to move these funds into your new account at any time.
Question: Can I move funds from other accounts I have into CU’s new investment menu?
In most cases, yes: You can roll your personal, tax-qualified IRAs and retirement accounts from former employers into either or both of the university's 401(a) and 403(b) plans. This allows you to take advantage of the best-in-class lineup and consolidate your retirement savings. Speak with a TIAA-CREF financial consultant to learn whether your retirement accounts outside the university’s Plans are eligible for rollover, and to have them transferred in (if applicable).
Guidelines for rolling funds into the university's Plans:
- The funds being rolled are from a qualified retirement plan or a tax-qualified IRA.
- The employee is participating in the university Plan receiving the rollover.
- Someone who is not already participating in the 401(a) Plan is not allowed to roll funds into the 401(a) Plan;
- Someone who is not already participating in the 403(b) Plan would need to complete the salary deferral agreement to enroll in the Plan and start contributing, and then could roll over funds.
- There are no after-tax funds being rolled in. (Neither Plan accepts rollovers of after-tax funds.)
Question: How long is CU’s contract with TIAA-CREF?
CU has contracted with TIAA-CREF as service provider of its retirement plans for three years. Going forward, the university will evaluate this contract every three years.
If for any reason, TIAA-CREF does not satisfy the terms of its contract during this three-year period, the university may terminate the contract with 90 days’ notice.