403(b) Tax-Deferred Savings Plan Update

The university is changing the investment options that are available to employees in the 403(b) Tax-Deferred Savings Plan and Cash Match Plan so that the investment choices with TIAA and Fidelity in these plans are the same as the investment choices in the Optional Retirement Plan.

The livestream recording and presentation (pdf) from recent town hall meetings help provide details about the update. More specific information may be found in the following FAQs.

What are the changes to the 403(b) Tax-Deferred Savings Plan and Cash Match Plan?

In 2016, the university created an investment committee and partnered with CAPTRUST, a financial advisory firm, to help the university review its various retirement plan offerings. CAPTRUST is the same firm that provides retirement plan advice to Virginia Tech, George Mason University, and VCU, as well as a number of other schools in Virginia and across the country. As a result of this review, we are making changes to the investment choices or investment lineup in 403(b) Tax Deferred Savings and Cash Match Plans.  In summary:   (1) We are changing the investment options that are available to employees in the 403(b) and Cash Match Provide Plans so that the investment choices with TIAA and Fidelity in these plans are the same as the investment choices in the ORP; and (2) Permitting employees hired prior to 1/1/2018 to select from investment options with both TIAA and Fidelity. (In the past, employees had to select funds with either TIAA or Fidelity but could not select from both.)

I currently participate in the 403(b) Tax-Deferred Savings Plan and/or Cash Match Plan through TIAA? What will happen to my TIAA contracts? What if I am a Fidelity customer?

If you are a TIAA customer, TIAA will issue a new TIAA contract to you in early December 2017. All new investments that you make into the 403(b) Tax-Deferred Savings Plan and/or Cash Match Plan after January 1, 2018 will be under this new contract.  If you are a Fidelity customer, there is no change with respect to your account setup with Fidelity.

Will the William & Mary plans have both TIAA-CREF and Fidelity as record keepers, or will we have a single record keeper for our plan?

We will continue to offer both TIAA and Fidelity as record keepers of the plans for existing employees.  The record keeper is the company who maintains the records for the plan’s selected investment platform or investment lineup.  One of the exciting changes that we are making is that existing employees will be able to select from both the TIAA and Fidelity investment platforms. In addition, the new TIAA investment platform will include a lineup of many new investment choices, some from TIAA, and others from a wide variety of other mutual fund companies.

Beginning January 1, 2018, TIAA will be the only record keeper choice available to new employees.  If a new employee wishes to select a Fidelity fund, TIAA will have a self-directed brokerage option that will permit employees to select Fidelity funds to include in their investment portfolio.

When will the new investment choices on the TIAA platform become available?

The new investment choices on the TIAA platform for existing TIAA customers will take effect on January 1, 2018.  However, TIAA customers will not be able to add Fidelity as an investment provider, and Fidelity customers will not be able to add TIAA as an investment provider until January 30, 2018.

What happens if I am currently investing in a fund with TIAA or Fidelity that is not in the new investment lineup as of January 1, 2018?  Will I be able to keep investing in the same fund?

No. If you are contributing to a fund that will not be included in the new investment fund lineup with TIAA or Fidelity, you may not keep contributing new monies into this fund after January 1, 2018.

If I am currently investing in a fund with TIAA or Fidelity that is not in the new investment lineup as of January 1, 2018, will I be required to move my existing balances into a different fund?

No, you will not be required to move existing balances. In other words, you may keep your existing balances as of December 31, 2018 in the same funds.  However, you are not required to do so. If you wish, you will be able to transfer existing balances into other available fund choices.

Can I invest in a fund that is not offered by William & Mary in the core lineup?

Yes, if there is a particular investment fund that William & Mary does not offer in the core lineup with TIAA or Fidelity, we will include a self-directed brokerage account option that will let employees invest in any mutual fund of their choice that is traded on the NYSE.

Can I invest in a fund that is not offered by William & Mary in the core lineup?

Yes, if there is a particular investment fund that William & Mary does not offer in the core lineup with TIAA or Fidelity, we will include a self-directed brokerage account option that will let employees invest in any mutual fund of their choice that is traded on the NYSE.

I am currently a Fidelity customer and want to switch to TIAA OR I am a TIAA customer and want to switch to Fidelity OR I want to select both TIAA and Fidelity as record keepers.  When and how can I do so?

In addition to the investment lineup changes, William & Mary is also launching Retirement@Work, a new online retirement web portal. Once the Retirement@Work web portal becomes available for W&M employees to use on January 30, 2018, you’ll be able to change your investment providers.  You may choose TIAA, Fidelity, or both TIAA and Fidelity as your investment provider and record keeper. Again, though, you will not be able to do so until the Retirement@Work platform is available.

How will I change my investment selections with TIAA or Fidelity prior to the launch of Retirement@Work?

Prior to the launch of the Retirement@Work platform, you can change your investment selections with TIAA or Fidelity in the same way that you do today by visiting each provider’s site or by calling Customer Service at either Fidelity or TIAA. And, again, if you are TIAA customer, you will not be able to add Fidelity funds, and if you are a Fidelity customer, you will not be able to add TIAA funds, until the launch of Retirement@Work on January 30, 2018.

How will I change my investment selections with TIAA or Fidelity after the launch of Retirement@Work?

After the Retirement@Work platform launches, you can follow the links on Retirement@Work to change your investment selections, or again you may call Customer Service at TIAA or Fidelity.

Will I pay any fees to invest in the retirement plans?

All mutual funds have expenses and other fees that can be found in the prospectuses for each fund, available by searching the NYSE tickers on TIAA.org or Fidelity.com. The expenses charged by the fund are used to pay the fees of the investment manager (mutual fund managers) and the record keepers like TIAA and Fidelity to offset administrative and/or advisory fees. These fees vary by fund.  Some mutual funds have higher expense ratios and others are lower. The prospectus is your best source for this information.

How do the fees charged by the mutual fund affect my investment return?

Investment returns are generally reported net of expenses. Mutual fund expenses are not seen on a participant’s statement, but expenses may directly impact a participant’s return on investments. The underlying fees charged by the fund can reduce the published returns.

Will I pay any fees other than the expenses charged by the mutual fund?

No, participants will not pay any fees other than the underlying expenses of each mutual fund.

How will the fees in the new plan setup compare to the current fees that employees pay?

The overall expense ratio of the ORP, 403(b) and Cash Match plans will on average be lower on an aggregated plan basis with the new plan setup.  That has resulted from utilizing investments with lower expense ratios and from negotiated decreases in fees for recordkeeping services with TIAA.  However, because the expense ratios vary by fund, each individual’s cost will vary based on the particular investments chosen by that person.

I see that lifecycle funds have been added to the TIAA platform. How do lifecycle funds work?

Each lifecycle fund consists of underlying mutual funds that invest in a broad range of asset classes. 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 types of investments is adjusted to a more conservative mix.

What else should I know about lifecycle funds?

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. A TIAA or Fidelity financial consultant can help you decide whether a lifecycle fund is right for you.

Can I roll over or transfer balances from other plans into my W&M ORP, 403(b) or Cash Match plans?

Yes, you may rollover or transfer balances from a prior employer into your 403(b) account.

Does it make sense to consolidate my retirement accounts and rollover balances into my 403(b) account?

Many people find it easier to manage their retirement money by working with only one provider. That said, transferring balances can sometimes trigger costs. You should carefully consider all your options. For instance, you may be able to leave money with a prior provider, roll over money to an IRA, or cash out all or part of the account value and roll over to your W&M 403(b) account. Weigh the advantages and disadvantages of each option carefully, including investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment or penalties, and your particular financial needs. You should seek the guidance of your financial professional and tax advisor before consolidating balances.

Will loans be available?

Yes, loans will continue to be available in the 403(b) Tax-Deferred Savings and Cash Match Plans.  These plans let participants borrow against their retirement account. However, William & Mary will limit the number of loans to two. If you currently have more than two loans outstanding, they may remain open until paid off.

I do not currently participate in the 403(b) plan but would like to enroll in the future. When can I do so?

If you do not currently participate in the 403(b) and Cash Match plans but wish to do so, you may enroll at any time up until Friday, December 15, 2017. If you do not enroll by December 15th, you will have to wait until Retirement@Work goes live on February 1, 2018 to enroll.

I currently participate in the 403(b) Tax-Deferred Savings Plan and Cash Match Plan.  Will there be any limitations on when I can change my salary deferral amounts into these plans?

Employees will not be able to change their salary deferral amounts (which is the amount that you contribute into the 403(b) and Cash Match Plans) between January 8, 2018 and January 15, 2018.  If you wish to change how much you are deferring into one of these plans to be effective with your January 16, 2018 paycheck, you must do so prior to January 8, 2018. However, other investment and account changes can still be made during this time with the individual investment providers.

What happens to my current account balances within the 403(b) Tax-Deferred Savings Plan and Cash Match Plan?

All account balances will remain invested where they are. In other words, you will not be required to transfer or move existing balances, and you may keep your existing balances in the same funds.  However, you are not required to do so. If you wish, you will be able to transfer existing balances into other available funds.

What happens to my future contributions to the 403(b) Tax-Deferred Savings Plan and Cash Match Plan?

If you are a salaried employee, William & Mary will direct your future contributions beginning with your January 16, 2018 paycheck to the target date fund on the new menu with the year closest to that in which you turn age 65, unless you advise TIAA or Fidelity before January 15th that you wish to direct future contributions into other available funds. If you are a TIAA customer, you will be able to make changes to how you wish to direct your future contributions that will take effect with your January 16th paycheck as early as December 12th. You may also make changes to future contributions at any time after the changes take effect in 2018.

I am a 403(b) Tax-Deferred Savings Plan participant and I received a letter in the beginning of August 2017 from TIAA advising me that I will move from an Individual Custodial Agreement (ICA) with TIAA, to a Group Custodial Agreement (GCA), unless I advised TIAA by the end of August that I wished to keep the ICA. What does this mean?

The different types of contracts with TIAA impact how participants may access and invest their existing account balances. A GCA contract provides participants with more flexibility to move monies on the new investment platform. The GCA also allows William & Mary to add new funds to the plan in the future. In the case of a change in the fund menu, you will be advised in writing and in advance by William & Mary.

Will these same changes also apply to the 457 Deferred Compensation Plan?

No.  The investment changes that we are making to the 403(b) Tax-Deferred Savings Plan and Cash Match Plan will not apply to the 457 Deferred Compensation Plan.   The 457 Plan is sponsored by VRS and is administered by International City Management – Retirement Corporation (ICMA-RC).  Because this plan is not administered by W&M, we cannot make changes to the investment lineup.  Only VRS can do so.

What happens to my current outstanding loan, systematic withdrawal, TPA (transfer payout annuity), or required minimum distribution?

You will receive separate communications if any actions are required on your part.

The investment choices are confusing.  How can I get help with investment advice?

One of the exciting changes that will occur is that beginning in 2018, employees who are TIAA customers will be able to meet with a TIAA financial advisor and receive investment advice.  Investment advice means that TIAA will now be able to provide investment recommendations and not just investment guidance.

What are the next steps?

You will receive a welcome package in the mail during the month of December with detailed information about the upcoming plan changes.  In addition, we will hold a series of meetings across campus in January with representatives from both TIAA and Fidelity to help you with your retirement planning and with any changes that you wish to make to your investment elections with TIAA and/or Fidelity.