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Questions and Answers
Based on feedback from the information sessions and inquiries from participants, we are providing this additional set of questions and answers. The questions have been grouped based on the topic being addressed.
- What happens to the money in a TIAA Traditional Annuity in an RA (Retirement Annuity), SRA (Supplemental Retirement Annuity) or GSRA (Group Supplemental Retirement Annuity) account?
- After the conversion date, will we be able to put money into the TIAA Traditional Annuity and receive a 3% minimum interest guarantee?
- Do we have to transfer funds from a frozen account to the TIAA Traditional Annuity before December 5, 2011 in order to get the 3% minimum interest guarantee?
- Why is there a lower guaranteed interest rate for the TIAA Traditional Annuity included in the new investment menu?
- When can I change how my future payroll deductions are invested?
- What happens if I don’t change my allocations for future payroll deductions?
- How is the age-appropriate T. Rowe Price Target Date Fund selected for me?
- If I am defaulted into an age-appropriate Target Date Fund, will I be able to select an alternate Target Date fund that better aligns with my actual anticipated retirement date or my risk/reward profile?
- If all or almost all of my investments are in a TIAA-CREF lifecycle fund appropriate for my age, is there anything I have to do before or after December 1, 2011 if I would like to remain invested in a Target Date strategy?
- What is a “frozen fund?"
- Can I move money into a “frozen fund” before market close on December 5, 2011?
- What happens to my existing assets in the frozen funds after market close on December 5, 2011?
- Were the Trustees of the College involved in the selection of the funds?
- Who is on the Investment Committee?
- Can asset classes and/or funds be added in the future?
- Is there an Inflation-Linked Bond option on the new investment menu?
- Why did the Investment Committee choose to replace the TIAA Real Estate Annuity Account with the E.I.I. International Property Institutional REIT?
- What fees are associated with the management of a fund?
- Are there any extra fees associated with transferring funds from one fund to another?
- Why are my TIAA-CREF mutual funds transferring from the Retirement share class to the Institutional share class on December 2, 2011?
- Do I need to take any action to get the Institutional share class for my TIAA-CREF mutual funds?
- Are there any other expenses associated with the operation of the plan?
- Is the College making any money on these changes?
- Why are there so many T. Rowe Price funds?
- Should I be concerned that the new funds are being managed by for-profit companies?
- How do I get more information on the new investments?
TIAA Traditional Annuities
A: Your investments in a TIAA Traditional Annuity as of December 5, 2011 will remain in the same RA, SRA or GSRA contract and continue to receive a 3% minimum interest guarantee. Return to Questions
A: Yes and No. Assets (including the frozen funds) can be transferred from an existing RA, SRA or GSRA contract into the TIAA Traditional Annuity within that contract and continue to have the benefit of a 3% minimum interest guarantee. However, payroll deductions and other retirement contributions made after December 1, 2011 can only be invested in RC/RCP contracts. The TIAA Traditional Annuity in RC and RCP contracts has a lower minimum interest guarantee. Return to Questions
A: No. You can transfer money from an existing RA, SRA or GSRA contract into the TIAA Traditional Annuity within that contract at any time before or after December 5, 2011 and still get the 3% minimum interest guarantee.
In addition, funds in an existing RA, SRA or GSRA contract that have been transferred to a fund on the new investment menu may be subsequently transferred to the TIAA Traditional Annuity within that contract and get the benefit of the 3% minimum interest guarantee. Return to Questions
A: The TIAA Traditional Annuity included in the new investment menu is an RC/RCP contract with a floating guaranteed minimum return of 1% to 3% (currently, 1%). The lower minimum interest guarantee is a result of the current interest credit environment, more flexible distribution options and more flexible replacement rules.
The actual rates credited to a TIAA Traditional Annuity for a particular period may be more than the guarantee, and can be found in the fund fact sheets available at: www.tiaa-cref.org/amherst.
A more detailed explanation of the interest rates associated with the TIAA Traditional Annuity, including examples, can be found by going to the following link: Examples
If you have any questions, please contact Ernie LeBlanc, the College’s Benefits Administrator, at ext. 5407 or firstname.lastname@example.org. Return to Questions
Decisions and Actions
A: You can change how your future payroll deductions are invested at anytime. However, if you do not change your future allocation before your first payroll in December 2011(December 2, 2011 for weekly paid employees, December 30, 2011 for monthly paid employees), the first payroll received at TIAA-CREF in December 2011 will be directed to the age-appropriate T. Rowe Price Target Date Fund and will stay there until you make changes.
The following link will allow you to change your future contribution allocations: www.tiaa-cref.org/amherst. If you prefer, you can call a TIAA-CREF representative at 800 842-2888, Monday through Friday, 8 a.m. to 10 p.m., and Saturday 9 a.m. to 6 p.m. (ET). Return to Questions
A: Starting in December 2011, funds contributed will be invested in an age-appropriate T. Rowe Price Target Date Fund. However, you can transfer or move those funds invested in the Target Date Fund to one or more of the other funds in the new investment menu. Return to Questions
A: The age-appropriate fund is determined by your date of birth on record at TIAA-CREF plus 65 years. For example, if you were born in 1962, your future allocations would be defaulted to the T. Rowe Price Retirement 2030 Fund since you will reach the age of 65 in 2027. Since 65 is the approximate age when an investor may begin making withdrawals, these funds may be merged into a fund with a more conservative asset allocation once the target date is reached. Return to Questions
Q4: If I am defaulted into an age-appropriate Target Date Fund, will I be able to select an alternate Target Date fund that better aligns with my actual anticipated retirement date or my risk/reward profile?
A: Yes. You can change your future allocations at any time to any of the options on the new investment menu. Return to Questions
Q5: If all or almost all of my investments are in a TIAA-CREF lifecycle fund appropriate for my age, is there anything I have to do before or after December 1, 2011 if I would like to remain invested in a Target Date strategy?
A: No. Your contributions to the plan after December 1, 2011 will automatically be directed to an age-appropriate T. Rowe Price Target Date fund. Your contributions which are currently in a TIAA-CREF Lifecycle Fund will stay in that fund. However, you may wish to consider whether or not to transfer your existing funds from the TIAA-CREF Lifecycle Fund to the T. Rowe Price Target Date Fund. Return to Questions
A: A frozen fund is a fund on the existing investment menu that will not accept new contributions after December 1, 2011 and will not accept transfers into the fund after market close on December 5, 2011. After market open on December 6, 2011, transfers will be allowed out of a frozen fund in a RA, SRA or GSRA contract into one or more of the funds on the new investment menu, including the TIAA Traditional Annuity within that contract. A frozen fund will continue to reflect any investment income generated by interest and dividends, if applicable, and any unrealized or realized gains or losses created by market fluctuations. Return to Questions
A: Yes. At anytime between now and market close on December 5, 2011, you can move your existing assets among all the current investment options offered under the existing plan. If, for example, you are interested in investing additional assets into the TIAA Real Estate Account variable annuity or the CREF Inflation-Linked Bond Account variable annuity, you can simply click on this link www.tiaa-cref.org/amherst, sign in and make any changes you would like. If you prefer, you can also call a TIAA-CREF representative at 800 842-2888, Monday through Friday, 8 a.m. to 10 p.m., and Saturday 9 a.m. to 6 p.m. (ET). Return to Questions
A: Your existing assets will stay in the applicable RA, SRA or GSRA contract and continue to be invested in the frozen funds unless you choose to exchange your holdings into the new investment menu, including the TIAA Traditional Annuity within that contract with the benefit of the 3% minimum interest guarantee. You cannot move these assets among the frozen funds after market close December 5, 2011. Return to Questions
A: No. The Trustees of the College authorized the formation of the Investment Committee. The Investment Committee approved the investment policy and is responsible for the implementation and administration of that policy. All decisions were made by the Committee with input from our investment advisor, Baystate Fiduciary Advisors. The Trustees of the College had no input on the asset classes or funds selected. Return to Questions
A: The Investment Committee consists of the College’s Treasurer (Peter Shea), Chief Investment Officer (Mauricia Geissler), Human Resources Director (Maria-Judith Rodriguez), Benefits Administrator (Ernie LeBlanc) and Legal and Administrative Counsel (Paul Murphy). Return to Questions
A: The present menu contains a diverse spectrum of asset classes with funds which underwent a rigorous evaluation process. It is not expected that the fund menu will remain the same over time. The Committee will meet on a quarterly basis to review each of the funds in the investment lineup. Funds not meeting the evaluation criteria will be placed on a watch list and if the overall fund performance is not corrected after a period of time, or other issues persist that cause the Committee concern, the fund may be replaced. In addition, the utilization of each asset class and associated fund(s) will be evaluated so that an asset class or fund may be dropped if not used by participants. Conversely, additional asset classes and types of funds within an asset class will be considered. Return to Questions
A: Not at this time. The Committee selected three bond funds with different investment approaches. The Committee determined that the three bond asset classes would provide participants with a variety of options to diversify their fixed-income investments. As stated previously, the Committee will be reviewing asset classes and funds on a quarterly basis and will consider adding a dedicated inflation-linked bond fund in the future. Return to Questions
A: The Investment Committee decided to offer a real estate investment option that had broad global exposure. The E.I.I. International Property Institutional Fund invests in companies that invest in real estate predominantly outside of the United States. The TIAA Real Estate Account invests in properties predominantly in the United States. The Committee will consider adding a real estate fund focusing on U.S. properties in the future. Return to Questions
A: There are internal management fees for each fund, referred to as expense ratios, which are netted from the investment performance for each fund. Some or all of these fees may be associated with the actual management of the fund, while some portion may be shared with the recordkeeper of the plan to help defray the costs to run the reporting, investment tracking, and other activities associated with operations of the plan for participants. These expense ratios can be found in the individual fund fact sheets located at www.tiaa-cref.org/amherst
A: No. There are no charges or loads when you transfer funds from one fund to the other on the new investment menu. However, there is a 2.5% surrender fee from TIAA Traditional Annuity in the RC contract if a terminated participant elects a lump sum distribution within 120 days of termination. Return to Questions
A: The TIAA-CREF Institutional Share class provides each shareholder in the TIAA-CREF mutual funds with the same underlying investments in the fund but with a reduction of expenses equal to 25 basis points (0.25%, or .0025 of each $1 invested). Return to Questions
A: No. The change will happen automatically. Return to Questions
A: Yes. For example, there are costs associated with new audit requirements and the investment advisor assisting the Committee. For 2011 these qualified plan expenses are paid through an arrangement with TIAA-CREF. These expenses are not borne by the plan participants. Return to Questions
A: No. The new approach enables us to more effectively comply with government regulations and to improve the quality of the plan’s investment choices. Return to Questions
A: Actually, there are only two basic fund options offered by T. Rowe Price. One of the new funds is the T. Rowe Price New America Growth Fund. In addition, there is a suite of 11 target date funds, plus a retirement income fund that can be used at retirement. Under current industry practices, all the target date options have to come from the same selected vendor. Return to Questions
A: No. Although fees charged for a fund are part of the evaluation process in selecting a fund, the investment return comparisons are done net-of-fees. So, while a fund may charge higher fees, if the investment performance net-of-fees (meaning all expenses have been deducted out of the performance figures) has generally provided consistently higher returns, you, the participant, benefit. If returns and other evaluation criteria are equal, and a fund has lower fees, the lower fee fund would generally provide a better return. Return to Questions
A: You can find Fund Fact Sheets, a link to prospectus and other relevant information regarding the changes at http://www.tiaa-cref.org/amherst/index.htm
You may also call TIAA-CREF at 800 842-2888. Return to Questions
In view of the interest in TIAA Traditional Annuity, more detailed information is provided below relating to the interest rates for TIAA Traditional Annuity investments under the new contracts, Retirement Choice and Retirement Choice Plus (RC and RCP, respectively), versus the applicable rates for investments in the present contracts, Retirement Annuity, Supplemental Retirement Annuity and Group Supplemental Retirement Annuity (RA, SRA and GSRA, respectively). In addition, there were also questions relating to transfers to and from other funds, including “frozen Funds”.
The following points were supplied, and confirmed, by TIAA-CREF.
- Investments in the TIAA Traditional Annuity through RA, SRA, and GSRA contracts have a guaranteed rate of return of 3%, versus a floating guaranteed rate of 1%-3% in the new RC and RCP contracts.
All employer and employee contributions starting with the first payroll received by TIAA-CREF following 12/1/11 will be directed to the new RC and RCP contracts. All new contributions deposited into these contracts following 12/1/11 are subject to the contractual terms of the new RC and RCP contracts including the floating guaranteed rate of return of 1%-3% for TIAA Traditional. The new investment menu is available to the new contributions and the asset accumulations that take place in these contracts following 12/1/11.
Existing asset accumulations in the RA, SRA and/or GSRA contracts as of market close on 12/5/11, the plan merger date, will remain in the originating contracts (RA, SRA, GSRA) unless a participant directs TIAA-CREF to take alternative action such as a distribution or contract to contract transfer to the new RC/RCP contracts. The new investment menu is available to the asset accumulations within the originating contract and any assets within the RA, SRA and/or GSRA contracts can be exchanged amongst the new investment line up, while remaining subject to the applicable contract provisions of the originating contract, including the guaranteed minimum rate of return of 3% associated with TIAA Traditional.
A “frozen fund” is a fund on the existing investment menu that will no longer accept future contributions after 12/1/11 and will not allow for exchanges into the fund after market close on 12/5/11. Exchanges of existing assets will be allowed out of a frozen fund into the new investment menu after market open on 12/6/11. A frozen fund will continue to reflect any investment income generated by interest and dividends, if applicable, and any unrealized or realized gains or losses created by market fluctuations.
Here are several examples to help illustrate these points, all of which are based on asset accumulations in RA, SRA and GSRA contracts.
A participant’s existing account balance on December 20, 2011 (or the value on any date after market close on December 5, 2011) in an RA contract is $100,000 in TIAA Real Estate. S/he exchanges (transfers) $20,000 to TIAA Traditional and $20,000 to PIMCO Total Return on December 20, 2011. Those assets will be invested in TIAA Traditional and PIMCO Total Return in the RA contract. The TIAA Traditional has the 3% interest guarantee.
A participant is currently invested in TIAA-CREF International Equity Index (a “frozen fund”) in an RA contract. S/he may transfer money from that fund at any time before or after December 5, 2011 to the TIAA Traditional Annuity in an RA contract with the 3% guaranteed minimum return. Similarly, a participant with funds currently invested in the TIAA-CREF Large Cap Value (another frozen fund) in a GSRA contract, may transfer funds at any time to the TIAA Traditional Annuity in a GSRA contract with the 3% guaranteed return. These transfers can be made even if the participant did not have any money invested in a TIAA Traditional Annuity in an RA or GSRA contract on December 5, 2011.
On January 15, 2012, a participant decides to transfer $2,000 from TIAA-CREF Mid-Cap Value (a “frozen fund”) in an RA contract to PIMCO Bond Total Return (a new fund). At a later date, the participant can transfer $2,000 from PIMCO Bond Total Return in the RA contract to the TIAA Traditional Annuity in an RA contract with the 3% guaranteed minimum return. Again, this transfer can be made even if the participant did not have any money in a TIAA Traditional Annuity in the RA contract on December 5, 2011.
A participant has $5,000 in CREF Inflation-Linked Bond (a “frozen fund”) in an RA contract and wants to transfer $2,500 to TIAA Real Estate (a “frozen fund”). As long as this transaction occurs before market close on December 5, 2011, it will be allowed. After market close on December 5, 2011 it will not.
These examples are based on contributions made to the new RC and RCP contracts on or after December 2, 2011, and any associated accumulations (any investment income generated by interest and dividends, if applicable, and any unrealized or realized gains or losses created by market fluctuations market).
A participant started contributing to Invesco Diversified Dividend in an RC contract after December 1, 2011. On May 13, 2012 the value of this investment is $1,500. S/he wants to transfer this amount into the TIAA Traditional Annuity. What is the interest guarantee? Since the value of Invesco Diversified Dividend was due to payroll contributions made on or after December 1, 2011, the transfer would be made to the TIAA Traditional Annuity in an RC contract, with the floating guaranteed rate of return of 1%-3%.
A participant started contributing to TIAA-CREF Growth & Income in an RCP contract after December 1, 2011. On December 11, 2013 s/he wants to transfer the value of this fund to CREF Global Equities (a frozen fund). This cannot happen since the CREF Global Equities is a frozen fund and cannot accept any new contributions or accumulations after market close on December 5, 2011. Return to Questions