The University Of Utah: Changes To Retirement Plan Accounts

Press release from The University of Utah:

June 30, 2021

July 8, 2021 – 9:00 am MT
https://tinyurl.com/4rjpyru8
Meeting ID: 922 5123 9657
Passcode: 873536

July 8, 2021 – 9:00 am MT https://tinyurl.com/4rjpyru8 Why are we making changes?

This summer, some exciting changes are coming for employees who have retirement plan accounts through the University.  Upcoming changes include a new updated investment line-up and new, transparent and leveled account fees.

The University’s Retirement Plans Committee has been working with HUB International, the retirement plans consultant selected by the Utah System of Higher Education.  HUB was hired to assist the Utah institutions of higher education with retirement plan operations to ensure the plans can withstand legal actions that have been filed against many employers in the past few years – including some higher education institutions.

The Retirement Plans Committee has employees representing faculty and staff, and include employees from across the academic and health academics campuses.  The Committee’s fiduciary responsibility is to represent and make choices that would be the best for University’s employees as a whole.

New and improved investment line-up

HUB has assisted the University’s Retirement Plans Committee in carefully reviewing and selecting a range of investments that will allow employees to create investment strategies that align with their investment preferences and financial goals.  New options from a variety of fund families are being added with both Fidelity Investments and TIAA, while several current options are being retained.

Later this summer, any funds in your account that are not being retained will be mapped to the new fund that most closely aligns with that fund.  You will receive a notice from your recordkeeper (Fidelity Investments or TIAA) before this transfer occurs.

Retirement plan fees

The University’s Retirement Committee has also reviewed the retirement plan fees and services from TIAA and Fidelity Investments.   Although University employees are not currently paying account fees in the retirement plans, fund managers and record keepers have been receiving funding through each investment option’s expense ratio.  Some funds’ expense ratios may include fees to be shared with other record keepers who keep the fund in their fund line-ups (revenue sharing), while some do not.  Currently, if the record keeper receives more revenue sharing than they need to record keep the plan, they return the revenue to the plan and the revenue credit is shared across all participants in the plan based on their account balance.

In connection with these plan changes, both Fidelity Investments and TIAA have agreed to reduce the amount they need to receive to record keep the plans.  The new plan fees will be transparent and level – you will see them on your account statements and know the amount you are paying.  All plan participants will pay the same percentage as a fee, regardless of the funds in which they are invested.

With the new fee transparency model, each individual will be charged a certain percentage as an annual account fee.  If the funds in which you are invested have revenue sharing, the account fees will be deducted and from the revenue shared, and any revenue shared over the required annual account fee (charged quarterly) will be credited directly back to your account.  If you are invested in funds that do not have revenue sharing, the fee percentage will be deducted from your account balance.

The new annual record keeping fees, shown as a percentage of plan assets, are different for the two record keepers:

• The new TIAA plan administration fees are .02% of plan assets annually (equal to $0.20 for every $1,000 invested).
• The new Fidelity Investments plan administration fees are .0575% of plan assets annually (equal to $0.58 for every $1,000 invested).

TIAA .02% of plan assets annually Fidelity Investments .0575% of plan assets annually 5

Employees can transfer most funds between Fidelity and TIAA – as long as the funds stay in the same University plan.  You should speak with a TIAA representative before transferring any TIAA Traditional funds.  If you would like to transfer funds from one to the other, contact the company you would like to transfer to and they can help you.

To schedule a meeting with a Fidelity representative go to www.netbenefits.com/uofu and click on the “Meet” link or call (800) 343-0860.

To schedule a meeting with a TIAA representative, go to TIAA.org/uofu and click on “Schedule Today” or call (800) 732-8353.

Additional information for employees with accounts at TIAA

The current accounts with TIAA do not allow for deduction of account fees.  To resolve this, TIAA will be opening new group accounts for all employees.  Mutual funds will be transferred to the new account; however, any annuities you have (including the TIAA Traditional annuity) will not be transferred and will remain in your old account.  The old accounts will be closed to new contributions and rollovers.  New contributions and any rollovers will all go into your new account according to your current asset allocation elections.  You will see all your accounts together when you log into your TIAA account.

The funds in the old accounts will be included in the calculation of the account fees; however all the fees will be deducted from the new account.  You may choose to transfer the annuities in your old account to your new account if you wish, or you can leave them in the old account.  The new accounts have different terms for the TIAA Traditional Annuity.  Before you transfer TIAA Traditional funds from your old account to your new account, you should talk with a TIAA financial consultant at 1‑800-842-2252.

This press release was produced by The University of Utah. The views expressed here are the author’s own.