FAQs

SECTION I: FUTURE CHANGES & ENHANCEMENTS
1.1 What is changing and when will the enhancements take place?
1.2 How is the new investment fund platform structured?
1.3 Which investment funds will be included in the Core Fund line-up?
1.4 Who will monitor Fidelity’s and TIAA-CREF’s investment fund performance?
1.5 What criteria were used by Fiduciary Investment Advisors to select the Core Funds included Tier 1 and Tier 2?

1.6 Why are the majority of funds being managed on the Fidelity platform?
1.7 Why are there only two TIAA-CREF funds offered in the Core line-up?
1.8 Will the university benefit financially from these changes?
1.9 Will I still have the option of investing in a “Social Choice” Fund?
1.10 Will there be a Roth option available?
1.11 (**NEW 4/4/11**)It appears that both the Perkins Small Cap Value Fund Class T and the Fidelity Growth Fund Class K are listed as closed to new investors. Will these funds be available to Tufts employees on March 1st?

SECTION II: FIDELITY BROKERAGELINK ACCOUNT
2.1 What is a Fidelity BrokerageLink account?
2.2 How do I set up a Fidelity BrokerageLink account?
2.3 What are the fees for funds in the Tier 3 Fidelity BrokerageLink account?
2.4 What are Institutional K share funds?
2.5 Which funds have institutional K shares that will need to be converted if I am transferring my funds directly to my BrokerageLink account?

SECTION III: AVAILABLE GUIDANCE
3.1 What services will be available to help me during the transition period?
3.2 How do I register for the Retirement Planning Seminars and TIAA-CREF & Fidelity Workshops?
3.3 How do I schedule a One-on-One investment review with a Fidelity and/or TIAA-CREF representative?
3.4 Will the investment counselors have all of my investment information when I meet with them to decide how to invest in the new fund lineup?

3.5 What assistance will be available for me if I am unable to attend the seminar and workshops?

SECTION IV: ACTION STEPS & KEY DATES
4.1 What actions steps do I need to take?
4.2 What are the key dates I need to know?

SECTION V: BACKGROUND
5.1 What is the Retirement Investment Advisory Committee’s (RIAC) role at the university?
5.2 What are the university’s fiduciary responsibilities?
5.3 How were the RIAC members appointed and what are their qualifications?
5.4 What did the RIAC learn in its review of the university’s retirement plans?
5.5 Why did the RIAC create the Core Fund line-up?

SECTION VI: MISCELLANEOUS
6.1 What are the current retirement plan defaults and are they changing?
6.2 If I don’t make an investment fund choice, where will my contributions go?
6.3 I am currently invested in a fund that is in an ‘institutional’ K share class, will these funds be affected?
6.4 Will I continue to have annuity options?
6.5 What happens to my current investments if one of my existing investment options is eliminated?
6.6 Will I be subject to taxes if I elect to transfer/roll over my account balance(s)?
6.7 When do I have the ability to transfer funds? Will there be an “annual open enrollment” period similar to health insurance?
6.8 Can I use Tiers 1, 2 and 3 or must I invest in one tier?
6.9 Will the ‘Core’ Funds in Tier 2 ever change?
6.10 Will I be required to move my current fund balances or just direct future contributions to the
new fund lineup?
6.11 Will this change affect my vesting status?
6.12 I understand one of the Committee’s goals is to make sure plan participants pay competitive fees for the investments and services provided. How are service fees paid today?

6.13 How did the RIAC determine if fees were competitive and reasonable?
6.14 I have funds in TIAA that are employer contributions. Can these be transferred to Fidelity in a lump sum or do they have to be transferred in over a longer period?
6.15 I invest in TIAA-CREF accounts through my Tufts University Retirement Plans. Will I be able to continue contributions to TIAA-CREF accounts in the new Core Fund line-up?
6.16 (**NEW 4/4/11) Is there any restriction on transferring or withdrawing funds from the TIAA-Traditional Account?
6.17 (**NEW 4/4/11) Are there any restrictions on the TIAA-CREF Accounts other than TIAA Traditional?

SECTION VII: RETIRING OR LEAVING THE UNIVERSITY
7.1 Will plan changes affect the portability of my retirement account, if I don’t stay at the university until my retirement?

7.2 I plan on retiring in the next few years. Will these Plan changes affect my retirement?

SECTION I: FUTURE CHANGES & ENHANCEMENTS

1.1 When will the changes and enhancements take place?

The investment fund options are changing. On March 1, 2011, the investment fund choices for both the 401(a) Basic Retirement Plan and the 403(b) Voluntary Retirement Plan will be organized into a three tiered framework (see details below) to address a range of investment styles. There are investment options available from Fidelity and TIAA-CREF as well as a host of other mutual fund companies. TIAA-CREF will be the service provider for the TIAA Traditional Account and the CREF Stock Account. Fidelity will be the service provider for all other funds offered in all three tiers.

Note: The contribution rate for the 401(a) Basic Retirement Plan is not changing. Also, the vesting schedule for the 401 (a) Plan is not changing; all eligible employees are 100% vested after three years of eligible service. The 403(b) Plan vesting schedule is also not changing; you are always 100% vested in your contributions as well.

1.2 How is the new investment fund platform structured?

Investment fund choices in both the 401(a) Basic Retirement Plan and 403(b) Voluntary Retirement Plan will be organized into a three tiered framework to address a range of investment styles. You can choose to invest in any or all of the following tiers:

Tier Participant Type Option Type
Tier 1-
Lifecycle Funds
Participants who want a higher level of professional guidance. Target Date Retirement Funds*.
Tier 2-
Core Funds
Participants who want to assume greater management of their accounts. Actively Managed as well as Index Funds are included in the Core Funds*.
Tier 3-
Brokerage Accounts
Participants who are investment savvy can actively manage their own funds. Self-Directed Brokerage account through Fidelity BrokerageLink**.

*Funds will be monitored by Fiduciary Investment Advisors (FIA) and the Tufts University Retirement Investment Advisory Committee (RIAC).
**Tier 3, the brokerage window, will not be monitored by the RIAC or FIA.

**The brokerage account is available to invest in any of the non-core Fidelity funds previously offered in the Tufts University Retirement Plans. In order to use this option, you must complete a form to establish a Fidelity BrokerageLink account. This form is available by contacting Fidelity at 1.800.343.0860.

In addition, a variety of new mutual funds will be available and administered by Fidelity through the following mutual fund companies: Vanguard, Eaton Vance, Perkins, Neuberger Berman, Columbia, Baron, Oppenheimer and Cohen & Steers.

1.3 Which investment funds will be included in the Core Fund line-up?

The following funds are included in the new fund line-up:

  • Tier 1 – Fidelity Lifecycle Funds (Qualified Default Investment Alternative)
  • Tier 2 – Core Fund line-up includes:
Type of Fund Fund Name
Capital Preservation
  • TIAA-Traditional Account*
  • Fidelity Money Market Trust Retirement – Money Market Portfolio
  • Fidelity U.S. Treasury Money Market Fund
Bond
  • Fidelity Strategic Income Fund
  • Vanguard Total Bond Money Market Index Fund – Signal Shares
  • Vanguard Inflation Protection Securities – Admiral Shares
Domestic Equity
  • Large Value:
    • EatonVance Large Cap Value Fund – Class A
  • Mid Value:
    • Perkins Mid Cap Value Fund – Class T
  • Small Value:
    • Perkins Small Cap Value – Class T
  • Large Blend:
    • CREF Stock Account* (with global exposure)
    • Fidelity Spartan 500 Index – Investor Class
    • Neuberger Berman Socially Responsive Fund – Class A
  • Mid Blend:
    • Fidelity Low Priced Stock Fund – Class K
    • Fidelity Spartan Extended Market Index Fund
    • Investor Class
  • Large Growth:
    • Fidelity Growth Company Fund – Class K
    • Fidelity Contrafund – Class K
  • Mid Growth:
    • Columbia Acorn Funds – Class Z
  • Small Growth:
    • Baron Small Cap Fund
International Equity
  • Harbor International Value Fund – Investor Class
  • Fidelity Spartan International Index Fund – Investor Class
  • Oppenheimer International Growth Fund – Class Y
  • Emerging Markets:
    • Oppenheimer Developing Market
Specialty
  • Cohen & Steers Realty Shares

*These accounts include an annuity feature

  • Tier 3: – The brokerage account is available to invest in any of the non-core Fidelity funds previously offered in the Tufts University Retirement Plans. In order to use this option, you must complete a form to establish a Fidelity BrokerageLink account. This form is available by contacting Fidelity at 1.800.343.0860.

1.4 Who will monitor Fidelity’s and TIAA-CREF’s investment fund performance?

The university’s Retirement Investment Advisory Committee (RIAC) and Fiduciary Investment Advisors (FIA), the university’s investment consultant, will monitor the Tier 1 and Tier 2 Fidelity and TIAA-CREF investment fund options. Tier 3, the brokerage account, will not be monitored.

1.5 What criteria were used by Fiduciary Investment Advisors to recommend the Core Funds included Tier 1 and Tier 2?

Fiduciary Investment Advisors, the university’s investment advisor, was tasked with recommending ‘best-in-class’ Core Funds for the university. The funds recommended in the Core Fund line-up met the following selection criteria: below category average expense ratios, performance ranked in the top 50th percentile over the past three years, manager tenure of at least three years, total fund assets of at least $250 million; and availability to new investors. Once the funds met this first level of scrutiny, the funds were then subject to further quantitative and qualitative analysis. The elements considered are: organization and investment professionals, investment philosophy and process, portfolio construction, style consistency, performance vs. indexes and peer groups, volatility and risk statistics and risk-adjusted performance.

1.6 Why are the majority of funds being managed on the Fidelity platform?

Both the RIAC and FIA made a determination, after reviewing the current record keeping companies (Fidelity and TIAA-CREF), that Fidelity was able to administer an ‘open architecture’, which allows them to offer a variety of funds from different investment companies, other than Fidelity and TIAA-CREF. TIAA-CREF does not currently have that functionality.

1.7 Why are there only two TIAA-CREF funds offered in the Core Fund line-up?

Fiduciary Investment Advisors (FIA), the university’s investment consultant, conducted a full review of all current Fidelity and TIAA-CREF fund options. Based on their Mutual Fund Selection & Performance Monitoring Process for defined contribution plans, they selected nine (9) Fidelity funds, (out of 136 funds in the 401(a) funds and 173 funds in the 403(b) funds), two (2) TIAA-CREF funds (out of 11 funds) and additional funds from Vanguard, Eaton Vance, Perkins, Neuberger Berman, Columbia, Baron, Oppenheimer and Cohen & Steers funds in order to develop a ‘best-in-class’ Core Fund line-up for the university. All funds were reviewed and approved by the Tufts University Retirement Investment Advisory Committee (RIAC). The Lifecycle Funds (Tier 1) and the Core Funds (Tier 2) will continue to be monitored by FIA and the RIAC on an ongoing basis.

1.8 Will the university benefit financially from these changes?

No, these changes were not financially driven. The university does not benefit from having more or less assets at our current record keepers (Fidelity and TIAA-CREF).

1.9 Will I still have the option of investing in a “Social Choice” Fund?

Yes, the Neuberger Berman Socially Responsive fund is available as part of the Core Fund in Tier 2.

1.10 Will there be a Roth option available?

The current plan structure does not include a Roth option. However, the RIAC will monitor and may elect to consider this option in the future.

1.11 (**NEW 4/4/11**)It appears that both the Perkins Small Cap Value Fund Class T and the Fidelity Growth Fund Class K are listed as closed to new investors. Will these funds be available to Tufts employees on March 1st?

Yes. Tufts University has received special approval from Perkins to offer the fund to Tufts employees. The fund will not be closed to Tufts employees; it will be available on our platform after March 1. As for the Fidelity Growth Company Fund K Shares – that fund is currently available to Tufts employees today and will remain available ongoing.

SECTION II: FIDELITY BROKERAGELINK ACCOUNT

2.1 What is a Fidelity BrokerageLink account?

A brokerage account within your retirement plan offers the opportunity to choose investments from a range of Fidelity mutual funds, outside of the Core Fund line-up. This account is neither a mutual fund, nor is it managed by any of the Fidelity Investments group of companies. Brokerage services are provided through Fidelity Brokerage Services LLC, a member of the New York Stock Exchange and Securities Investor Protection Corporation.

You alone decide how to invest the assets in your Fidelity BrokerageLink account, limited to the remaining 158 Fidelity funds previously offered through the plans.

Those who wish to utilize a brokerage window account: 1) should be comfortable with evaluating and researching a broad universe of mutual funds 2) want to invest part of his or her retirement savings in mutual funds through a brokerage account, 3) want the highest degree of variety in selecting mutual funds investments for his or her retirement savings and 4) are familiar with how a brokerage account operates.

2.2 How do I set up a Fidelity BrokerageLink account?

Please contact Fidelity at 1.800.343.0860. A team of representatives is available to assist you through this process.

2.3 What are the fees for funds in the Tier 3 Fidelity BrokerageLink account?

There are no fees to set up a BrokerageLink account. However, the Fidelity funds available in the BrokerageLink account are subject to the same type of expense and management fees associated with funds in Tier 2. In addition, some funds may have short term redemption fees associated with shares held less than the stated holding period. Please refer to the fund prospectus for complete information on the expense ratio or any short-term redemption fees associated with a particular fund by logging on to www.fidelity.com/atwork.

2.4 What are institutional K share funds?

K Shares are institutional class shares, which generally have lower fees than shares offered to the general public since they require a higher initial investment. K shares have the same management team, investment objectives and will invest in the same underlying funds as the non-K share class. However, K shares are not available in the Fidelity BrokerageLink account since BrokerageLink is a retail product.

2.5 Which Fidelity funds have Institutional K shares that will need to be converted if I am transferring my funds directly to my BrokerageLink account?

If you currently have K shares (institutional shares) that are not part of the Core Fund line-up at Fidelity, you will be affected by the following change. Some of the funds moving to BrokerageLink are K Share class funds. K Share class funds have lower expense ratios, which mean they are a less expensive share class. K shares have the same management team, investment objectives and will invest in the same underlying funds as the non-K share class. K Share class funds are not available in the BrokerageLink account. The K Share funds outside of Tier 2 (Core Funds) will be converted to the retail version of the fund. No action is required on your part as this conversion will occur automatically on July 27 at 4:00 p.m. Eastern Standard Time.

Below is a list of K Share Funds that will be converted to retail share class funds:

Fidelity Fund Name Fidelity Fund Name Fidelity Fund Name Fidelity Fund Name
MAGELLAN MID CAP STOCK DISCIPLINED EQUITY VALUE
EQUITY INCOME INTERNATIONAL DISCOVERY EQUITY INCOME II OTC PORTFOLIO
PURITAN FIDELITY FUND GROWTH DISCOVERY CAPITAL APPRECIATION
DIVERSIFIED INTERNATIONAL INDEPENDENCE VALUE DISCOVERY GROWTH STRATEGIES
BLUE CHIP GROWTH DIVIDEND GROWTH VALUE STRATEGIES EXPORT & MULTINATIONAL
BALANCED LEVERAGED COMPANY STOCK STOCK SELECTOR
GROWTH INCOME EMERGING MARKETS OVERSEAS

SECTION III: AVAILABLE GUIDANCE

3.1 What services will be available to help me during the transition period?

  • February 14 – March 18, 2011: ‘Retirement Planning’ Seminars will be offered across all three Tufts’ campuses and presented by David Carboni, Ph.D., CFP of DKC Retirement Associates LLC, a recognized retirement planning and investment expert, who will explain basic financial concepts, discuss investment strategies, review the features of the university 401(a) Basic and 403(b) Voluntary Retirement Plans, and discuss terms and concepts you need to know in order to make sound retirement planning decisions. Visit the Seminars and Workshops page for a complete list of Retirement Planning Seminars available on your campus.
  • February 15, 2011: Watch your mail for Fidelity and TIAA-CREF Transition Brochures which will be sent to all participants who currently have a balance in either the Tufts University 401(a) Basic and/or 403(b) Voluntary Retirement Plans.
  • March 21 – April 28, 2011 : ‘TIAA-CREF & Fidelity Investment Planning Workshops’ will be conducted to explain the new three-tiered framework, best-in-class investment fund options and the important steps you need to take. Visit the Seminars and Workshops page for a complete list of TIAA-CREF & Fidelity Workshops available on your campus.
  • One-on-One Retirement/Investment Planning Sessions, currently offered on an ongoing basis, will continue to be offered on all three campuses by Fidelity and/or TIAA-CREF counselors. You may sign up for an individual session by contacting Fidelity at 1.800.642.7131 and/or TIAA-CREF at 1.800.842.8353. Fidelity and/or TIAA-CREF counselors will be able to help assist you with your fund selections. Remember to bring your year-end statements from Fidelity and/or TIAA-CREF with you. If you have additional investments outside of the Tufts University retirement plans, bring those statements with you as well.
  • The Human Resources Retirement Planning Website
    (http://hr.tufts.edu/retirementplanning) will provide you with important information on how to register for the seminars and workshops noted above, review the three-tiered framework and new investment Core Fund line-up, as well as provide background information on the Tufts University RIAC’s work with FIA. In addition, there will be information regarding key dates and deadlines, Frequently Asked Questions, and much more.

3.2 How do I register for the Retirement Planning Seminars and Fidelity & TIAA-CREF Workshops?

For a complete list of Retirement Planning Seminars and TIAA-CREF & Fidelity Workshops available on your campus, visit the Seminars and Workshops page. Once you choose the seminar and workshop you want to attend, click on the link and you can enroll online.

3.3 How do I schedule a One-on-One investment review with a Fidelity and/or TIAA-CREF representative?

To schedule a one-on-one session with a Fidelity and/or TIAA-CREF Representative please contact Fidelity at 1.800.642.7131 and/or TIAA-CREF at 1.800.732.8353

3.4 Will the investment counselors have all of my investment information when I meet with them to decide how to invest in the new fund lineup?

Please note that either Fidelity and/or TIAA-CREF counselors will be able to help assist you with your fund selections. Remember to bring your year-end statements from Fidelity and/or TIAA-CREF with you. In addition, if you have additional investments outside of the Tufts University Retirement Plans, bring those statements with you as well.

3.5 What assistance will be available for me if I am unable to attend the seminar and workshops?

The Retirement Planning Seminar and the TIAA-CREF & Fidelity Investment Planning Workshops will be posted on-line at http://hr.tufts.edu/retirementplanning.

In addition, assistance is available by contacting Fidelity at 1.800.343.0860 or TIAA-CREF at 1.800.842.2776.

You can also contact the HR Benefits Office at 617.627.3270 or benefits-feedback@tufts.edu. Please note, that the HR Benefits Office staff is not authorized or licensed to provide financial/investment advice.

SECTION IV: ACTION STEPS & KEY DATES

4.1 What actions steps do I need to take?

There are several important steps you will want to take regarding your current balances and your future investment allocation elections:

  1. Review your Fidelity and/or TIAA-CREF quarterly statement(s) being mailed to your home address during January, 2011 and your current investment fund allocations.
  2. Review the Fidelity and/or TIAA-CREF Transition Brochures that will be mailed to your home address on or about February 15.
  3. Attend a ‘Retirement Planning’ Seminar and/or ‘TIAA-CREF & Fidelity Investment Planning’ Workshop on your campus.
  4. Take action as soon as possible after March 1, 2011, when the new investment fund options become available. You must make the following decisions for each of your Retirement Plans, the 401(a) and 403(b):
  • Future Investment Allocations (Deadline to act is April 28, 2011)
        • Log in to the appropriate vendor’s website (www.fidelity.com/atwork and/or www.tiaa-cref.org) and make your future investment allocation elections to the Fidelity Lifecycle funds, the Core Fund lineup, or Fidelity BrokerageLink account.
        • If you are currently directing future contributions to a non-core fund and do not make an election by April 28, your future contributions will be automatically directed to the default fund (Fidelity Lifecycle Fund).
    • Current Balances (Deadline to act is July 28, 2011)
      • Fidelity : Current balances outside of the Fidelity Lifecycle funds or the new Core Fund line-up must be exchanged into Lifecycle or Core Funds at Fidelity; or, if you wish to maintain your balances in non-core Fidelity funds, you must complete and return a BrokerageLink application by July 14 and those fund balances will be transferred to the Fidelity BrokerageLink account. If you do not make this change prior to July 28, all balances in non-core funds at Fidelity will be automatically liquidated and reinvested in the Plan default fund (Fidelity Lifecycle Fund).
      • TIAA-CREF : Current balances in non-core TIAA-CREF funds may be exchanged into Core Funds at TIAA-CREF. If you do not make a change prior to July 28, all balances in non-core funds at TIAA-CREF will be maintained. Your current balances will stay invested as previously elected; however, no new future contributions or exchanges can be made to these funds.

Note: If you want to change the vendor (Fidelity and/or TIAA-CREF) to whom you currently direct your investments or enroll in or change your 403(b) per pay period deduction, please update your elections online at the Tufts University website through Employee Self-Service at http://eserve.hr.tufts.edu. Your ability to move between Fidelity and TIAA-CREF has not changed.

4.2 What are the key dates I need to know?

  • January, 2011: Fidelity and TIAA-CREF Quarterly Statements (dated 12/31/2010) were mailed to the home addresses of all current participants. Keep this as a reference when you are meeting with your financial advisor and/or deciding which funds you want to invest your current and future contributions.
  • February 15, 2011: Watch your mail for Fidelity and TIAA-CREF Transition Brochures which will be sent to all participants who currently have a balance in either the Tufts University 401(a) Basic and/or 403(b) Voluntary Retirement Plans.
  • March 1, 2011: The new investment Core Fund lineup will be available to all participants, including the Fidelity BrokerageLink account. You can change your current and/or future investment fund allocations online directly at www.fidelity.com or www.tiaa-cref.org. You will have until 4:00 p.m. EST on April 28, 2011, to change your investment allocations for future contributions utilizing the Fidelity Lifecycle funds, the Core Funds, and/or BrokerageLink.
  • April 28, 2011: As of 4:00 p.m., all future investment allocations and exchanges for current balances will be limited to the Core Fund lineup, Fidelity Lifecycle Funds, or a Fidelity BrokerageLink account.
    • No future contributions or exchanges will be allowed into non-core funds unless you have set up a BrokerageLink account.
    • Future investment allocations to non-core TIAA-CREF funds will be redirected to the current Plan default (Fidelity Lifecycle Fund).
  • April 28 – July 28, 2011: Some of the Fidelity funds in the current line-up have short-term redemption fees if purchased and sold within a 90 day period; most funds do not. During this time, a 90-day waiting period will take place in order to avoid short-term trading fees. If you choose to trade during this period, please contact Fidelity to determine if your trade will be subject to a fee. Participants will maintain complete control over their accounts during this time.
  • July 14, 2011: You can set up a Fidelity BrokerageLink account at any time, however; it takes approximately two weeks to set up this account. In order to meet the July 28th deadline, your request must be submitted to Fidelity by July 14, 2011, in order to ensure that your assets outside of the Core Fund lineup can be transferred in-kind to the Fidelity BrokerageLink account.
    • If you submit a BrokerageLink account application after July 14, 2011, all current balances in non-core funds at Fidelity will be liquidated and redirected to the current Plan default (Fidelity Lifecycle Fund). Then, once your BrokerageLink account is created, you will be able to purchase any of the non-core Fidelity funds previously offered in the Tufts University Retirement Plans.
  • July 27, 2011: If you currently have Fidelity K Share ‘institutional’ class funds that are not part of the Core Fund line-up, those K Share class funds will not be available in the Fidelity BrokerageLink account. At this time, all K Share class funds outside of the Core Funds will be converted to the ‘retail’ version of the fund before the conversion to the Fidelity BrokerageLink account or an age-appropriate target date Fidelity Lifecycle fund.
  • July 28, 2011:
    • CURRENT BALANCES AT FIDELITY: On July 28, 2011, any current balances at Fidelity which are invested in funds outside of the Core Fund lineup or the Fidelity Lifecycle funds, will be liquidated and invested in the Plan default (Fidelity Lifecycle Fund), unless a Fidelity BrokerageLink account has been created.
    • CURRENT BALANCES AT TIAA-CREF: On July 28, 2011, any current fund balances at TIAA-CREF outside of the Core Fund lineup will be maintained; no future contributions or exchanges can be made to those funds; however the balances will remain invested as originally directed.
  • July 29, 2011, and thereafter: All future contributions must be directed to a Fidelity Lifecycle Fund, the Core Fund lineup, or a Fidelity BrokerageLink account.

SECTION V: BACKGROUND

5.1 What is the Retirement Investment Advisory Committee’s (RIAC) role at the university?

Historically, the university has used the RIAC, comprised of Tufts senior administration, to review its retirement programs. The RIAC was expanded in 2008 to include additional faculty and staff members from across all three campuses. Due to changes in federal regulations at that time, they began the process of reviewing the university’s retirement investment fund options. The new regulations increased the responsibilities of employers as plan sponsors, requiring a more active role in administering their defined contribution plans. In addition, the regulations sought to establish a more structured retirement program for employees in the non-profit sector.

The university seeks to provide well managed and competitive retirement plan offerings that provide best-in-class investment choices, select and monitor financially sound and reputable financial investment partners, ensure outstanding service and expertise to plan participants; and to keep fund fees to a reasonable level.

To meet the above goals, the RIAC engaged outside legal counsel and an investment consultant, Fiduciary Investment Advisors (FIA), to assist them. The resulting improvements should further assist you in reaching your long-term retirement income goals.

5.2 What are the RIAC’s fiduciary responsibilities?

Acting solely in the interest of plan participants and their beneficiaries, with the exclusive purpose of providing benefits to them, the RIAC must:

  • identify the parties responsible for the management and fiduciary oversight of plan investments and define their respective roles
  • take responsibility for the selection of investment providers
  • comply with legal standards established under the Employee Retirement Income Security Act of 1974 (“ERISA”)
  • establish policies for selecting and monitoring plan investments, and ensure plan documents are amended to incorporate the investment structure and comply with regulations
  • pay only reasonable expenses of administering the plan and investing its assets; and
  • avoid conflicts of interest

5.3 How were the Committee members appointed and what are their qualifications?

Patricia L. Campbell, Executive Vice President/RIAC Chairperson, appointed the Committee members based on their expertise and experience in financial management, their knowledge of investments and administration of retirement plans. Currently nine (9) university employees and two outside members are serving on the RIAC.

5.4 What did the RIAC learn in its review of the university’s retirement plans?

While not everyone has the same investment objectives, knowledge, retirement time horizon, and tolerance for risk, improvements can be made to the university’s retirement plans to benefit all participants the following ways:

  • leverage the value of Tufts University’s combined retirement assets to lower administrative and investment management costs paid by plan participants. High administrative costs impact participants’ investment earnings potential. One of the RIAC goals is to ensure plan participants pay competitive fees for the investments and services provided
  • simplify the investment process and encouraging participation by offering an improved investment menu with a wide variety of competitively priced options
  • provide independent investment guidance
  • simplify the recordkeeping process to comply with Internal Revenue/Department of Labor requirements to ensure participants benefit from tax-deferral of contributions and earnings until benefits are distributed from the plan

5.5 Why did the RIAC create the Core Fund Line-up?

The university’s goal is to maintain a broad array of investment options with reduced participant costs. The current plan includes redundant investment options, some funds with higher fees and several underperforming funds.

Eliminating investment options with overlapping investment styles will reduce confusion in the fund selection process for participants. Limiting the number of investment options to 24 Core Funds will allow effective communication on the individual investment options. The new menu will provide participants with the ability to monitor the fees they pay, reduce overall expenses, and diversify their portfolios using a broad spectrum of investment options.

SECTION VI: MISCELLANEOUS

6.1 What are the current retirement plan defaults and are they changing?

The current qualified default investment alternative (QDIA) funds are the lifecycle funds at Fidelity and TIAA-CREF, which include the Fidelity Freedom Funds and the TIAA-CREF Lifecycle Funds. Effective April 29, 2011, the qualified default investment alternative fund will be the Lifecycle funds at Fidelity.

6.2 If I don’t make an investment fund choice, where will my contributions go?

The U.S. Department of Labor recommends using balanced investments such as ‘target date retirement funds’ as a reasonable default option for most defined contribution plans. These funds are designed to make investing for retirement more convenient by automatically changing your investment mix or asset allocation over time as you get closer to retirement. Asset allocation involves dividing an investment portfolio among different asset categories such as stocks, bonds and cash investments. Once you select a target date fund, the managers of the fund make all the decisions about asset allocation.

6.3 I am currently invested in a fund that is in an ‘institutional’ K share class. Will these funds be affected?

If you currently have K shares (institutional shares) of funds that are not part of the Core Fund line-up at Fidelity, you will be affected by this change. Some of the funds which are scheduled to move to BrokerageLink are K Share class funds. K Share class funds have lower expense ratios, which mean they are a less expensive share class. K shares have the same management team, investment objectives and will invest in the same underlying funds as the non-K share class. K Share class funds are not available in the BrokerageLink account. The K Share funds outside of the Core Funds will be converted to the retail version of the fund before the conversion to the BrokerageLink account.

6.4 Will I continue to have annuity options?

Yes, the university recognizes the importance of providing lifetime income solutions to participants and will continue to offer the TIAA Traditional and CREF Stock funds. As part of the RIAC’s selection process, factors such as asset management, performance, risk, liquidity, fees, and annuitization flexibility have been evaluated.

The TIAA-CREF accounts offer a broad range of distribution options, including an annuity option. Keep in mind that lifetime annuities may limit your ability to make changes in the future. You should carefully weigh the advantages and disadvantages of annuities. Contact your financial advisor to see if an annuity is right for your financial situation.

It is important to keep in mind that in most cases, annuitizing all or most of one’s retirement plan is not recommended. Annuitizing retirement plan accumulations means surrendering all or a portion of an accumulated retirement account in exchange for receiving regular payments for life. For individuals unsure of their life expectancy, annuitizing only a portion of their retirement accumulation diversifies risk in retirement.

6.5 What happens to my current investments if one of my existing investment options is eliminated?

While the Plan’s new investment structure may no longer accommodate future contributions to some of the existing investment options after March 1, 2011:

  • TIAA-CREF existing individual contracts will remain with the individual participant. Those contracts will remain unaffected by the proposed change.
  • Fidelity existing investment fund options, outside of the Core Fund line-up (Tiers 1 & 2), will require that you establish a BrokerageLink account to keep the existing balances where they are. If a BrokerageLink account is not established, your balances will be liquidated and reinvested in the Plan default, a Fidelity Lifecycle fund that coincides with the year you reach age 65. Age 65 is used as a “Normal Retirement Age,” as defined by the Social Security Administration normal retirement age parameters.

NOTE: After learning more about the new investment menu and/or meeting with an independent advisor to determine which funds are in your best interest, you may decide to keep existing funds invested as they are, or you may choose to transfer your current balances to another investment option. However, all future contributions will need to be made within the plan’s new investment three-tiered structure.

EXAMPLE: I have a current balance in my 401(a) in the TIAA Traditional account and the CREF Social Choice fund. My future contributions are being directed to TIAA-CREF Lifecycle Fund. How will I be affected by this change?

  • Current Balances:
    • The TIAA Traditional account is part of the Core Fund line-up, there is no change required.
    • However, if you don’t exchange your balances in the CREF Social Choice fund prior to July 28 to a fund from the new line-up, the balance in that account will be maintained.
      • This means that although you cannot direct future contributions or exchanges to that fund, the current balance will remain invested as originally directed.
  • Future Contributions:
    • Since the TIAA-CREF Lifecycle fund is not part of the Core Fund line-up, if you don’t change your election to direct your future contributions to go to a fund within the new line-up by April 28, all future contributions will be redirected to the Plan default (a Fidelity Lifecycle Fund).

6.6 Will I be subject to taxes if I elect to transfer/roll over my account balance(s)?

No, direct transfers/rollovers do not result in the taxing of amounts you have accumulated. Amounts will continue to be tax-deferred while they remain in the Plan. Taxes will be payable when you request a withdrawal or receive a distributions from the Plan.

6.7 When do I have the ability to transfer funds? Will there be an “annual open enrollment” period similar to health insurance?

There is no annual enrollment period for our Retirement Plans. You can switch or add vendors (Fidelity and/or TIAA-CREF or vice versa) anytime. Contact the vendor you would like to transfer your account to in order to start the transfer process.

In addition, you can transfer your future balances from March 1, 2011 to April 28, 2011 without fees or charges. However, if you wish to transfer current balances between April 29, 2011 and July 28, 2011, you may be subject to short-term trading fees. After the transition is complete (July 29, 2011), you will be able to move current balances at any time, 24/7, through the Fidelity and/or TIAA-CREF websites utilizing the Fidelity Lifecycle funds, the Core Funds, or Fidelity BrokerageLink. We recommend that all staff and faculty schedule a counseling session with Fidelity, TIAA-CREF and/or their own private financial advisor before making decisions about transferring funds.

6.8 Can I use Tiers 1, 2 and 3 or must I invest in one tier?

Yes, you can invest funds in any or all of the Tiers (1, 2 and 3). A Fidelity BrokerageLink account must be established before you can invest in Tier 3.

6.9 Will the ‘Core’ Funds in Tier 2 ever change?

They can. If a fund does not meet the fund management performance criteria set by Fiduciary Investment Advisors (FIA) and the Retirement Investment Advisory Committee (RIAC) over an appropriate period of time (usually after four quarters), the fund can be replaced with another fund of the same type. The Core Fund lineup as well as the Fidelity Lifecycle Funds will be carefully monitored by the RIAC and FIA on an ongoing basis.

6.10 Will I be required to move my current fund balances or just direct future contributions to the new fund lineup?

Existing balances with TIAA-CREF will remain with TIAA-CREF unless the employee makes an active decision to move them. After April 28, 2011, no new contributions will be allowed into non-core TIAA-CREF funds. The TIAA Traditional and CREF Stock funds are included in the Core Fund line-up.

Existing balances at Fidelity will need to be moved within the new fund line-up. If they are not moved as of July 28, 2011 or if you do not set up a Fidelity BrokerageLink account, your balances will be liquidated and reinvested into the Plan default, (Fidelity Lifecycle Fund) at that time.

Example: I have my current 403(b) balance with Fidelity, invested in the Fidelity Blue Chip Growth. I have directed my future contributions to the Fidelity Magellan Fund. What do I need to do?

  • Current Balances: Since the Fidelity Blue Chip Growth is not available as part of the Core Funds, you can set up a BrokerageLink account before July 14.
    • If you choose not to set up a BrokerageLink account, you can contact Fidelity to exchange my balance into a fund or funds in the new line-up prior to July 28.
    • If you do nothing, your current balances will be liquidated on July 28 and reinvested in the Plan default (Fidelity Lifecycle fund).
  • Future Contributions: Since Magellan is not part of the new line-up, you would need to contact Fidelity to change your future investment allocation by April 28. If you do nothing, your future contributions will be directed to the Plan default, (Fidelity Lifecycle fund). However, you always have the option of investing in Blue Chip Growth through BrokerageLink. Contact Fidelity at 1.800.642.7131 to request a form.

6.11 Will this change affect my vesting status?

No, this change has no impact on the 401(a) Basic Retirement Plan’s three year vesting rule, which states that you must complete three years of eligible service in order to own the funds and be able to take them with you if you leave Tufts University. In addition, the 403(b) vesting rule that you are always 100% vested in the 403(b) Voluntary Retirement Plan, is not changing either.

6.12 I understand one of the RIAC’s goals is to make sure plan participants pay competitive fees for the investments and services provided. How are service fees paid today?

Administrative and investment management fees are paid by Plan participants through the expense ratios of the investment options they have selected. Fees are taken before earnings are credited to participants’ statements, reducing their return on their investments. Reducing plan fees allows more retirement earnings to accumulate for the participants. Fee disclosures will be included on participant statements effective January 1, 2011.

Even small differences in fees can translate into a large difference at retirement. For example, $10,000 invested in a plan for 20 years with an 8 percent annual rate of return and a 1.5 percent operating expense will return approximately $35,236. However, a one percent decrease in the operating expense for this fund would increase the participant’s return by $7,243, a 21% increase or a total of $42,479.

6.13 How did the RIAC determine if fees were competitive and reasonable?

Fee transparency and “hidden fees” have recently made headlines in the press and are the basis of new federal legislation under discussion. The RIAC, assisted by Fiduciary Investment Advisors (FIA), reviewed each service provider’s services and all costs associated with the administration of the retirement plans.

6.14 I have funds in TIAA that are employer contributions. If I want to transfer them to Fidelity, can these be transferred to Fidelity in a lump sum or do they have to be transferred in over a longer period?

Tufts University uses the Group Retirement Annuities (GRA) product from TIAA-CREF in the Tufts University Retirement Plans. What this means to you is that the TIAA Traditional Account can be transferred to Fidelity as follows:

  • While you are still employed at Tufts University, you can transfer your account balances with 10 payments over 9 years.
  • If you have terminated employment at Tufts, you can withdraw your account balance, receiving 5 payments over 5 years. Or, you can receive a lump sum cash withdrawal within the 1st 120 days of termination and be charged a 2.5% surrender charge. You can roll over your balances to an IRA or another employer’s retirement plan or distributed directly to you. Consult with a tax advisor regarding how a direct distribution will affect your tax situation.

Again, these options only apply to the TIAA Traditional Account and not to other accounts at TIAA-CREF. All other accounts should be able to be transferred to Fidelity in a lump sum.

6.15 I invest in TIAA-CREF accounts through my Tufts University Retirement Plans. Will I be able to continue contributions to TIAA-CREF accounts in the new Core Fund line-up?

Yes, through the TIAA Traditional Annuity and CREF Stock Accounts in Tier 2 of the Core Fund line-up. Future contributions to the other TIAA-CREF investments will no longer be available after April 28. Current balances will remain in the same funds they are currently invested in. After July 28, current balances at TIAA-CREF can only be transferred within the TIAA Traditional, CREF Stock and TIAA-CREF Money Market Fund.

6.16 Is there any restriction on transferring or withdrawing funds from the TIAA-Traditional Account?

Yes, the restriction on the TIAA traditional is that you can only transfer or withdraw your balance in 10 annual installments. This only applies to the the GRA, which is offered in the 401(a) Basic Plan. There are two exceptions: (1) if you have less than $2,000 in the account, the restriction doesn’t apply. (2) Within 120 days of termination of employment, you can withdrawal the full amount with a 2.5% penalty. Note: The restrictions don’t apply to your 403(b) contributions to the TIAA-Traditional Account.

6.17 (**NEW 4/4/11) Are there any restrictions on the TIAA-CREF Accounts other than TIAA Traditional?

Yes. For the TIAA Real Estate Account, cash withdrawals and transfers out of the Account to a TIAA-CREF account or into another investment option can be executed on any business day but are limited to once per calendar quarter.

SECTION VII: RETIRING OR LEAVING THE UNIVERSITY

7.1 Will plan changes affect the portability of my retirement account, if I don’t stay at the university until my retirement?

No, you will have the same distribution choices as you do today. You are always 100% vested in your 403(b) Voluntary Retirement Account. Your 401(a) Basic Retirement Plan Account is fully ‘vested’ after you complete three-years of eligible employment with the university. You will have several distribution options from which to choose.

7.2 I plan on retiring in the next few years. Will these Plan changes affect my retirement?

No, existing TIAA-CREF annuity contracts remain unaffected by a consolidated investment structure, as you are not required to transfer or withdraw any funds already contributed. Also, contributions made to your Fidelity account will not be impacted by these changes.