July 1, 2014, will bring significant changes. Beginning on that date, no new accounts will be allowed to be opened with VALIC or Lincoln Financial Group (LFG). This will reduce the number of approved providers in the plan to only two – TIAA-CREF and Fidelity.
If you have accounts with VALIC or LFG (unless you have an individual contract or assets that are being annuitized), your account assets must be transferred to Fidelity or TIAA-CREF before December 31, 2014. This transfer is a non-taxable event. In like manner, if your contributions are now going to either VALIC or LFG, you must redirect those to one of the two approved carriers before December 31. If you fail to take either of these actions your account assets and/or your contributions will be placed in an account with TIAA-CREF by default.
There are other complicating factors as well. First, and of utmost importance, if you are receiving a monthly income required to maintain your health insurance coverage from VALIC or LFG (other than from an annuity contract), you will need to make the changes necessary to begin receiving those income streams from either Fidelity or TIAA-CREF. You must take this action before December 31.
Changes will also be made to the lineup of investment options available to you. If you currently have investments with TIAA-CREF or Fidelity that will not be part of the new fund lineup offered by those providers, and you do not take action yourself to make necessary changes, your investment in those funds will be “mapped” to similar funds for you.
We want to help you simplify this complicated transition. Not only will your ORP account need to be reviewed, but this should take place in the context of your overall financial picture. Our clients have portfolios that consist of many accounts, only one of which is their ORP. It is critical that your actions resulting from these required changes be integrated into your portfolio of accounts.
We’re here to help. Please contact one of our advisors to schedule a complimentary meeting to review how this affects you and how to navigate your path forward.