You will be glad to know that even with the many alterations coming to the UNC System Retirement plans, the System will still offer most of the mutual funds currently found in your 403(b) and Optional Retirement Plans (ORP). However, you must take action to ensure that this takes place within the new structure, changes in how your assets are allocated could occur automatically and without your input. We believe you should know your options and remain in control of your retirement portfolio.
Your 403(b) Plan
Unless you decide otherwise, by July 1, 2014, assets in your current 403(b) funds will be automatically “mapped” to new funds, some of which may have different investment objectives than you desire. For example, if you have sector funds or region-specific foreign funds, they may be mapped to a target-date fund. If you are unhappy with the new direction imposed upon your account(s), it will be up to you to redirect them.
We advocate you take a different route as soon as possible and gain access to the brokerage trading platform already available to you in your 403(b) plan. You can then allocate your funds as you see fit. By taking this course of action, you will avoid having your funds mapped and the subsequent need for reallocation.
Because VALIC and LincolnFinancial Group (LFG) will no longer be offered to ORP participants, you will need to make changes to your plan by December 31, 2014, if you currently invest with those providers. First, you will need to transfer your current ORP assets in those accounts (those that are not individual annuity contracts) to Fidelity or TIAA-CREF. This transfer is a non-taxable event. Second, you need to determine where your future contributions will go, again to Fidelity or TIAA-CREF, and submit the proper form to your payroll department. If you fail to take these actions, your account assets and/or your contributions will be placed in an account with TIAA-CREF and an investment option selected for you by default.
Additionally, if you are retired and receive systematic monthly income from VALIC or LFG to maintain your health insurance or to fund your retirement, you will need to choose to begin receiving those income streams from either Fidelity or TIAA-CREF.
We think each decision above should be made by you and in the context of your unique financial picture, not by someone else and not automatically. This summer, we can help you make informed decisions and take the actions necessary to implement them.
Contact our office with questions.