As you are aware, the college recently implemented enhancements to the 403(b) Retirement Plan. These changes were announced in late September and communicated in the transition guide mailed to your address on file in October. We would like to respond to some questions that have been raised about the timing, process, and rationale for these changes. While we cannot cover every topic within this communication, I will make myself available at the next Faculty Council and Staff Council meetings to answer any questions as well.
We understand that retirement savings are a sensitive, complex matter and that some employees have experienced a level of aggravation and confusion related to the changes and we apologize for any inconvenience that has been caused. The goal of these changes was not to take anything away but to enhance available options, particularly for the vast majority of employees who are not actively engaged with their investment options.
Why the changes?
Ithaca College is committed to providing our employees with competitive retirement benefits and tools that will support attaining their retirement saving goals. The 403(b) Investment Committee, which includes the CFO, CHRO, benefits staff, as well as faculty and staff representatives, meets regularly to review the plans and consider how to improve available options and has endorsed these changes. This committee is advised by Fiduciant, a third-party independent investment advisor and has been working with both TIAA, the recordkeeper and administrator of our retirement plans and NFP, our benefits broker, to implement the changes.
As part of their review process and in an effort to better align the plan with best practices and make improvements for our participants the committee decided to modernize the fee structure and to transition the approach for our target date investors (“do it for me” participants). National Research shows that over 60% of employees do not actively engage with their retirement investment plans at all. Therefore, it is incumbent upon the fiduciaries of the 403(b) plan to ensure that it remains up to date, modernized, and fully taking advantage of available options to ensure that investments for all employees are working to their fullest potential.
In implementing these changes, nothing has been taken away from employees. Employees who wish to retain their current investment configuration are free to do so.
Simply log in to your account at TIAA.org/ithaca to get started. From this one location, you can:
- Make investment changes to your current balance or future contributions
- Unsubscribe from the Target Income Model portfolios (opt out) at any time and make your own investment elections
- Review or change your beneficiary information
Some employees have asked why the changes were rolled out with a default of “opting out” versus “opting in.” Universal re-enrollment when changing a QDIA (Qualified Default Investment Alternative) is a retirement plan industry best practice. It enables plan sponsors like Ithaca College to ensure participants are allocated appropriately if they don’t take any action and provides better outcomes by allowing participants to remain in an age-appropriate model. All participants can still actively choose their own investment allocation, but this practice ensures that those who take no action will be benefiting from the most up-to-date options available.
What Does This Mean for You?
You now have access to more investment choices, tools and services to help you save for your financial future. As part of these enhancements, unless you chose different investment options, all future contributions and existing balances were directed to the plan’s new default investment option – the Target Income Moderate model portfolio that aligns with your anticipated retirement age. Any annuity balances remained in your Retirement Annuity (RA), Supplemental Retirement Annuity (SRA) and Group Supplemental Retirement Annuity (GSRA) accounts.
TIAA will continue to be the service provider for the administration and recordkeeping of your Ithaca College retirement plans. You can continue to work with a TIAA financial advisor as you choose. We understand that some of the local TIAA advisors expressed that they were not fully aware of the college’s plans or rationale for the changes. While TIAA has assured us that communication and training was provided to these advisors, they are committed to working with the local team to ensure they fully understand Ithaca College’s transition and benefits of the target date models.
If you were unable to attend the webinars held in November that reviewed the plan changes, you can access a recording of the session here. Additional resources regarding the plan changes are also available at TIAA.org/ithaca/transition, including answers to frequently asked questions (FAQs). Please visit the following link for answers to a few questions that have been raised (Link) We are also looking to schedule additional informational sessions in the new year to answer any remaining questions you may have.
Get Help Reviewing Your Account
You have several resources available to you to help understand the changes and address your questions.
- Fiducient Advisors provides comprehensive fiduciary governance and oversight services to Ithaca College, including managing plan fees to ensure they are reasonable and competitive (the Plan’s administrative fee requirement has been reduced by ~80% since 2021) and provides investment monitoring and reporting services (ensure funds in the plan are performing well). Fiducient works with approximately 100 colleges and universities providing these same services and has approximately $275 billion in assets under advisement.
- NFP is our current benefits broker. They are a private entity that is 100% equity and employee owned and has no affiliation with any IC individual or entity. The college had previously been working with Mercer as our benefits broker, but they had not been proactive in advocating for the college’s interests. By switching to NFP and through their re-negotiation of our current contracts with benefits vendors, the college has been able to realize significant savings over the last two years without negatively impacting benefits for our employees. In addition, NFP is a qualified retirement plan consulting firm that provides an enhanced level of investment options and financial education to our employees, in partnership with TIAA and at no additional cost to individual employees. NFP can be reached at 1-800-959-0071 or email@example.com.
- TIAA remains our recordkeeper and administrator of our retirement plans. Employees can access personalized advice from a TIAA financial consultant by calling 800-732-8353, weekdays 8 a.m. to 8 p.m. (ET) or visiting TIAA.org/schedulenow. During your session, you can get answers to your specific questions and develop a retirement action plan tailored to your financial situation.
457(b) Deferred Compensation Plan
I would also like to address questions that have been raised regarding the college’s 457(b) plan.
Under the college’s 403(b) plan, all eligible employees can have elective deferred compensation up to $19,500 per year (2020 and 2021), going up to $20,500 in 2022 with catch ups depending on age. These are deductions that come out of their paycheck pre-tax and are placed in their TIAA account. That money is invested and grows over time and is then taxed upon withdrawal. The college currently matches that contribution up to 5% of the employee’s annual salary for all eligible employees.
The 457(b) plan, which was instituted in 2015, is an additional plan which is standard across non-profits. This plan allows HCEs (highly compensated employees, or the top 5% of employees in terms of compensation regardless of title, which includes some faculty) to contribute an additional $20,500 (or whatever the current federal limit is) of their own pre-tax income (beyond the $20,500 noted above) to an account with TIAA. These contributions are not matched or supplemented in any way by the college, but rather provides an option for those eligible employees to invest their own personal funds. None of these individuals received any additional money from the college beyond what has been available to other employees. All were subject to the reduction of the match contributions last year, but were able to continue to contribute their own funds to the 457(b) plan. The SRA (Supplemental Retirement Plan) document for the plan is publicly available and contains further details.
These plans are very common and are a necessary component of being an Employer of Choice in order to attract and retain top talent for executive and faculty positions.
This is a lot of information to absorb. Please know that we are committed to making sure you have access to answers to whatever questions you may have, either by connecting you to the right resources or by just being available for a phone call. I would much rather be able to have a direct conversation with you and answer your questions than to have misinformation circulating.
Wishing everyone a safe holiday with time to rest and rejuvenate for next semester.
Vice President, Human Resources and Planning