The recent decision by the Internal Revenue Service to extend the deadline for 403(b) retirement plan document compliance creates opportunities for plan sponsors to further simplify and streamline their retirement plans and enhance benefits to participating employees, according to TIAA-CREF, the financial services organization which serves more than 15,000 institutions in the academic, research, medical and nonprofit fields.
Strengthening Retirement Plans
The IRS recently extended the deadline, to December 31, 2009, for 403(b) plan sponsors to have a written plan in place, while remaining aspects on the final regulations will take effect on January 1, 2009, as planned. TIAA-CREF offers a number of programs to help plan sponsors meet compliance needs, assure their plan furthers their institutions' strategic goals, manage risk prudently and address the long-term income needs of participating employees.
"TIAA-CREF stands ready to assist clients who have not yet completed their plan documents to complete this task as soon as possible," said Paul J. Gallagher, Vice President of Institutional Product Management for TIAA-CREF. "At the same time, we want to help 403(b) plan sponsors take full advantage of this opportunity to review and enhance their plan offerings to ensure that their plans further institutional strategic objectives and help meet the long-term financial needs of participating employees, whatever their plan's structure."
Last year TIAA-CREF began offering a service to assist plan sponsors in developing or revising their plan document(s) using Ascensus, Inc.SM, a leading provider of plan document services. To date, more than 65 percent of 403(b) plans that TIAA-CREF serves have signed up for the service.
Streamline Retirement Plans and Help Employees Address Long-Term Income Needs
"403(b) plans, regardless of their size or number of vendors, now face the multiple challenges of streamlining platforms, managing compliance rules and ensuring a safe and secure retirement for their employees," continued Gallagher. "This deadline extension provides an opportunity for all plan sponsors to navigate these varying objectives in a strategic way so that their plan is doing all that they ask it to do to create new efficiencies and safeguard their organization and its employees."
For example, TIAA-CREF also offers Compliance Coordinator, a web-based solution for plans with multiple vendors that streamlines management and administration of participant loan and withdrawal transactions across all vendors in compliance with new IRS rules.
"Plan sponsors have an opportunity to help assure that their plans encompass financial vehicles that can produce the lifetime income employees will count on in future decades," Mr. Gallagher added.
For example, TIAA-CREF's TIAA Traditional Annuity, which has paid additional amounts above its guaranteed minimum interest rate every year since 1948, can add stability to retirement portfolios, and can act as a complement to equity, fixed income and other offerings.1 Any guarantees under annuities issued by TIAA are subject to TIAA's claims-paying ability. Payments under CREF and the TIAA Real Estate Account are variable and will rise or fall based on investment performance.
In 2009, annuitants will receive annual income that matches or exceeds 2008 levels under the TIAA Traditional Annuity, notwithstanding an uncertain market.2
Newly released data from Morningstar shows that 78 percent of TIAA-CREF's variable annuities and mutual funds within the organization's fund complex exceeded their category median over the five-year period and 76 percent exceeded their category median over the three-year period ended November 30, 2008.3 In addition, as of the same date, 30 percent of TIAA-CREF's variable annuities and mutual funds within its fund complex rated by Morningstar held overall ratings of four or five stars and none held overall ratings below three stars.4
Depend on TIAA-CREF
Plan sponsors also have an opportunity to assure that participating employees have the objective advice and guidance they need to choose from among dozens of investment options. According to Forbes, TIAA-CREF has "the most extensive personal[ized] workplace advice."5 Its advisers receive no commission; they are compensated through a salary-plus-incentive program that awards client service excellence.
TIAA is one of just three U.S. life insurance companies to receive the highest possible ratings from all four of the major ratings agencies.6
A TIAA-CREF guidebook, "403(b) Plan Fundamentals: Your Guide to Compliance" provides information plan sponsors may need to satisfy the regulatory requirements relating to 403(b) plans, highlighting the specific requirements of the final 403(b) regulations. It is available here.
About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with more than $398 billion in combined assets under management (9/30/08) and the leading provider of retirement services in the academic, research, medical and cultural fields.
All TIAA-CREF investment products are subject to market risk and other risk factors as detailed in their prospectus. Past performance does not guarantee future results.
Chad Peterson, Director, Corporate Media Relations
cpeterson@tiaa-cref.org, 1 212 916-4808 Cell: 1 917 715-9083
Abby Aylman Cohen, Manager, Corporate Media Relations
aacohen@tiaa-cref.org, 1 212 916-4381 Cell: 1 917 596-4758
1 See http://www.tiaa-cref.org/support/news/articles/gen0810_139.html
2 http://www.tiaa-cref.org/support/news/articles/gen0812_152.html; This information doesn't apply to income annuitants are receiving under defined benefit pension plans, principal and interest contracts or the TIAA Transfer Payout Annuity or interest-only payments from TIAA Traditional.
3 Fund complex defined as all TIAA-CREF Open-End Mutual Funds, its group variable annuities (e.g. CREF Accounts) and the TIAA-CREF Life Funds as defined by Morningstar Direct. The Morningstar median represents the midpoint of an index of comparable funds/accounts grouped by factors such as investment objective and asset class.
4 The performance of TIAA-CREF mutual funds and variable annuity accounts has been negatively impacted by current market volatility. For more information on performance, please visit www.tiaa-cref.org/performance.
5 "Playing the Numbers," Forbes 2009 Retirement Guide
6 A++, A.M. Best (9/2008); AAA, Fitch Ratings (8/2008); Aaa, Moody's (7/2008); AAA, S&P (8/2008)
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
Advice and Planning Services is a division of TIAA-CREF Individual & Institutional Services, LLC.
Annuity products are issued by TIAA (Teachers Insurance and Annuity Association of America), New York, NY.
Variable annuity account options are available through contracts issued by TIAA or CREF. These contracts are designed for retirement or other long-term goals, and offer a variety of income options, including lifetime income. Payments from the variable annuity accounts [and mutual funds] are not guaranteed and will rise or fall based on investment performance.
Mutual funds do not offer the range of income options available through annuities.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 1 877-518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.
© 2009 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
