| Q: |
Is the value of TIAA Traditional Annuities reported as assets on schedule H or schedule I?
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| A: |
No. TIAA Traditional Annuity contracts are fully allocated contracts issued by TIAA,
which is an insurance company. According to the instructions to Form 5500 under "Limited Pension Plan
Reporting," account balances in such contracts are not reported as assets on schedule H or schedule I.
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| Q: |
Does TIAA-CREF provide auditors with an SAS 70 report?
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| A: |
Yes. You can access and print the report from the Online Form 5500 Instruction Materials page.
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| Q: |
Are CREF contracts and the TIAA Real Estate Account subject to the limited scope audit
provisions of Section 103(a)(3)(C) of ERISA and DOL Regulations, section 2520.103-8? In other words, are the
statements and information provided by TIAA-CREF for my plan exempt from having to be examined and reported on by
an independent qualified public accountant?
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| A: |
Yes. This exemption from the audit requirements applies to statements and information
about your plan provided by TIAA-CREF. Section 103(a)(3)(C) of ERISA and the applicable Department of Labor (DOL)
regulation, section 2520.103-8, provide that the examination and report of an independent qualified public
accountant need not extend to any statement or information prepared and certified by a bank or similar institution
or by an insurance carrier. The exemption applies to any plan, the assets of which are held by an insurance carrier,
bank, or other financial institution regulated, supervised, and periodically examined by a state or federal
agency. Both TIAA and CREF qualify for the exemption.
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| Q: |
Does CREF hold the plan's investment assets and execute investment transactions on
behalf of the plan?
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| A: |
No. The underlying assets of CREF accounts are not plan assets. CREF is an investment
company registered under the Investment Company Act of 1940. Under ERISA section 401(b)(1), the underlying
assets of an investment company are not plan assets, though the securities issued by such investment companies
are plan assets. As a result, CREF units are plan assets, but the underlying assets of the CREF accounts are not.
It is the value of the CREF units that must be reported on schedule H or schedule I, and not the value of the
assets underlying the accounts.
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| Q: |
Can you provide a breakdown of the plan administrative expenses charged against the
assets of the CREF accounts and the TIAA Real Estate Account?
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| A: |
Plan administrative expenses and fees are reported on line 2i of schedule H. But since there were no fees or
expenses incurred or paid by the plan to CREF or the TIAA Real Estate Account, there are no CREF or TIAA Real
Estate Account expenses or fees to report.
The expense deductions for the CREF and TIAA Real Estate accounts, as reported in their respective prospectuses,
are factors in determining the unit values of the accounts. However, because these expenses are not paid by
the plan, they are not the types of plan expenses that must be reported on schedule H. The instructions given
for line 2i of schedule H state:
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Report all administrative expenses (by specified category) paid by or charged to the plan, including those
that were not subtracted from the gross income of CCTs, PSAs, MTIAs, and 103-12 IE's in determining their
net investment gain(s) or loss(es). Expenses incurred in the general operations of the plan are classified
as administrative expenses.
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As the instruction shows, plan expenses do not include those that are charged against the unit values of accounts
in determining their investment experience. A similar instruction is given for line 2h on schedule I.
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| Q: |
How should records on terminated participants be handled? Must they be considered plan
participants and should schedule SSA be included with a plan's form 5500 filing?
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| A: |
There is no guidance from the DOL on this, so each plan administrator must decide how to handle terminated employees.
Usually the determination of who is a participant is relatively clear-cut. If the plan continues to hold assets to
fund the benefits to be paid to a terminated employee, then that employee must be considered a plan participant for
purposes of form 5500. However, in the case of defined contribution plans funded with TIAA-CREF contracts, the
question of whom to include in a plan filing becomes a little more complicated, as explained below.
Under the TIAA-CREF system, many rights are vested in the individual participant. Unlike plans that are funded
through a trust, individual participants in plans funded with TIAA-CREF contracts already own their own contracts.
This is true even for participants covered under our group annuity contracts because under those contracts the
participants own their own individual certificates.
After an employee terminates employment, the employer has no obligation to make further contributions and will not
control when the participant receives distributions. Instead, the terminated employee will exercise his or her own
rights under the terms of the TIAA and CREF contracts. In effect, the former employee is in the same situation as
if he or she had received an in-kind distribution of an annuity contract from a trusteed pension plan. Since this
is the case, a number of institutions take the position that an individual who has terminated employment is no
longer a participant in the plan. Since there is no guidance from the DOL to the contrary on this point, we
believe that excluding terminated employees is an acceptable approach.
The alternative approach of treating individuals who have terminated employment as participants until they actually
begin to receive annuity benefits is, however, in our opinion equally acceptable. Under this approach, so long
as a former employee still has funds in a deferred contract and that contract is not being used to accept
additional contributions from another employer, the individual would still be considered a plan participant. Only
his or her employment status has changed; plan benefits remain unchanged.
While either approach for handling terminated employees may be adopted by a plan administrator, all terminated
employees must be treated consistently. So -
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If you choose to treat former employees as participants on Form 5500
| – |
The unit values of their CREF and TIAA Real Estate accumulations should be reported as assets of the plan, and
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| – |
A schedule SSA should be included in the 5500 filing for these former employees.
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| • |
If former employees are not treated as participants on form 5500
| – |
The unit values of these individuals' CREF and TIAA Real Estate accumulations should be reported as having been distributed by the plan, and
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| – |
No schedule SSA should be included in the 5500 filing for these individuals, since they are no longer treated as participants.
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In addition to treating all former employees in the same way on Form 5500, you should also take a consistent approach from
year to year. If you want to change the approach taken with regard to former employees, you should notify the DOL of
the change by including an attachment with the 5500 Form for the year in which the change is adopted.
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| Q: |
Must we attach an annual statement of assets and liabilities of a pooled separate account or
a certification to our Form 5500 filing, as required by the instructions for Line 31 (c)(12)?
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| A: |
Yes. If your plan has any participants who have invested in the TIAA Real Estate Account
during the plan year, you must meet this requirement because the account is a pooled separate account. However, instead
attaching of an annual statement of assets and liabilities, which is available in the TIAA Real Estate prospectus,
the attachment you can use can be downloaded from the Form 5500 Instruction Materials and is also included in the Form
5500 information package you receive from TIAA-CREF. (Query: Are we still going to send the information package
or will this info only be available on the Web?) TIAA files an annual financial statement for the TIAA Real Estate
Account directly with the Department of Labor that meets this and the other DOL requirements for such a filing.
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| Q: |
Must we provide, with respect to our TIAA-CREF annuities, the schedule of plan transactions in
excess of 5 percent of the current value of plan assets requested on Line 4j of schedule H?
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| A: |
No. The DOL has clarified that transactions "under an individual account plan that a
participant or beneficiary directed with respect to assets allocated to his or her own account...should not be
taken into account for purposes of preparing the schedule of reportable transactions," required by line 4j of schedule H.
Since TIAA-CREF contracts fund such individual account plans, no schedule of reportable transactions is required with respect to them.
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| Q: |
How do we report holdings in the TIAA Real Estate Account under the revised Form 5500?
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| A: |
If your plans that have any participants who participated in the TIAA Real Estate Account at any time during the plan
year, you must comply with the instructions for reporting these assets applicable to plans that invest in a so-called
"Direct Filing Entity." The TIAA Real Estate Account is a pooled separate account or "PSA" of TIAA, an insurance
company, and is therefore a Direct Filing Entity for Form 5500 reporting purposes.
On behalf of the Real Estate Account, TIAA will file a Form 5500 directly with the DOL, which will permit plans
with assets in the Real Estate Account to follow the instructions applicable to plans with assets in a Direct Filing
Entity that does such a direct filing. Specifically -
If your plan is a large plan that files schedule H (financial information), Real Estate Account assets are reported in:
| • |
Part I, line 1c(10) ("Value of interest in pooled separate accounts"), and in |
| • |
Part II, line 2b(7) ("Net investment gain [loss] from pooled separate accounts"). |
If your plan files schedule I (financial information - small plan), Real Estate Account assets are reported in:
| • |
Part I, line 1a (total plan assets) and line 2c (other income). |
Both large and small plans with Real Estate Account assets must also file schedule D (DFE/Participating Plan
Information), Part I.
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| Q: |
Does TIAA-CREF provide breakdowns of the interest and dividends credited to each
TIAA and CREF variable annuity account?
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| A: |
No. Such a breakdown is not provided because no such amounts are credited by TIAA or
CREF. The CREF accounts and the TIAA Real Estate Account are investment options in a variable annuity held pursuant
to the terms of a qualified plan. Such options, unlike mutual funds sold directly to the public, are not required to
distribute dividends and capital gains on an annual basis. Nor are the investment returns of investment options in a
variable annuity subject to federal income taxes on an annual basis, as is generally the case with respect to privately
purchased mutual funds. Instead, distributions from variable annuity contracts are taxed under section 402 and section
72 of the Internal Revenue Code when received. Premium contributions to variable annuities purchase additional units,
the value of which are calculated daily. The changes in unit values reflect the gains, losses, dividends, and interest
received by the entire account. For purposes of Form 5500 reporting, the investment experience is the unrealized
appreciation or depreciation of assets. For schedule H or schedule I reporting purposes, these assets are the CREF
annuity contract units and TIAA Real Estate Account units, not the underlying assets of the CREF and TIAA Real
Estate accounts.
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| Q: |
Does TIAA-CREF report the "cost" of units of the CREF and TIAA Real Estate accounts?
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| A: |
No. The DOL has clarified in the revised Form 5500 that it is no longer necessary
to report "cost" information in the "Schedule of Assets Held for Investment Purposes At End of Year," required
by line 4i of schedule H. The instructions to line 4i of schedule H clearly provide that:
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"Cost information may be omitted when reporting transactions of an individual account plan that a participant or
beneficiary directed with respect to assets allocated to his or her own account..."
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Since TIAA-CREF contracts fund such individual account plans, cost information with respect to them may be
omitted from the schedule, which now only requires: The identity of the issuer, a description of the investment,
and the current value as of the end of the year.
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| Q: |
Is the accrual basis of accounting used with regard to interest, income and dividends?
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| A: |
No. TIAA-CREF provides reporting strictly on a cash basis. Only transactions actually
occurring within the reporting period are reported in our reports.
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| Q: |
Is TIAA-CREF required to provide me with the 401(a)/403(b) ERISA data by a particular date?
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| A: |
Yes. Like all carriers, TIAA-CREF is required to provide ERISA data and instructions
by the end of the fourth month following the plan-year end. For example, if your plan-year end is 12/31,
then TIAA-CREF must send you your data by 4/30 at the latest. (See ERISA 5500 Calendar) This data is
available online by selecting 5500 Annual from the Reports drop down menu on the Administrator Secure Homepage.
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| Q: |
How much time is allotted for my institution to file its Form 5500?
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| A: |
Your institution has seven months after your plan-year end to file your Form 5500. For example, if your
plan-year end is 12/31, then you have until 7/31 to file your Form 5500. (See ERISA 5500 Calendar)
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| Q: |
Can I file for an extension?
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| A: |
Yes. However, you must file for the extension prior to your original filing
date. You would then have an additional two and a half months to file. For example, if your plan-year end is
12/31 and you file an extension before 7/31, you will have until 10/15 to file. (See ERISA 5500 Calendar)
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