The Idaho State Board of Education has introduced updates to the Optional Retirement 401(a) Plan (ORP), Tax Deferred 403(b) Plan, and 457(b) Deferred Compensation Plan, including lower fees and a streamlined investment menu. The updates follow a 2017 evaluation of fees charged by ORP vendors (both TIAA and AIG/VALIC). The evaluation and subsequent fee negotiations have resulted in lower participant fees.
The investment updates went into effect Sept. 26.
An overview of the changes
New investment menus have been created with the providers. Brokerage options will now be available through AIG and TIAA, providing thousands of additional mutual fund options.
What’s not changing: The plan design rules remain the same; employees will continue to work with AIG and TIAA; and many of the current investment options for both vendors will be retained.
Every employee impacted by the changes should have received a notice directly from AIG or TIAA with further details regarding personal account access.
New investment options beginning Sept. 26
All funds, aside from the brokerage options, were selected with the help of Multnomah Group, an external firm that specializes in retirement programs, and with the approval of the State Board Retirement Plan Committee. These investments will be continually monitored for performance and overall value. If an investment is no longer performing up to established benchmarks and standards, the committee may decide to replace it. If that happens, employees will be notified prior to the change.
The new investment menus offer several benefits
There are substantial similarities between the investment menus at AIG and TIAA. By using the same funds on both platforms, it allows the plan to purchase less expensive institutional shares that may not be available if the committee utilized different options on the two platforms.
- Simplified menu and levels: New investment “levels” provide you with help in making your investment choices. You can select investment products from as many investment levels as you wish.
- Diversification: The investments offered on the menu provide an array of investment across multiple asset classes and investment managers
- Lower fees: Since index funds are passively managed, their expenses tend to be much lower than other types of funds
- Brokerage: These options allow participants the ability to purchase thousands of additional mutual fund investment options for experienced investors.
Individual contributions as of Sept. 26
The new investment menus will be used for all contributions after September 26. To see how your future contributions will be invested with each provider based on your current choices with them, please refer to the disclosure letter you received in August.
Existing balances may or may not be moved to new investment options as of the effective date. For details regarding asset movement, please consult the disclosure letter you received in August. Generally, at both AIG and TIAA, money invested in mutual fund custodial accounts will be “mapped” (transferred to a new investment options) on the effective date. Investments that you may have made into variable annuity products are not eligible for mapping by the ISBOE.
Those assets include:
- AIG portfolio director annuity contracts
- TIAA real estate
Participants may elect to move money out of these investment options and may wish to meet with counselors from TIAA and AIG to determine whether these products continue to meet their needs considering the new options.
Additional resources and information
The Idaho State Board of Education has created a website with Frequently Asked Questions (FAQ) and to provide updates on the change process.
Additionally, there will be both live and recorded communication presentations for reference. Please see: https://boardofed.idaho.gov/data-research/finance-administration/retirement-plans/ for a list of available education sessions, the FAQ document and updates on the change process.
To receive receive help deciding deciding how to build your portfolio with your chosen investment provider(s), please contact the corresponding vendor below: