December 4, 2014

Retirement plan updates make saving easier in 2015

Vanderbilt is taking steps to streamline and simplify the administration of the 403(b) retirement plan beginning in April 2015.


by Erika Houser

After an extensive review of how the 403(b) retirement plan operates, how employees save, and new federal regulations for retirement plan sponsors, Vanderbilt is taking steps to make the plan work even better for employees beginning in April 2015.

The plan benefits will remain the same, including when employees are eligible to participate, your contribution levels and Vanderbilt’s matching contributions. You will still be fully vested immediately and have access to a full suite of online resources and one-on-one guidance in person or over the phone.

A streamlined structure will make saving for retirement easier. The current retirement plan includes more than 350 investment options, which can overwhelm some employees and make it difficult to make good decisions. We will move to a three-tiered investment structure designed to accommodate all employees, whether you want to be hands-off or very engaged in managing your investments:

  • Tier 1: Vanguard Target Date Funds – for investors who prefer an easier, less involved approach by investing through a single fund and the added benefit of professional management to monitor and adjust investments over time;
  • Tier 2: Core Investment Options – for investors who want to divide contributions among a group of funds, such as some offered by Vanguard, carefully selected and continuously monitored by Vanderbilt’s Retirement Plan Oversight Committee;
  • Tier 3: Self-Directed Brokerage Option – for very engaged, hands-on investors who want expanded mutual fund investment options and are comfortable managing portfolios. If you would like to keep your money invested in the same mutual funds they are in today, but those funds are not included in the core lineup, you may be able to do so using a self-directed brokerage account. Please be aware that additional fees may apply.

As we move to this structure, the plan’s administrative services will be consolidated with one provider, Fidelity Investments. This means you will log into one site to make or change contribution election amounts, update beneficiaries, and choose from a variety of funds from investment companies like Vanguard, Loomis Sayles, Dodge & Cox and more. You will also have access to additional mutual fund options from a variety of providers through a self-directed brokerage account.

Regardless of the tier or number of funds in which you invest, going forward you will receive one statement and have one place to go to manage your investments and get guidance (with the exception of annuities remaining at TIAA-CREF or VALIC). Vanderbilt’s Retirement Plan Oversight Committee chose Fidelity after a thoughtful and comprehensive review process in part, because of its strong track record completing successful transitions for universities and health systems like ours. We are committed to making this transition as smooth and as seamless as possible. Fidelity representatives will increase their presence on campus to offer help and guidance. Employees can also get guidance over the phone or visit their Franklin office.

Beginning in April 2015, new payroll contributions (employee and match) will use the new investment structure.  Existing balances invested in mutual funds with Fidelity, Vanguard and TIAA-CREF will be transferred to new funds according to the mapping matrix you can find online at (VUnetID required). Annuities will remain with TIAA-CREF or VALIC, unless you initiate a transfer.

In addition to simplifying the plan’s structure, this tiered approach positions Vanderbilt to comply with regulations and increased scrutiny by federal agencies requiring us to take greater responsibility for overseeing the performance of investments and fees associated with investing in the plan. It is anticipated that this move will also save you and your colleagues nearly $2 million in fees each year.

Visit the retirement plan transition website for more details and a list of information sessions you can attend. Look for a printed transition guide in your home mailbox in mid-December.