Your retirement plan choices - JHU Benefits Site

Your retirement
plan choices
Why join?
If you want to retire someday, then saving is a must. It’s the single most effective way to reach a
comfortable retirement. It’s important because experts estimate that you will need 70% to 80%
of your annual income for each year you live in retirement. Saving consistently over time can help
you accumulate significant wealth, better preparing you to handle the future costs of retirement—
including the rising costs of health care for retirees. In fact, most experts suggest you save 10% to
20% of your salary every year to build a sufficient nest egg. And while Social Security payments
can provide some income in retirement, they frequently are not enough.
It’s important for your health—physical as well as financial—to ensure that you’ve saved enough for
your retirement. As part of the Healthy@Hopkins program, your 403(b) retirement plan is designed to
improve your chances of achieving good health. By enrolling in the retirement plan, you’re building a
solid foundation for retirement income—one that will include your retirement plan contributions and
earnings, University contributions and earnings, your personal savings and Social Security payments.
The University can help
The most important choice you have is simply to join the
Johns Hopkins University retirement plan—it’s never too
early or too late to enroll! The plan makes it easy and
convenient for you to save for retirement by offering:
• University contributions. Depending on which plan
you are eligible for, the University will make contributions to your account. You are always 100% vested in
any University contributions made on your behalf.
o Staff Voluntary 403(b) Retirement Plan. Once
you complete two years of service and are eligible
to participate in the University contribution, the
University will contribute $0.20 to your plan account
for every $1 you save, up to 3% of your salary.
o Faculty and Senior Staff Retirement Plan.
The University will make monthly contributions to
your account when you reach age 35 or complete
two years of service, whichever event occurs first.
The contribution will be equal to 6% of your base
salary up through age 34, increasing to 12% of
your base salary when you reach age 35.
• Payroll deductions. You save before you can spend
because money is deducted automatically from your
pay and deposited in your plan account. You are
always 100% vested in your pre-tax contributions.
The IRS limits your pre-tax contributions to the plan
to $16,500 in 2009. If you will be age 50 or older in
2009, you can make an additional $5,500 “catch-up”
contribution. Note that if you have worked 15 or more
years with the University, you may be able to contribute
more than the normal IRS limit for the year, up to an
additional $3,000.
• Rollover or direct transfer contributions. To the
extent permitted by the plan and applicable law, you
may make rollover or direct transfers to the plan.
• Tax advantages. You contribute before state and
federal taxes are deducted, so your tax bill is lower.
And you don’t owe taxes on your contributions or
earnings until you withdraw the money, which
may be years from now.
• Compound rate of return. The money you invest
can produce earnings. These earnings may earn
a return, and continue to grow, year after year. The
result? Your savings can really add up over time.
• Flexibility. You can raise or lower your contributions
monthly. You also can change your investment mix
whenever you wish.
• Portability. If you leave the University, you can take
your savings with you.
• Industry leaders. Johns Hopkins University has
selected five well-known and respected investment
companies for you to choose. You can invest your
savings with one or a combination of financial vendors.
You can find the Summary Plan Descriptions which summarize the details of your
retirement plan on the Benefits Web site at www.benefits.jhu.edu.
2
Get started now
Once you’ve decided to join the plan, this guide can
help you:
• Learn about the types of investments that
are offered. Compare the investment vendors.
• Consider the investment tools offered by each
investment vendor.
• Contact the investment vendors to get more
information and enroll in your plan.
• Learn key investment terms.
It’s easy to enroll
To get started, you will need an election form and
application form from your selected vendors. Complete
these six simple steps to join the plan:
1.Request an enrollment information kit from the
Benefits Service Center or, if you know which vendors
you would like to use, go to the Benefits Web site
(www.benefits.jhu.edu) under Forms and download
the applications.
2. Complete the Salary Reduction Agreement (found in
the back of this guide). This form allows you to set
your contribution amount and designate your
account’s investment vendor(s).
3. Complete the investment company enrollment
applications to choose your investment options and
designate beneficiaries. If you do not choose an investment option to receive your contributions, your contri-
butions will be invested in an appropriate target date
fund (the default investment) with your chosen vendor.
Note: The plan is intended to constitute a plan
described in Section 404(c) of the Employee Retirement
Income Security Act of 1974 (ERISA) and Title 29 of the
Code of Federal Regulations Section 2550, 404(c)-1.
Because the plan satisfies these requirements, the
plan's fiduciaries may be relieved of liability for any
losses which are the direct and necessary result of
investment instructions given by you.
4. Contact the chosen vendors if you have any
questions concerning the investments offered.
Contact information for each vendor can be found
in the table on pages 6 and 7.
5. Return your completed Salary Reduction Agreement
and your investment company enrollment applications
to the Benefits Service Center at 1101 E. 33rd
Street, Suite D-100, Baltimore, MD 21218 or fax
to 443-997-5820.
6. Review your pay check to ensure that the correct
amount is being deducted. You will also receive a
welcome kit from the investment vendor to let you
know that your account is active.
Questions?
Contact the Benefits Service Center by e-mail at
[email protected] or by phone at 410-516-2000.
Office hours are Monday through Friday from 8:30 a.m.
to 5 p.m., Eastern time.
3
The investment vendors
and their products
You have five investment companies from which to choose. Each offers various investment
options and services. The information on the following pages is offered to help you choose
a vendor.
Target-date funds
A balanced portfolio of mutual funds
American Century, Fidelity, TIAA-CREF, and Vanguard
offer one-decision, target-date funds. Consider choosing the date-specific fund closest to your expected
retirement date. If you’re not sure when you’ll retire,
just choose the fund closest to the year in which you’ll
turn age 65. Your fund will automatically shift from
stocks to bonds and short-term reserves as you get
closer to retirement.
When you invest with any vendor in the plan, you can
create your own portfolio using a mix of stocks, bonds,
and short-term reserves. If this option is appealing to
you, but you don’t feel confident selecting your own
funds, each investment vendor offers simple tools to
help you choose the funds that are right for you.
Annuities
TIAA-CREF and VALIC offer the option of buying an
annuity, a contract between an individual and an
insurance company. Like mutual funds, TIAA-CREF
and VALIC annuities allow you to create your own
portfolio using a mix of stocks, bonds, and short-term
reserves. In addition to other distribution options, such
as lump-sum and periodic withdrawals, an annuity is
the only product that gives you the option to receive a
guaranteed stream (subject to the claims-paying ability
of the insurance company) and/or variable stream of
retirement income designed to last for your and, if
applicable, your annuity partner's lifetime.
4
In-person assistance
Representatives from each of our investment vendors visit
the campus several times each month. You can sign up
for a free one-on-one meeting to discuss your account
and get answers to your questions. The investment
vendor schedule can be found on the homepage of the
Benefits Web site at www.benefits.jhu.edu.
Accessing your money
For more information about taking loans, requesting
hardship withdrawals and distributions, and other details
about the plan, refer to your plan’s Summary Plan
Description, available at www.benefits.jhu.edu under
both the Summary of Plans and Retirement sections.
Investment tools
Making decisions about investing for your retirement
can be tricky. With so many factors to consider, it’s
important to be sure that your decisions are well
informed and comprehensive.
That’s why every investment company in the plan
offers investment tools to help you make your
decisions. Depending on the investment vendor, you’ll
have access to several in-person, online, and other
advice tools such as financial planning, counseling, and
budget management that can help you manage your
account, choose investment options, decide how
much to save, and more.
These tools include on-campus meetings with
company representatives; websites either hosted by
the companies themselves or designed specifically for
the plan; and printed and online surveys, calculators,
worksheets, newsletters, and articles. You may even
have access to specific services offered by the company.
The chart on the following page contains a general
section about the investment tools offered by each
investment company. For more information about
each investment company’s tools, contact the investment company directly.
5
Compare investment companies
American Century Investments
Fidelity Investments
Investment choices
Choose from more than 70 no-load mutual funds
(many of which are not available to other new
investors), including, stock, bond and short-term
cash funds, index and actively managed funds
and all-in-one asset allocation funds.
Fidelity Investments offers over 175 mutual funds
to help you meet your investment goals.
Investment options include conservative, moderately conservative, aggressive, sector, index and
lifecycle funds.
Why choose this vendor?
American Century Investments has been
focused on performance for over 50 years. As
a privately held company whose sole business
is managing money, the firm is committed to
doing the right thing for investors and providing
superior results. Additionally, over 40% of profits
support medical research.
Fidelity Investments is the largest mutual fund
company in the United States, the No. 1 provider
of workplace retirement savings plans, the
largest mutual fund supermarket and a leading
online brokerage firm (all as of May 31, 2009).
Fidelity brings this experience to help you
manage your priorities at every stage of your life.
Management fees/
Other expenses
All funds are no-load (no up-front or back-end sales
charges). For a complete list of expense ratios, visit
www.americancentury.com.
There is no annual maintenance charge for
JHU employees.
Please go to www.fidelity.com/atwork, click the
Investing tab at the top of the web page, then
mutual funds for additional expense information
on any of Fidelity’s funds.
Changing your investments
Typically, there are no limits on moving assets
between investments. However, there are
excessive-trading limits as well as short-term
trading fees for some funds. Contact American
Century Investments for additional information.
Typically, there are no limits on moving assets
between investment options or to or from
another company. However, there are excessivetrading limits as well as short-term trading
fees for some funds. Contact Fidelity at
800-343-0860 for additional information.
Investment tools provided
Free advice and guidance.
Access a wide variety of retirement planning
tools to see if your savings are on track for
retirement. Go to www.fidelity.com/atwork and
log in to your NetBenefits account.
401(k)/403(b) Contribution Calculator, which shows
the effect of contributions on your paycheck.
Investment Planner, which provides specific
fund suggestions based on your risk profile and
time frame.
Planning for Your Retirement, which provides
recommendations for in-depth planning.
eLearning tools include Web Workshops,
Retirement Income Planner and Portfolio Review.
To schedule a confidential consultation with an
onsite Retirement Counselor, call 866-795-0405
.
Time Value Calculator, which shows how
contributions build over time.
Enrollment, fund
performance and more
6
Visit www.americancentury.com/workplace or
call 800-345-3533 weekdays from 8 a.m. to
6:30 p.m., Eastern time.
Call 800-343-0860 Monday through Friday from
8 a.m. to midnight, Eastern time, to speak with a
Retirement Services Specialist. Visit NetBenefits
at www.fidelity.com/atwork.
TIAA-CREF
VALIC
Vanguard
TIAA-CREF’s fund family and annuity investments
cover a full spectrum of asset classes and investment styles, including equity (active, indexed,
enhanced index and socially responsible), fixed
income, Lifecycle (asset allocation) and real estate.
VALIC offers more than 60 fixed and variable
investment options. You have the choice of
combining two approaches: fixed-interest options
to help stabilize your portfolio, and variable
options with the potential for greater returns.
More than 70 mutual funds, including Vanguard
Target Retirement Funds, index, and actively
managed mutual funds; stock and bond funds;
and short-term reserve options.
TIAA-CREF is a full service financial services
group of companies that has dedicated itself to
helping those in the academic, medical, cultural
and research fields for over 90 years. TIAA-CREF
has a clear and long commitment to serving the
financial best interests of those who serve the
benefit and enlightenment of others.
VALIC has more than half a century of
experience helping Americans plan for and enjoy
retirement. The company offers products and
services for retirement plans and programs that
are innovative and easy to use, providing
one-on-one service and customized solutions
for individual needs.
Vanguard is one of the world’s largest investment
management companies, serving individual
investors, institutions, employer-sponsored
retirement plans, and financial professionals.
As a not-for-profit organization, TIAA-CREF keeps
operating costs low, charging fees that are less than
half the industry average (source: Lipper Inc.). TIAACREF annuities and mutual funds come with no sales
charges or fees to transfer between investments.
Variable options incur Separate Account Fees
ranging from 0.21% to 1.35%. Net Fund Annual
Expenses range from 0.21% to 1.35%, depending on the contract and variable investment
option selected.
Expense ratios range from 0.18% to 0.91% per
fund. No loads. Some funds charge redemption
fees on fund shares that are not held for a
certain minimum period of time. A small number
of funds charge a purchase fee.
Participants may transfer funds freely among the CREF There is no charge for transferring amounts among
Participants are never barred from exchanging
out of a fund. After money is exchanged out of a
fund, however, it may not be exchanged into the
same fund for a period of 60 days.
variable annuity accounts and TIAA-CREF mutual
funds available under the plan. Transfers from TIAA
Real Estate are limited to one per calendar quarter.
Transfers from TIAA Traditional (fixed annuity) are
investment options. You can transfer all or part of
variable account values. If you transfer money into
the Short-Term Fixed Account, your money can be
transferred from the account in 90 days.
Vanguard offers investors exceptional value
through a dedication to outstanding
performance, superior service, and low costs.
available in 10 substantially equal annual installments.
At TIAA-CREF, you’re more than a client—you’re
a participant. We are dedicated to helping you
stay in control of your account, anytime.
To schedule a one-on-one counseling session
with a representative from TIAA-CREF, visit
www.tiaa-cref.org/moc or call 877-842-2008,
Ext. 255501.
Advice and Planning Tools are available at
www.tiaa-cref.org/jhu to help you: Save for
Retirement, Save for Education, Manage Income
and Expenses, Protect Against the Unexpected
and Develop an Estate Plan.
VALIC advisors continue to set the standard for
personalized service and work closely with their
clients to ensure they stay on track for a secure
retirement. Investment guidance and financial
plans are available to all participants. To schedule
an appointment, please call your local office
at 410-859-2480.
You can also visit the custom website at
www.valic.com/johnshopkins. You can access
account information, fund performance, and a host
of interactive financial planning tools and calculators.
Visit www.tiaa-cref.org/jhu, or call 877-842-2776 Visit VALIC.com, or call 800-448-2542 Monday
through Friday from 8 a.m. to 9 p.m., Eastern time.
Monday through Friday from 8 a.m. to 10 p.m.,
and Saturday from 9 a.m. to 6 p.m., Eastern time.
Visit www.meetvanguard.com to schedule a
one-on-one meeting with a representative
from Vanguard.
Custom enrollment website at
http://jhu.vanguard-education.com.
Use the Investor Questionnaire, to determine
your investment goals, time horizon, and tolerance
for risk.
Free financial plans from Vanguard Financial
Planning Services for participants age 55 and older.
Visit Vanguard.com or call 800-523-1188 for
fund and account information.
7
403(b) Salary
Reduction
403(b) Salary
Reduction
& &
Contribution
Agreement
UniversityUniversity
Contribution
Agreement
For Faculty and Staff
For Facult y and Staf f
Name:
Last
__ Email: __________________________
First
Social Security No:
Prior JHU Service:
to
___________ Birthdate: _______________________
______Former Name (if applicable): _____________________
Effective for amounts earned on or after the first day of:
_____ PERNR: _________________
(month/year)
Deduction will be taken based on receipt of complete enrollment: by the 5
20th – first pay date of the next month.
th
(If unknown; leave blank)
- second pay date of the month; by the
Section I. Salary Reduction Election Amount
Complete only if you are making a first election or
changing the amount of your existing salary reduction.
A. A voluntary amount of $
per pay . The minimum voluntary contribution is
$7.50 per pay (semi-monthly payroll) or $3.75 per pay (weekly payroll).
B. The annual maximum voluntary amount allowed by the Internal Revenue Code and
administratively practical to be taken over the remaining pay periods of the year. Amount adjusts
annually.
C. University contributions only (eligible Faculty & Sr. Staff).
Section II.
Status
Determine Your Eligibility
Faculty or
Sr. Staf f
Support Staff or
Bargaining Unit
Criteria
Age: 35 or olde r OR
Service:2 or more yrs
Age: Under 35 AND
Service: less than 2 yrs
Service: 2 or more yrs
University Contribution
Eligible
Employee Voluntary
Contribution Eligible
Complete Sections
Below
No
Yes
B
No
Yes
Yes
Yes
Service: less than 2 yrs
Yes
Yes
A or A & B
A&B
B
Section III. Investment Company Allocations
Complete below for initial allocation or to change your
existing allocation. Elections must be in whole percentages totaling 100%. If establishing an account with a
new investment company, please attach their enrollment application. If application not received,
contributions default to the investment company’s age-appropriate life cycle fund.
A. University Contributions
B. Employee Voluntary Contribution
Fidelity Investments
Fidelity Investments
American Century Investments
American Century Investments
TIAA-CREF Supplemental Annuity
TIAA-CREF Regular Annuity
TIAA-CREF Regular Annuity
VALIC
The Vanguard Group
Total
VALIC
100%
The Vanguard Group
Total
100%
9
403(b) Salary Reduction &
403(b) Contribution
Salary Reduction
&
University
Agreement
Section IV.
Univer sity Contribution Agreement
Prior Pre-tax Contributions (Required for new enrollments)
Select one of the following:
I made no pre-tax contributions through my previous employer in this calendar year.
My total pre-tax contributions through my previous employer in this calendar year were $
Section V.
__.
Termination of Agreement
Please terminate my salary reduction agreement. I understand that I must sign a new Salary
Reduction form if I want to resume voluntary contributions in this plan in the future.
Section VI. Employee Authorization
I hereby authorize Johns Hopkins University (JHU) to reduce my gross salary by the amount indicated in
Section I. Such salary reduction amount will be applied by JHU to purchase one or more annuity contracts
and/or mutual funds for me as indicated in Section III. When the maximum is elected, I understand that
unless I otherwise instruct, this amount will be adjusted periodically to maintain my maximum contribution.
This authorization will remain in effect until the Benefits Service Center either receives written notice of
termination of this agreement in Section V from me, a new valid salary reduction agreement signed by me,
I die, I become totally disabled, or my JHU employment terminates, whichever shall first occur. I agree that
I can only withdraw these contributions in accordance with the plan document and the provisions under the
annuity contracts and/or mutual funds that I elect to use. I understand this agreement is subject to
approval by JHU, and I accept full responsibility for all the effects of this agreement.
Employee Signature
Work Phone
Date
Office Use Only:
Benefits Service Center: ______________________________________
Signature
Benefits Shared Services: ______________________________________
Signature
Return Form to:
JHU Benefits Service Center
1101 E. 33rd Street, Suite D100
Baltimore, MD 21218
FAX: 443-997-5820
Rev. 8/09
10
_____________________
Date
_____________________
Date
BSC/BSS Use Only :
___ New Election
___ Change in Election
___ Termination of Election
Eligibility Date ______________
___ Prior Service (552)
___ Prior Contribution (510)
___ IT41
Commonly used terms
Active management — Active management – An
investment strategy that seeks to outperform the
average returns of the financial markets. Active
managers rely on research, market forecasts, and
their own judgment and experience in selecting
securities to buy and sell.
Annuity – A contract between an individual and an
insurance company. An annuity is the only product that
gives an individual the option to receive a guaranteed
stream (subject to the claims-paying ability of the insurance company) and/or variable stream of retirement
income designed to last for their and, if applicable, their
annuity partner's lifetime.
Asset allocation – The apportioning of investment
dollars among various asset classes, such as cash
investments, bonds, and stocks. Also known as
investment mix.
Asset transfer – A transfer of retirement plan assets
from one custodian to another. No actual distribution is
made to the account holder, so there is no tax liability or
IRS reporting requirement.
Balanced fund – A mutual fund that seeks to provide
some combination of growth, income, and conservation
of capital by investing in a mix of stocks, bonds, and/or
money market instruments.
Beneficiary – The inheritor of an account’s assets in the
event of the account owner’s death.
Bond fund – A mutual fund that emphasizes income—
consistent with risk, rather than growth—by investing in
corporate, municipal, or U.S. government debt obligations, or some combination.
Exchange – The transaction a participant processes
to move assets from one fund to another within
their account.
Expense ratio – A mutual fund’s annual operating
expenses—including management fees, administrative
fees, and any marketing and distribution fees—
expressed as a percentage of average net assets.
Expense ratios, which directly reduce returns to
investors, do not take into account loads, redemption
fees, or purchase or transaction fees.
Index – An unmanaged group of securities whose overall
performance is used as a standard to measure investment performance. Example: The S&P 500. “Index funds”
seek to parallel the performance of a particular index.
Market capitalization – A determination of a company's
value, calculated by multiplying the total number of company stock shares outstanding by the price per share:
• Small-cap – Companies valued at less than
$2.1 billion.
• Mid-cap – Companies valued between $2.1 billion
and $17.6 billion
• Large-cap – Companies valued at more than
$17.6 billion.
Money market fund – A mutual fund that seeks
income, liquidity, and a stable share price by investing in
very short-term investments.
Mutual fund – An investment company that pools
the money of many shareholders and invests it in a
variety of securities in an effort to achieve a specific
objective over time.
No-load fund – A mutual fund that charges no sales
commission or “load”.
Default investment – The investment option selected
for plan participants who do not specify how their contributions should be invested.
Stock fund – A mutual fund having holdings consisting
mainly of stocks.
Direct rollover – Movement of tax-deferred retirement
plan money from one qualified plan to another. No
immediate tax liabilities or penalties are incurred, but
there is an IRS reporting requirement.
Target-date fund – A balanced mutual fund that
automatically shifts assets from more risky investments
to more conservative investments as a stated target
date approaches. Also referred to as a “life-cycle” fund.
Employer contributions – Money deposited in employee retirement accounts by their employer, the sponsor of
the retirement plan.
Voluntary contributions – Contributions to a retirement
account that an employee elects to have deducted from
his or her pay.
11
For more information about any fund, including investment objectives, risks, charges, and expenses, call the
investment vendor to obtain a prospectus. The prospectus contains this and other important information about the
fund. Read and consider the prospectus information carefully before you invest. You can also download fund
prospectuses at each fund company’s Web site.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency. Although a money market fund seeks to preserve the value of your investment
at $1 per share, it is possible to lose money by investing in such a fund.
American Century online at www.americancentury.com or phone 800-345-3533
Fidelity online at www.fidelity.com/atwork or phone 800-343-0860
TIAA-CREF online at www.tiaa-cref.org or phone 800-842-2776
VALIC online at www.valic.com or phone 800-448-2542
Vanguard online at www.vanguard.com or phone 800-523-1188
Vanguard Financial Planning Services are provided by Vanguard Advisers, Inc., a registered investment advisor.
Portfolio Review is an educational tool.
Retirement Income Planner, an educational tool, is developed and offered for use by Strategic Advisers, Inc., a registered investment adviser and
Fidelity Investments company.
S&P 500 ® is a trademark of The McGraw-Hill Companies, Inc., and has been licensed for use by The Vanguard Group, Inc. Vanguard mutual
funds are not sponsored, endorsed, sold, or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the
advisability of investing in the funds. Financial Engines is a trademark of Financial Engines, Inc.
© 2009 The Vanguard Group, Inc. All rights reserved.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
61084-1 102009