Voluntary 403(b) Plan Enhancement – Frequently Asked Questions

What is the change to the Voluntary 403(b) Plan and when will it happen?                          The Arizona University System will be moving to three providers for 403(b) services. The approved providers are AIG Retirement, Fidelity Investments and TIAA-CREF. Effective November 1, 2008, salary deferrals will only be directed to these three providers.

Why is a change occurring?
The Internal Revenue Service has implemented new administrative rules for 403(b) plans effective January 1, 2009. These regulations are having a significant impact on 403(b) plans, their plan sponsors, and the investment companies in this marketplace. Many brokers and investment companies will be unable to comply with new federal regulations and as a result, most 403(b) programs will be experiencing a consolidation of vendors.

How were the approved vendors selected?
The Arizona University System -- The Arizona Board of Regents, ASU, NAU and UA -- used an open, competitive bid process in accordance with university, Arizona Board of Regents, and state policies. As with all major purchase and service agreements, a review committee was assembled comprised of ABOR staff, faculty representatives and benefits directors from each university. The work and the analysis were guided by Segal Advisors.

In addition to maintaining regulatory compliance, the committee was able to negotiate lower investment costs. As a result, more of our participants' salary deferrals will be invested, and less will be diverted to the investment companies.

I already have my account with AIG Retirement, Fidelity Investments or TIAA-CREF. Is there anything that I need to do?
No.

What will happen to my current 403(b) salary deferral authorizations if I don’t open an account with one of these three companies by October 31, 2008?
Payroll deduction salary deferrals directed to other previously authorized companies will end October 31, 2008 (paycheck of November 7). If you wish to continue investing future salary deferrals in the Voluntary 403(b) Plan, you must open an account with AIG Retirement, Fidelity Investments, or TIAA-CREF.

If I have investments with previously approved vendors, do I need to move those account(s) to AIG Retirement, Fidelity Investments or TIAA-CREF? No. You are not required to move your account. While you will be unable to direct salary deferrals to that account after October 31, 2008, existing funds may remain there until you separate/retire from the University, and you may continue to direct their investment allocation.

I would like to continue directing salary deferrals to the 403(b) program. How do I open an account with AIG Retirement, Fidelity Investments or TIAA-CREF?
First, contact one of the three authorized providers and open an account. 

AIG Retirement (520) 795-8050 George Maytorena; (520) 275-4032 Gerry Petersen; Bob Twesten (520) 400-2363
Fidelity Investments (866) 588-2612 Damond Peterson
TIAA-CREF (866) 548-3705, ext. 7709 Donn Fitch

After you have opened an account, you will establish payroll deductions in Retirement Manager.  Retirement Manager is a secure internet based tool that supports Voluntary 403(b) Plan enrollment as well as payroll deduction contributions.

How may I continue to work with an investment advisor whose company is no longer an authorized investment company?

You may solicit and use financial advice from a third party/outside investment advisor who is not authorized to sell/service the Arizona University System's Voluntary 403(b) Plan.

The Arizona University System has negotiated reduced costs charged for the mutual funds offered in Tier 1 and Tier 2 of the Voluntary 403(b) Plan. These cost savings are based on your direct enrollment through a non-commissioned representative of an authorized investment company.

Since third party/outside advisors typically earn commissions or advisory fees, you will typically pay more when using a third party/outside advisor. These advisors may charge flat fees per consultation, a percentage based on your assets under the advisor's management, or based on other agreements you choose to make. These charges could be charged directly to your 403(b) account, paid out of pocket to the advisor, charged to outside investments you have with the advisor, or based on other arrangements you choose make.