403(b) and 457(b) Retirement Plans October 2016 Fund ...

403(b) and 457(b) Retirement Plans October 2016 Fund Changes FAQ

Money market reform FAQs

What is money market fund reform?

The U.S. Securities and Exchange Commission -- the agency of the federal government that regulates mutual funds, registered investment advisers, the stock and bond markets and broker-dealers -- amended the rules governing the money market mutual fund industry. These amended rules, which are intended to address any potential financial instability and enhance fund regulation and transparency for investors, become fully effective Oct. 14, 2016.

What are some key changes to the SEC rules?

The new rules are designed to address concerns about price fluctuations in money market funds while preserving the benefits these funds provide to investors. They would potentially give fund companies the ability to halt or slow redemptions in times of extraordinary market stress.

The new regulations impact prime money market funds, which are mutual funds that invest in CDs, commercial paper and corporate notes. Government and U.S. Treasury money market funds invest in low-risk securities like U.S. Treasury Bills and are not subject to the new regulations.

The new rules are intended to protect investors by limiting massive fund withdrawals, which occurred during the 2008 financial crisis and affected the liquidity and stability of prime money market funds.

Under the new regulations, a prime money market fund may impose a 2 percent fee on withdrawals if the fund's weekly liquid assets fall below 30 percent of its holdings, and allows funds to impose a gate to stop all transactions for 10 days in times of extraordinary market stress. The gate would stop transfers, cash withdrawals, loans, portfolio rebalancing and deposits of payroll deductions for the duration of the gate.

How will these changes affect the CMU retirement plan?

TIAA TIAA offers several money market funds, including the CREF Money Market Fund, TIAA-CREF Money Market Fund and TIAA-CREF Life Money Market Fund. After a thorough review, TIAA will convert to the government type for all of their money market funds and, as such, will be in compliance with the new SEC rules. Any necessary changes will be implemented to these funds on or before Oct. 14, 2016.

In addition, TIAA announced that it will no longer waive fee expenses on the CREF Money Market Account after? April 14, 2017. The waivers -- common across the money market industry -- have been used to prevent negative returns since administrative costs have generally outweighed money market returns since 2009. Along with the removal of the fee waivers, TIAA will also begin recouping lost expenses, which cannot exceed 25 percent of the positive return on a daily basis. The recoupment is subject to a three-year look back period. Becoming government type money market funds may cause lower returns, and the ending of the expense waiver may cause CREF Money Market to have negative returns if interest rates don't sufficiently rise. The CREF Money Market in the CMU Retirement Plan cannot be closed, as most of these assets are individual contracts and is a required investment option on the TIAA platform.

Note: The elimination of the fee waivers will only apply to the CREF Money Market Account and not to any of the TIAA's mutual fund offerings.

For details on fund changes and offerings, please refer to the TIAA website at public/land/moneymarketchanges.

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403(b) and 457(b) Retirement Plans October 2016 Fund Changes FAQ

Fidelity Investments The Fidelity Investments money market and short-term bond fund options have been removed and replaced with another cash-equivalent option ? New York Life Guaranteed Interest Account. This change was recommended by the CMU Retirement Investment Advisory Committee and approved by Vice President of Finance and Administrative Services Barrie Wilkes, the plan fiduciary.

Effective at midnight on October 14, 2016, the following funds will be replaced with the New York Life Guaranteed Interest Account fund:

Government Money Market Fund (Ticker: SPAXX) Government Money Market Fund ? Premium Class (Ticker: FZCXX) Money Market Trust Retirement Government Money Market Portfolio (Ticker: FGMXX) Money Market Trust Retirement Government Money Market II Portfolio (Ticker: FRTXX) Treasury Money Market Fund (Ticker: FZFXX) Treasury Only Money Market Fund (Ticker: FDLXX) Asset Manager? 20% (Ticker: FASIX) Conservative Income Bond Fund (Ticker: FCONX) Government Cash Reserves (Ticker: FDRXX) Limited Term Bond Fund (Ticker: FJRLX) Limited Term Government Fund (Ticker: FFXSX) Short-Term Treasury Bond Index Fund ? Premium Class (Ticker: FSBAX) Short-Term Bond Fund (Ticker: FSHBX)

What does this mean for CMU retirement plan participants?

TIAA The change will be automatic and does not require any action. Apart from the requirements relating to underlying investments, participants will see few changes in TIAA's money market funds as a result of their becoming government type funds. Additionally, the removal of the fee waiver and recoupment on the CREF Money Market Account will be implemented automatically.

Fidelity Investments The change will be automatic and does not require any action. Any assets in the 13 affected funds will automatically be transferred to the New York Life Guaranteed Interest Account ? NYLGIA ? which is a guaranteed interest account.

The New York Life Guaranteed Interest Account is a general account group annuity contract that seeks to provide a low-risk, stable investment option. The NYLGIA fund offers competitive yields and limited volatility with a guarantee of principal and accumulated interest. The NYLGIA fund was selected for its more conservative approach to securing the guaranteed return because it provides capital preservation and full liquidity. The NYLGIA fund is backed by the general account of New York Life Insurance Company.

Guaranteed interest account FAQs

What is a guaranteed interest account?

Guaranteed interest account investments are managed with the objective of maintaining principle stability, providing liquidity at contract ? or book ? value for participant-initiated transactions, and generating a positive and reasonably stable rate of return. A guaranteed interest account is not a mutual fund but rather an investment pool comingled with insurance protection to provide a periodically stated guaranteed rate of return. The guarantee is backed by the credit worthiness of the insurance company.

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403(b) and 457(b) Retirement Plans October 2016 Fund Changes FAQ

Under CMU's Fidelity Investment retirement plan, the university has selected the New York Life Guaranteed Interest Account as the guaranteed interest account option for the plan. The NYLGIA fund is backed by the general account of New York Life Insurance Company -- one of the highest rated companies available.

Does a guaranteed interest account have any restrictions?

Yes. Transfer restrictions -- also referred to as equity wash -- may apply if a plan participant transfers balances out of the guaranteed interest account directly to a competing fund, such as a money market fund or short term bond fund. The transfer restrictions would prevent plan participants from reinvesting in the guaranteed interest account until certain time restrictions or other parameters are met.

To avoid this restriction, the CMU retirement investment advisory committee recommended and the plan fiduciary supported the decision to remove all competing funds -- e.g. money market fund, short-term bond fund -- from the Fidelity Investment plan menu. With the removal of the competing funds, plan participants can transfer their funds without concern for this restriction.

General FAQs

When will I be notified if I am affected?

TIAA and Fidelity Investments launched communication of the money market reform in 2015. Plan participants with assets in the affected money market funds received notices in the mail.

All plan participants with assets with Fidelity Investment will receive a letter during the month of September 2016.

What are the key dates I need to know?

Mid-September: Fidelity Investment mailing to all plan participants

Mid-October:

Removal of the 13 Fidelity Investment funds from the plan menu. Any balances in the affected funds will automatically be transferred and any future contributions deposited in the New York Life Guaranteed Interest Account fund

Who can I contact if I have additional questions? If you have questions about the changes, you can contact our retirement vendors' customer service.

TIAA: Call 800-842-2776 or login to the website at cmich Fidelity Investments: Call 800-343-0860 or login to the website at cmu

Can I get advice or guidance on whether the fund option is compatible with my savings goals?

Yes. Fidelity Investments as well as TIAA offer objective investment guidance at no additional cost to participants of the plan. You can schedule a one-on-one session by calling TIAA at 800-732-8353 or online at moc and Fidelity Investments at 800-642-7131 or online at atwork/reservations.

For individuals seeking assistance in determining the plans, vendors and investments that are most appropriate for individual goals, CMU has approved StraightLine as an optional resource. Whether your account resides at TIAA or Fidelity Investments, StraightLine can provide independent education and investment advice. The annual fee varies based on the retirement plan balance and service solution. To learn more, call 877-338-4032 or visit cmu.

The information in this document is for informational purposes. For guidance on your retirement plan account(s), please contact Fidelity Investments (cmu) or TIAA (cmich).

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