Faculty and Voluntary Retirement Plan Transition
The University is moving the Faculty Retirement Plan (FRP), Optional Retirement Plan (ORP), and the 457 Deferred Compensation Plan (457 Plan) to a single service provider for new contributions, Fidelity Investments, on June 12, 2020.
Retirement Transition Postponed until June 12
Due to the unprecedented and continued market volatility that began in recent weeks regarding COVID-19 and other market developments, the Retirement Plan Governance Committee has decided to delay the transition to Fidelity until June 12, 2020. You can read the announcement the Committee sent here. This means that there will be no blackout period between March 20 and April 13, nor will there be a day out of market for the April 1 transition. More information will be posted when available.
In order to meet retirement plan best practices, the University of Minnesota's fiduciary body, the Retirement Plan Governance Committee (RPGC), went through a process of due diligence to review its benefit plans and compare them to other higher education institutions.
The RPGC determined that moving to a single service provider and simplifying the investment fund lineup would best meet its objectives of improving the retirement plan experience for employees. Through that process, the University chose Fidelity Investments to be the sole service provider of retirement contributions after June 12, 2020.
The benefits of the transition to Fidelity include making plan provisions more understandable and accessible, promoting and improving education and one-on-one consultations, and restructuring and simplifying the fund lineup.
Video Overview with SVP Brian Burnett
There are a number of key changes to the retirement plans to be aware of:
- All new contributions after June 12, 2020, will go to a Fidelity account.
- Some current balances will transfer automatically to Fidelity during the transition. Not every balance will transfer automatically, so please see this chart of what is transferring automatically or search for your plan or vendor to see how your current balance will be handled.
- Simplified fund choices. Currently there are hundreds of investment options to choose from among many plan service providers. By having one plan service provider, the University is simplifying your investment choices while still giving you a variety of choices among many asset classes.
- Online transactions. Before the transition, you had to conduct most plan transactions by filling out paper forms. With Fidelity, you can change your investments and choose your beneficiaries all online for the Faculty Retirement Plan. For the ORP and 457 Plans you can also enroll and change your contribution rates online.
There are a lot of changes to highlight with the transition to Fidelity, but here is what is not changing:
- The Minnesota State Retirement System, also known as the MSRS, is not affected by the transition to Fidelity. The MSRS is the primary retirement plan for Civil Service and Labor-represented employees (who are not Faculty).
- The University of Minnesota’s contributions to the primary retirement plans for all employee groups will not change.
- The Minnesota Life General Account and General Account Limited funds will continue to be fund options in the plans as before.
Two exciting options will be added to the ORP starting June 12, 2020—a Roth contribution option and rollovers from qualifying accounts.
Roth 403(b) Option
In addition to the traditional pre-tax contribution option within the ORP, you will have an after-tax Roth option after the transition. A Roth contribution option allows you to make after-tax contributions to the ORP while taking your earnings tax-free at retirement as long as the withdrawal is a qualified one.
Rollovers Welcome Starting June 12, 2020
Starting in June, you will be able to roll over eligible pretax and Roth contributions from a former workplace savings plan account or an IRA. Call Fidelity at 800-343-0860 for more information or for assistance with a rollover.
You can see a detailed timeline on the Timeline and Checklist page, which includes more information on the new transition date.
Call Fidelity at 800-343-0860 for help or investment advice. To make an appointment with a Fidelity representative, call the Fidelity reservation line at 800-642-7131, go online to NetBenefits.com/UMN.
You can contact Total Compensation by calling 4-UOHR (612-624-8647 or 800-756-2363) and select option 1 or you can send an email to email@example.com.