Is Your UTSaver Account an Orphan?
An "orphaned account" is a deferred contribution account with a provider that was previously eligible to receive elective deferral contributions but was not selected as an Approved Provider when the UT Retirement Deferred Contributions Program was revised in January 2009. For example, in August 2006 there were over 110 companies receiving elective deferral contributions from UT System employees across the state. Today, there are only five Approved Providers that UT System has contracted with to provide such accounts to its employees.
Is your money working for you?
The University of Texas System no longer has contracts in place with the providers of these orphaned accounts. What this means is that you may be paying administrative or service fees associated with these orphaned accounts that UT System's Approved Providers do not charge; and UT System has not evaluated how well these orphaned accounts are currently performing.
Do you have any flexibility with your old accounts?
Loans are available for active employees from the UTSaver Tax Sheltered Annuity (TSA) and UTSaver Deferred Compensation Plan (DCP), but only from the five, currently authorized providers (Fidelity, ING, Lincoln Financial, TIAA-CREF and VALIC). Such loans are not available under the older orphaned accounts.
Additionally, because UT System does not have contracts or maintain an electronic means of communication with the former providers, many UT System participants with these older accounts have encountered difficulties with the distribution process after retirement, or upon reaching age 59 ½. These issues do not exist with the five Authorized Providers.
Should you transfer your orphaned account to an Approved Provider?
To determine if it might be beneficial for you to transfer your deferred compensation account to one of the currently Approved Providers, you may want to ask the provider of your current account the following questions:
- What fees and expenses am I paying?
- How are my investments performing?
- Am I paying for a representative, and if so, how often do we meet and what services are being provided?
- Will an early termination/surrender fee be charged if I transfer my account balance?
You may discover that a less expensive, better performing product and a more responsive representative is available to you from an Approved Provider. If so, you may want to consider transferring your account. However, it is important to be aware of any applicable early termination or surrender fees that may be associated with your current account. Such fees can be significant enough that in some cases it may make better financial sense not to transfer your account.
To learn more about your investment options, please visit our website at: www.utretirement.utsystem.edu. If you are interested in learning how to transfer your account balance, please contact your local benefits office.