Wednesday, April 30, 2014

TAG 401(k) Switchover

The last few weeks, we've gotten a number of inquiries about oncoming changes for the Animation Guild's 401(k) Plan*.

Are we changing the Plan? The Plan Administrator? Why are we changing? Answers below the fold: ...

To begin, Vanguard Mutual Funds will be taking over administration duties from Mass Mutual Insurance in the next few months. Here are a few specifics about the change-over: ...

* Participants' account balances will transfer from MassMutual to Vanguard on August 1, 2014.

* Beginning the first week in June, participants will receive a number of details about the transfer. Current account balances will automatically be invested at Vanguard into the Target Retirement Fund based on the year in which the participant turns 65.

* Participants who prefer to construct their own asset allocations will have a two-week window in late July to create a different account balance when funds are transferred to Vanguard. There will be a core line-up of mutual funds similar to what is currently available on the MassMutual platform. (There will be some changes made in several of asset classes to improve on our current selections.)

* The number of Target Date Retirement Funds will increase, changing from ten-year increments ("Vanguard Retirement 2010 ... 2020 ... 2030") to five-year increments ("Vanguard Retirement 2010 ... 2015 ... 2020 ... 2025").

So why are the Plan trustees changing administrators? To improve service and bring down costs. Moving to Vanguard is the next step in a process that has been ongoing for more than two years. Lower costs mean more money in participants' pockets. And service should be more robust and transparent, with more online investment management and financial planning tools.

Why Vanguard? The company is structured as a “mutual” mutual fund company, owned by the Vanguard family of mutual funds. The Vanguard funds, in turn, are owned by their shareholders — or client - owners. This unique mutual structure is intended to align the interests of Vanguard with those of their clients (otherwise known as TAG 401(k) participants.) Overall, this should mean lower fees and costs in coming years.

Moves from one administrator to another is seldom 100% glitch free. This will be our second adminstrator change in nineteen years, and hopefully our last for a long while. Over the next few months, we'll be working diligently to make it as smooth and painless as possible, but please let us know if you have any questions or concerns.

* The TAG 401(k) Plan is the third pension of three offered to members of the Animation Guild. The other two are The Motion Picture Industry Defined Benefit Plan and the Motion Picture Industry Individual Account Plan.


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