How to Set Up a Self-Directed Brokerage Account

Transcription

1 How to Set Up a Self-Directed Brokerage Account Your North Dakota Public Employees Retirement System 401(a) Defined Contribution Plan and 457(b) Deferred Compensation Companion Plan

2 How to Set Up a Self-Directed Brokerage Account If you re participating in NDPERS 401(a) Defined Contribution and/or 457(b) Deferred Compensation Companion Plan and are interested in investing in funds outside of the core menu of 33 funds, you have the option of opening a Self-Directed Brokerage Account. Through a brokerage account, you can invest among thousands of mutual funds. In the pages that follow, we outline the steps you need to follow to enroll in a brokerage account and how to make transactions. If you re interested in opening a brokerage account, be aware that additional fees and charges may apply. So please take the time to carefully consider this brokerage service and whether it s appropriate for your investment needs. TIAA-CREF Is Here To Help Phone Assistance To open a new Brokerage Account: For help with the initial setup and funding of your Self-Directed Brokerage Account, call , press 1, and then enter your SSN or contract number when prompted to be directed to your NDPERS service team. You can also call this number for general assistance with your NDPERS Retirement Plans. For help with your existing Brokerage Account: For help with your existing Self- Directed Brokerage Account (trading, fees, setting up systematic transfers, and questions about the Automatic Investment Plan) call For when you call, mention that you are seeking information on the NDPERS Retirement Plans Self-Directed Brokerage Option. In-Person Assistance Log on to or call to sign up for an individual consultation regarding your retirement account. Online Assistance Go to to: Access comprehensive NDPERS Retirement Plan information (funds, prospectuses, performance, online enrollment, online salary deferral and Account Access). Set up your NDPERS Retirement Plans in order to participate in Self-Directed Brokerage. Go to to: View available mutual fund families. Section 1: How to Set Up A Self-Directed Brokerage Account Inside Front Cover Section 2: TIAA-CREF Is Here To Help Inside Front Cover Section 3: How to Enroll in the Self-Directed Brokerage Account 1 Section 4: How To Access your Self-Direcrted Brokerage Account 4 Section 5: How To Buy/Sell In Your Account 6 Section 6: Frequently Asked Questions 9 Section 7: Commission and Fee Schedule 12

3 How to Enroll in the Self-Directed Brokerage Account Step 1: Establish your NDPERS Retirement Plan Account You must first establish a NDPERS Retirement Plan with TIAA-CREF before being able to open a Self-Directed Brokerage Account. If you ve already done this, go to Step 2. If not, go to and click Enroll Now (see the screen shot at left), to establish your NDPERS Retirement Plans. The plan enrollment process will involve completing a Salary Deferral Agreement. To establish your plan account, click the Enroll Now button. Step 2: How To Get Started Once you have a NDPERS retirement plan with TIAA-CREF with a balance of at least $500 (in any single fund), you may then establish your Self-Directed Brokerage Account. You can do this by waiting until your salary deferrals accumulate, or you can call TIAA-CREF at for assistance in transferring at least $500 from your existing balance that will be automatically moved over from Fidelity. Step 3: Set up online access Once you have a balance in your NDPERS Retirement Plans with TIAA-CREF of at least $500 (in a single fund), go to and click on the blue Login box. If you haven t set up online access to your account, go to the box on the right side of the page and select Participants, which will lead you to the Register for Online Access screen. Fill in the required fields to register for online account access. (See the screen shot at left.) NDPERS Brokerage FAQ 1

4 How to Enroll in the Self-Directed Brokerage Account (Continued) Step 4: Transfer Funds* Once you have successfully logged into your online account and are at your Home Page, select Transfer money between my accounts. This tab appears just below the pie chart showing the asset allocation for your retirement savings. Step 5: Select your NDPERS Retirement Plan Select your 401(a) Defined Contribution Plan or 457(b) Deferred Compensation Companion Plan Step 6: Transfer funds Enter an amount of at least $500 in the first section of the Transfer Funds page to transfer out of a fund with a balance of at least $500, then scroll down to the Transfer To section. At the bottom of the list, enter the amount to be transferred into the Self-Directed Brokerage Account (the amount you transfer to the brokerage account will automatically be invested in the money market sweep account). There may be charges and tax consequences associated with transfers of assets. You should also carefully consider potential differences in features, costs, expenses, and other important factors. Consult with a tax advisor regarding your particular situation. * 2 NDPERS Brokerage FAQ

5 Step 7: Complete The online application Since you are funding your Self-Directed Brokerage Account for the first time, you will then need to complete the online application, which will automatically appear after you complete Step 6. (The screen shot of the first page of the online brokerage application is shown at left.) Step 8: Confirmation of account setup Once you complete the online brokerage application, you will see a confirmation of your account setup and will receive a Welcome Kit via U.S. mail with additional login instructions to access your Self-Directed Brokerage Account online. Please note that your brokerage account login will be different from your TIAA-CREF secure access login. Note: Once you have established your Self-Directed Brokerage Account, you can continue to fund it with transfers of at least $100 from your NDPERS Retirement Plan (from a single fund). Follow the same steps 4 to 6 to complete a transfer. You can also set up systematic transfers from your NDPERS Retirement Plan to your Self-Directed Brokerage Account by calling TIAA-CREF at NDPERS Brokerage FAQ 3

6 How To Access Your Self-Directed Brokerage Account Step 1: Access your account Go to and select Login. Select Login Step 2: Click On The Brokerage Services Account Link It is found towards the bottom of the login page. Select Brokerage Services 4 NDPERS Brokerage FAQ

7 Step 3: View Your Account Summary Page To See Your Account And Make Transactions You ll see your Account Summary page, which shows you an overview of your account, including your asset allocation in pie chart format, the asset classes you are invested in (and the dollar amounts), and an account summary of all of your holdings. From the Trading section at the top of the page, you can buy, redeem or exchange mutual fund shares, view/change/cancel an order, and see a schedule for commissions and fees. NDPERS Brokerage FAQ 5

8 How To Buy/Sell In Your Account In addition to the investment options available directly through the NDPERS Retirement Plans, the Self-Directed Brokerage Option offers access to powerful tools and research and expands the range of investments available to you. Please note: All funds are subject to their specific prospectus, which may indicate, for example, various minimum investment requirements. Step 1: Make A Transaction Online You can make mutual fund transactions easily from your Account Summary page. For example, if you re interested in purchasing a mutual fund, go to the Trading section and, under Mutual Funds, select the Buy tab. As the screen shot on the left shows, you can search for the fund you re looking for by either entering the fund s ticker symbol or the first letters of the fund name. Once you ve entered this fund information, select the Continue tab. (Or, click the Lookup tab to find the fund you re interested in investing in.) Step 2: View Next Page For A Complete description Of Your Transaction In the example we re using of purchasing a mutual fund, once you ve selected the Continued button from the previous screen, you will see a page showing the fund name, fund family, and information on and description of the fund. If you re interested in continuing with your order, select the Continue Placing Order tab. Please Note: You must have sufficient funds available in your brokerage account to cover the purchase price, plus any commissions/fees. 6 NDPERS Brokerage FAQ

9 Step 3: Select Your Purchase Amount From the next screen, you can enter the amount of your purchase in dollars or shares. You can also choose to reinvest the dividends, income and capital gains for the fund and view the terms of the prospectus from this page. Once you ve completed these steps, select the Review Before Sending tab to review the details of your order, and then to complete the order. Enter the Purchase Amount Step 4: Redeem Fund Shares In our example of making a mutual fund transaction, say you want to redeem shares of a mutual fund you currently own. From the Mutual Fund section in the Trading column, select the Redeem tab. The next screen will show a list of the mutual funds you own, and you can select a mutual fund to either fully or partially redeem. Once the request is placed and the trade settles, the funds will sweep into the brokerage Money Market Fund after settlement; you then request to move these funds back to your NDPERS Retirement Plans so that you can withdraw them. Select a Mutual Fund Position to Redeem. NDPERS Brokerage FAQ 7

10 How To Buy/Sell In Your Account (Continued) Step 5: Continue Redeeming Your Mutual Fund Shares Once you ve selected the mutual fund you want to redeem, the next screen will show the fund name, the amount of available shares, and enable you to either redeem a set number of shares, or all of them. You can then review and confirm your order before sending it. Review Your Order Before Sending It. Step 6: Send Your Completed Order Once you ve determined that your order is correct, select the Send Order button. Your order will then be completed. Select the Send Order Button. 8 NDPERS Brokerage FAQ

11 Frequently Asked Questions 1 Is there a minimum amount required to establish the Self-Directed Brokerage Account? Yes. The minimum initial amount required to establish a Self-Directed Brokerage Account is $500 (in a single fund within your NDPERS Retirement Plans with TIAA-CREF). 2 Once a Self-Directed Brokerage Account is established with the minimum of at least $500, is there a minimum for subsequent transfers from the NDPERS Retirement Plans? Yes. The minimum is at least $100 from a single fund when completing the transfer online. When completing the transfer by calling , there is a minimum of at least $100, which can be met from multiple funds within your NDPERS Retirement Plans. 3 Can I contribute directly to my Self-Directed Brokerage Account through salary deferral? No. This option is not available. Contributions to your NDPERS Retirement Plans through salary deferral must initially be allocated among one, or more, of the 33 funds available through the NDPERS Retirement Plans. 4 How do I make systematic transfers from my NDPERS Retirement Plans into the Self-Directed Brokerage Account? Call TIAA-CREF at to set up a systematic transfer. With systematic transfers, accumulations will be swept from your NDPERS Retirement Plans into your Self-Directed Brokerage Account on a periodic basis (monthly or quarterly, on a date you specify). Select funds, dollar amounts and or percentages that you would like to have moved to the brokerage money market fund. Amounts must be a minimum of $100 or 100%. You can request transfers on a dollar or a percentage basis for each period. The minimum for each transfer is $100. Once moved to the self-directed fund, the brokerage area will be able to move the funds to your selected investments on the brokerage platform. 5 What happens if I do not have the minimum $100 in the selected fund(s) within my NDPERS Retirement Plans and I ve set up systematic transfers (from NDPERS Retirement Plans into Brokerage)? Your transfer will not process and you will receive a notification letter from TIAA-CREF. To reinstate systematic transfers, once you have met the minimum transfer amount of $100, you will need to call TIAA-CREF at to speak with a consultant. 6 I have $100 in my brokerage money market account. How do I use these funds to invest in a mutual fund? You can make a purchase through one of two ways: Log in to your brokerage account and place trades online. Call to speak with a TIAA-CREF consultant. The commissions for your trades will vary, depending on whether you place the order online or through a TIAA-CREF brokerage consultant. 7 Once I have a balance in my Self-Directed Brokerage Account (money market fund/sweep account), can I set up a recurring investment into a specific mutual fund offered through the brokerage account? Yes, by using the Automatic Investment Plan (AIP) form for your brokerage account, you can set up a specific amount to be deducted from your brokerage money market fund, which will then be invested on a specified date in the mutual fund of your choice. You must have an established position in the fund in order to set up an AIP. A $100 minimum amount is required for an AIP. You can obtain an AIP form online at (click the Brokerage Services tab). Please note that if you ve set up systematic transfers from your NDPERS Retirement Plans to be deposited into your Self-Directed Brokerage Account and then choose to use the entire amount of a transfer to go into an AIP, you should select a date about four to five days after the systematic transfer is made before your funds go into the AIP; these extra days will account for weekends and holidays. NDPERS Brokerage FAQ 9

12 Frequently Asked Questions (Continued) 8 What happens if my systematic transfer (from NDPERS Retirement Plans to Brokerage) did not process and I have an Automatic Investment Plan (AIP) in place? Your AIP order will be executed on the date you ve set up. If the balance in your brokerage account is short, you will typically have five business days to satisfy the deficiency. This can be resolved by either enacting a one-time transfer of a minimum of $100 or through a systematic transfer. If you cannot fund the trade within five business days, and have not met the minimum balance requirement, then your position(s) will be liquidated. 9 Currently, all my funds are in my Self-Directed Brokerage Account, but I want to invest in the CREF Stock Account and other TIAA-CREF annuity accounts. Can I invest in these accounts through my Self-Directed Brokerage Account? The CREF Stock Account and the other TIAA-CREF annuity accounts are not available through your brokerage account because they are not publicly traded on any exchange. If all of your funds are invested in mutual funds within the brokerage window, you will have to sell enough of these holdings to generate the cash you d need to invest in any of the TIAA-CREF annuity accounts. Once the trade settles, the funds will be deposited into your brokerage money market fund. At that point, you can call TIAA-CREF Brokerage Services at and ask the brokerage consultant to transfer the brokerage money market funds over to your NDPERS Retirement Plans, a process that will take about 24 hours. The funds will then be posted to the CREF Money Market Account in your NDPERS Retirement Plans, from which you can request a transfer to the TIAA-CREF annuity account(s) you want to invest in. You can make this request by calling TIAA-CREF at and asking a consultant to assist you, or by going to selecting Access My Account, and making the transfer online. 10 What types of investments are available to me through the Self-Directed Brokerage Account? There are thousands of mutual funds from all leading fund managers accessible through the brokerage account, including Fidelity. These funds offer you a significant variety of asset class diversification and specialization. For a current list of fund families, go to and select fund families. To find out if a specific mutual fund is available, you can call TIAA-CREF Brokerage Services at In the PDF of fund families available on the Brokerage Services website, certain mutual fund families are listed with an asterisk. Do these asterisks mean that all the mutual funds available through these fund families have no fees, or do they mean that just some of the mutual funds within the family are no-fee funds? The asterisk means that some of the funds within that family are no-transaction-fee funds. If the individual fund has no transaction fee, this means that you can buy and sell the fund without being subject to a $35 transaction fee (annual brokerage fees and ongoing fund management fees and expenses do apply, however). In some cases, certain funds within these families do have loads or fees that are specific to those individual funds. 12 If only certain funds within a fund family have loads or transaction fees, how do I find out which funds have fees and which do not? In deciding which mutual funds to buy, you can read the prospectus and call a TIAA-CREF brokerage consultant at to discuss details on fees. 10 NDPERS Brokerage FAQ

13 13 Are there expenses associated with having a brokerage account? There can be costs associated with having a brokerage account, based upon such factors as: The frequency of trading. The type of funds selected for investment (transaction fee vs. non-transaction fee; no-load vs. load). You can minimize or eliminate each of these factors, depending on how you set up and fund your Self- Directed Brokerage Account. Please refer to the Brokerage Commission and Fee Schedule at the back of this guide for specific charges. 14 What options do I have to minimize/eliminate the fees within my Self-Directed Brokerage Account? To learn how to minimize fees, call to speak with a TIAA-CREF brokerage consultant. Generally, you can minimize fees by: Establishing a regular, automatic, recurring schedule for funding the transaction fee mutual funds in your account (monthly, quarterly, semiannually, etc.). Investing in funds designated as non-fee transaction funds. 16 When does the $8.00 exchange fee apply? This fee applies when you make a fund-to-fund exchange on transaction-fee mutual funds within the same mutual fund family. 17 Are any other fees associated with the brokerage account? Please see the Commission and Fee Schedule in the following section. How do I take distributions from my Self-Directed Brokerage Account? Distributions directly out of your brokerage account are not available. Distributions must come from your investment options within the NDPERS Retirement Plans. You will need to transfer the funds from the Self-Directed Brokerage Account back to your NDPERS Retirement Plans by calling Please note that in order to make this transfer, the money must be in the brokerage money market in order to move it back into the NDPERS Retirement Plans. (There may be tax consequences associated with a distribution from your plan. Consult a tax advisor.) 15 What does the phrase non-transaction fee fund mean? When you trade in a Non-Transaction Fee (NTF) fund, you do not incur the $35 transaction fee. Please note: Transaction fee funds do have the $35 transaction fee for each purchase and sale of the fund. Fidelity funds are a transactionfee fund. NDPERS Brokerage FAQ 11

14 Brokerage Commission And Fee Schedule Mutual Funds Online Automated Telephone System Client Service Assistance Mutual Funds No-transaction-fee (NTF) funds Transaction-fee (TF) funds Minimum initial investment $500; some funds may have higher initial investment minimums. Minimum additional investment $100. Short-term redemptions fee: $50 minimum for shares held less than six months (waived for shares transferred from another brokerage firm or financial institution). Automatic dollar-cost averaging transactions, no fee; minimum transaction $100. Transaction fee $35 per trade regardless of order size. Minimum initial and additional investments typically based on amount listed in the fund s prospectus. Dollar-cost averaging transactions, no fee; minimum transaction $100. Exchanges: $8 per trade regardless of order size. The lower fee for online equity trades is based on a household asset balance of $500,000 held in Brokerage Services. Contact a TIAA-CREF brokerage consultant regarding householding eligibility. Account Maintenance Fees * Duplicate Statements or confirmations Account research $2.50 per copy or $30 for full year $20 per hour Stop payment order fee $15 Annual account fee $40 Please note: For NDPERS Brokerage Accounts, these account maintenance fees are waived. A self-directed brokerage window is available for those participants and beneficiaries who seek a wider menu of investment securities than the mutual funds designated by NDPERS. Please keep in mind the following, however. NDPERS has not selected, nor is it responsible for monitoring, any of the investments available under the brokerage window. A participant or beneficiary is fully and solely responsible for his or her brokerage window investment decisions, including performing the due diligence necessary to determine the suitability of the investment securities that the participant or beneficiary selects. NDPERS also is not responsible for an act or failure of the brokerage firm providing services under the brokerage window. 12 NDPERS Brokerage FAQ

15 Learn More About the TIAA-CREF Brokerage Services Account You can view a demo of a TIAA-CREF Brokerage Services account. Go to look for the Related Links section on the right-hand side of the screen, and select the View a demo link. NDPERS Brokerage FAQ 13

16 You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call or log in to tiaa-cref.org for a prospectus that contains this and other information. Please read the prospectus carefully before investing. TIAA-CREF Brokerage Services is a division of TIAA-CREF Individual & Institutional Services, LLC, Member FINRA/SIPC. Brokerage accounts are carried by Pershing, LLC, a subsidiary of The Bank of New York Company, Inc. Member FINRA, NYSE, SIPC. TIAA-CREF Brokerage Services, a division of TIAA-CREF Individual & Institutional Services, LLC, reserves the right to change its fee and commission schedule at its discretion, subject to notification in accordance with applicable laws and regulations. TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), 730 Third Avenue, New York, NY C1281