Updates on vanguard 403 b program transition
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[Name] [Company] [Address 1] [Address 2] [Address 3] [City, State Zip]
P.O. Box 2600 Valley Forge, PA 19482-2600
Updates on Vanguard 403(b) program transition
Dear [Sponsor Name],
Recently we shared our plans to partner with Newport Group, one of the country's leading retirement plan service providers, to enhance our 403(b) retirement services. It's a change that will bring your participants a more comprehensive retirement program and provide you with services and support that can make your job easier.
We're pleased to report that progress toward completing this program--Vanguard 403(b) Services--is on schedule, and we expect it to be up and running by November 13, 2017. For right now, there are a few items we need to let you know about.
First, some great news about investment choices
? Vanguard AdmiralTM Shares will be offered as an even lower-cost investment choice.
What are Admiral Shares? They're a separate share class of our mutual funds with expense ratios that are, on average, 41% lower than our standard Investor Share class and 83% lower than the industry average.* Over time, the savings from Admiral Shares can really add up: Participants will not only save on costs, they'll also benefit from an increase in the power of compounding. Admiral Shares will be offered by many of the funds in the Vanguard 403(b) Services investment lineup.
Want more good news? The minimum investment amount normally required to invest in Admiral Shares ($10,000, $50,000, or $100,000, depending on the fund) will be waived for Vanguard 403(b) participants. And there won't be a minimum balance requirement either.
Please note: If a participant account already holds Investor Shares of a fund that offers Admiral Shares, we'll automatically convert the Investor Shares to Admiral Shares starting on October 4, 2017, and continuing through the month. Participants will receive a confirmation after the Admiral Shares conversion is complete.
*Vanguard Admiral Shares average expense ratio: 0.12%. Vanguard Investor Shares average expense ratio: 0.20%. Mutual fund-only industry average expense ratio: 0.69%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2016.
? 2017 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
Next, some additional explanation about fees ? Vanguard has adjusted the plan pricing.
We've changed our pricing to more accurately reflect the additional plan services and capabilities we're offering. Starting in 2018, each participant will pay a flat $5 monthly recordkeeping fee ($60 annually). The $5 fee replaces the $15 annual fee for each mutual fund held in an account. This means your participants can hold multiple funds, including lower-cost Admiral Shares, without incurring multiple fees. Previously, they'd pay $60 to hold 4 funds; now they can hold any number of funds and won't pay more than $60. And there are no charges to buy or sell funds (front- or back-end loads), and no commissions, withdrawal fees, or other investment-related fees commonly collected by other companies.**
A blackout period will occur ? There will be a blackout period as accounts are transitioned to the enhanced program.
What is a blackout period? It's a time frame during which participants won't be able to access their accounts or make transactions, including taking distributions. When will it take place? It starts at close of business on Friday, November 3, and extends through the week of November 6, 2017.
A few housekeeping items you should be aware of ? Newport Trust Company will serve as custodian.
Vanguard will remain as investment provider, but Vanguard Fiduciary Trust Company will resign as custodian of 403(b) custodial accounts. Effective November 4, 2017, Newport Trust Company will become successor custodian, assuming the custodial duties described in the updated 403(b) custodial account agreement. Visit caa to review the agreement, including a change to voting rights. ? Information-Sharing Agreement for 403(b) Contract Exchanges has been revised. Vanguard's Information-Sharing Agreement for 403(b) Contract Exchanges has been amended to reflect that The Vanguard Group, Inc., and Newport Trust Company are responsible for sharing information with the employer and can engage third parties to facilitate these duties under the Agreement. The Vanguard Group, Inc., has engaged Newport Group to perform information-sharing duties. View the revised Information-Sharing Agreement at infoagree. ? New Administrative and Recordkeeping Service Description is available for review. Vanguard's Individual 403(b)(7) Program Services Description has been amended and restated as the Administrative and Recordkeeping Service Description ("Service Description"). It details the enhanced services available under Vanguard 403(b) Services. View the Service Description at rsd.
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**The flat fee covers the costs of recordkeeping, custodial, administrative, and account services provided in the Vanguard 403(b) Services program. Unlike an asset-based fee, a flat fee will not increase as your account assets grow. There is a charge for loans, if your plan offers them, and a charge for certain optional hardship and domestic relations order services, if elected.
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