Introduction

With thousands of investment selections available through the Self-Directed Brokerage Account, the State of Michigan 401(k) and 457 plans are among the best in the country. With this large number of investments, there is ample opportunity to build a well diversified portfolio for your State of Michigan 401(k) and 457 savings.

Please visit our “Fund Commentary” section below for further information on specific funds and/or fund types within the Plans.

Below you will find articles of interest as well as news and updates to State of Michigan employee and retiree benefits. Check this page for future updates to the Plans, as well as news that affects State of Michigan employees and retirees.


For Your Interest


Plan Updates

State of Michigan Loan Provision Reminder – September 2015

As a reminder, effective January 1, 2015, the loan rules were amended to permit up to two outstanding loans total from the 401(k) and 457 plans at any one time, reduced from seven. The new loan provision, effective January 1, 2016, further revises the number of loans permitted at a time from two to one.

While it is possible there are times a loan from your 401(k) or 457 plan may be your only or best option, taking that loan can have a detrimental effect on your retirement savings. There are many factors that should be taken into consideration before looking to your retirement savings account as a revenue source.

If you are considering taking a loan from your SOM 401(k) or 457 and would like to discuss how this may impact your retirement plan or to explore other possible revenue sources, do not hesitate to contact us toll-free at 1-866-444-6246.

State of Michigan Loan Provision Update – January 2015

Effective January 1, 2015, loan rules for the 401(k) and 457 plans will be amended to allow for up to two outstanding loans total from the plans at one time. In addition, effective January 1, 2016, the number of loans permitted at one time will be reduced to one.

There are many factors to consider before utilizing your 401(k) or 457 plan for a loan. Contact one of our Certified Financial PlannersTM toll-free at 1-866-444-6246 to discuss your personal situation and the impact this loan could have on your long term retirement plans.

State of Michigan Fund Change Announcement – January 2014

The State of Michigan has announced investment option changes for the State of Michigan 401(k) and 457 plans.

Effective January 10, 2014 Jennison Large Cap Growth Fund will replace Rainier Large Cap Growth Fund and Vanguard Emerging Markets Index Fund will replace SSgA Emerging Markets fund. These new investment options will provide similar investment strategies and risks, but the overall expenses for the investment options will be lower.

All balances and future contributions will be automatically transferred to the new finds and balances in those new funds will be available to trade on January 13, 2014.


News and Articles


Fund Commentary

SSgA Target Retirement Funds

The SSgA Target Retirement fund family is designed for those participants who wish to base their asset allocation decision on a specific target date, typically aligning the account with the fund that most closely matches their projected retirement date.

Eleven of these funds are included in the plan, with 5-year incremental targets from 2010 to 2055, along with a fund targeted as an Income Fund. The further away the target date, the more aggressive the asset allocation. Conversely, the closer the date, the greater the emphasis on preservation of capital in the asset allocation.

Target retirement funds hold some appeal in that they are simple to explain and administer. While this approach is unique, we believe the asset allocation decisions provided by these funds are crude at best. These funds attempt to make decisions about asset allocation based solely on a target date. An investor’s tolerance for risk and financial goals are other key factors that should largely play a role in determining investment strategy and asset allocation. Additionally, they leave no room for the fund manager to tactically adjust the strategy based on specific opportunities within the financial markets or in response to prevailing market conditions.

The returns realized in these commingled vehicles are diluted by a rigid adherence to mechanical allocation parameters. These parameters may prove to be shortsighted and inappropriate for everyone participating in the pool. The real world changes every day, yet proponents of lifecycle funds expect someone to stick to a single game plan for as much as 40 years, whether interest rates are rising or falling, or whether the economy is in expansion or recession. While target retirement funds offer a simple one-stop-solution, we continue to advise participants to avoid these funds and retain the flexibility to proactively adjust their portfolios as needed.


 

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or call us toll-free at 1-866-444-6246.

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