I’m on the tail end of a relaxing three day weekend as I write this, so I may be too tranquil to be able to build up the appropriate lather to close this series out. We’ll see what happens. Part one here. Part two here.
Near the end of my email conversations with the former HR department, I asked a question out of desperation.
Clarification: I can move my funds as long as it is within TIAA-CREF, but not move them if it means another tax deferred retirement investment plan?
Also: The funds I rolled into TIAA-CREF from my employer prior to NDSU, is that also caught in the TIAA-CREF trap, or can I roll that portion out?
Correct. If you rolled your prior account into a 403b with TIAA-CREF, those are not tied to your regular plan rules and you could do the rollover on those.
However, when I went to TIAA-CREF with this plan, to at least get my $3,000 that I rolled into it, I was once again rebuffed. They said resounding NO to this. I had apparently rolled it into the 401(a) plan and not the 403(b) plan or some such nonsense that was never explained to me when I did it. I did not know more than one plan existed, and even if I did doubt I would have known the difference.
Meanwhile, I’m getting emails all the time from TIAA-CREF about their wonderful services filled with flexibility and security and awesomeness. They even offer to meet with plan holders one on one for advice. I took them up on this and scheduled an appointment.
Three Conversations that Lead Nowhere
I met with a kindly gentleman who informed me that yes, all this was true. That this was not TIAA-CREF’s usual way of doing business. That such plans were rare, so rare he wouldn’t speculate how many there were. I asked him “Seriously, how is this OK?” I could tell he sympathized, and really wanted to say things about the ridiculousness of the system, though he couldn’t. That’s assuming a lot from nonverbals, but when you speak with someone that knows a system is not right but can’t do anything about it, you know it. Just like when you speak with someone who refuses to see the problem and just keeps feeding you the corporate jargon filled answers that won’t get them in legal trouble.
He said that TIAA-CREF was only doing what NDUS asked it to do. He told me there was a chance I would be able to get back my roll over money, but that it was slim. He gave me some pointers to do so.
None of those pointers worked.
I talked to a TIAA-CREF person on the phone about the rollover. He said that it is clearly in the documents that this is how it is. I asked if laypeople were expected to be able to navigate investment documents that have more technical terminology than an episode of Grey’s Anatomy. He said “Well, the information is available online.” Which I guess makes all this OK, because internet.
So at this point there was little left to do but call NDUS directly and speak to them. Here’s a partial transcript of that call, in progress…
Her: Our plan allows for cash withdrawals if you are over age 55 or if the balance is less than 10,000. Our plan also allows for rollovers if you are over age 55 or if the balance is less than 10,000.
Me: Which to me is like, that’s why I’m calling. I’m wondering why that is.
Her: Do you happen to be working with somebody by the name of Pat Torney?
Me: No. (Though now I really want to know that person)
Her: It’s that way because at least historically with the retirement plan is that the state of ND is giving a very large employer contribution toward employee retirement and they are very restrictive about the ability to access the money on any level. The intent is that the money was for retirement. The board wants to make sure that the money goes toward retirement.
Me: Well, OK, so why wouldn’t the employee part of the contribution to it or anything I rolled into it be available?
Her: Again, the rules are specified. That’s why we have the 403b plan for employee contributions.
Me: So their thought is that because of the large, and granted, it is was a large contribution from North Dakota, and it’s unusual in that way for employer to make such large contributions to a retirement plan, but it’s also very unusual to not allow employees to roll anything, even their own contributions or anything they rolled into it, out.
Her: But again, we’re bound by these guidelines for the money that has been put into your account. The point is we don’t have the ability to allow exceptions.
It went back and forth like this for several more minutes. I asked why they treat employees working in higher academia like they don’t have the ability to manage their own retirement account. She said their benevolence in bestowing so much into our retirement is not to be questioned. (THERE’S THE ANGER LATHER I WAS LOOKING FOR! And just in time for the last section!)
Why This All Matters
I’ve given up on ever seeing this money again. I say that in all honesty. Most people who move on from higher education in North Dakota are probably pleased enough to be escaping a dying industry that they consider the 401 plan just something they have on standby when they retire. Live and let live, the way Midwesterners do. Accept that you can’t do anything about it and move on.
I’d honestly be fine with just getting back the money I rolled into the plan and the money I contributed against my will in my paycheck twice a month and let the rest just fly away. That’s crazy, you say, but I have several reasons for this attitude.
Reason one – they don’t see my contributions as actual contributions. As stated in their plan document, all my contributions are “specified by the Institution as being made by the Institution in lieu of contributions by the participant. Furthermore, the “pick-up” amounts cannot be received directly by participant in accordance with Code Section 414(h)(2).
Here’s what IRS says about “Pick-Up”:
Section 414(h)(2) provides a special rule for qualified plans established by a State government or political subdivision thereof, or by any agency or instrumentality of the foregoing. Under this rule, contributions, although designated as employee contributions, are nevertheless treated as employer contributions if the contributions are picked up by the employing unit.
So even though the document says I’m putting in 1.5 percent of my paycheck, and that was taken out of the compensation due to me regardless of my willingness to contribute, they consider it all theirs. It’s this attitude, and the attitude of the woman at NDUS who spoke to me as she had obviously spoken to dozens of others with the same question, that is so deeply troubling – the Board considers this gift of theirs so precious that they don’t want you to have it until you are deemed fit enough to retire. They are doing it for your own good, they say. I don’t want my money and retirement investments under the control of people who think this way.
There’s also this nugget at the end of the plan document:
While it is expected that this Plan will continue indefinitely, the Board reserves the right to amend, otherwise modify, or terminate the Plan, or to discontinue any further contributions or payments under the plan, by resolution of its board. In the event of a termination of the plan or complete discontinuance of plan contributions, the board will notify all participants of the termination. As of the date of complete or partial termination, all accumulation accounts will become nonforfeitable to the extent that benefits are accrued.
Not only won’t they let me roll out my funds, they won’t guarantee that they won’t just fucking up and take their ball home with them. Investment accounts carry risk, which I accept. But this is an additional risk on top of that which I don’t accept. For them to have a clause in their document that flat out allows them to take all the funds and never pay back what they (as stated above) consider their contributions, is ridiculous.
But, Joel, how on earth could that happen?
Basically, I see Higher Education as the next economic bubble that will burst with dire consequences. The decision in 2005 to put the final nail in the coffin for students to be able to discharge loans in bankruptcy has allowed lenders to have absolutely no misgivings about lending money that they know will never be forgiven by the courts. Student loan debt has surpassed auto and credit card debt. Tuition keeps rising faster than inflation. Can you see this ending well once today’s students leave college and are unable to pay off their loans?
I am thoroughly convinced that I will never see this retirement money because of that clause – which is why I call this theft. I cannot move my retirement account to a 401(k) that I feel safer with because I can actually control it. It’s like being invested in a pension system, and we all know how well those fare in tough times. My only hope is that the current higher ed system can hold out for 20 more years so I can roll it all out before the bottom falls out. Combine the student loan issue with the unsustainable system of using people with doctorates as adjuncts for cheap labor and it just won’t hold.
Add to that the fact TIAA-CREF had Becky’s retirement money under the wrong social security number, and that’s a lot more trust you are asking of me to provide than I have to give.
But, Joel, they contributed so much, they should be able to have that say.
Again I say bullshit. I’ve found that compared to state employees, the private sector pays way better. Part of the reason people are willing to become state employees is the benefits are generally better through union negotiations (unless you live in Wisconsin). So even though I’ve been led to believe that the ND contribution to the 401 was so generous, here’s a little factoid. One year after NDSU, I was working with a new employer. I contribute 4 percent (Which is entirely my choice!), the employer matches that with 3.5 percent. So 7.5 percent. Dollar for dollar, I put in more now than I did working in the NDUS where 11 percent of my salary was invested into an account. The generosity of the system was a myth. Give employees better wages, and they’ll contribute on their own into a system that allows them actual control of their retirement account. Heck, Time is saying it’s time to retire the 401(k) for other systems. I wouldn’t go as far as that, though.
Regardless, NDUS should have NO say no matter what. This is my retirement to worry about, not theirs. And screw any documents signed about it when hired. I was working in a group home at the time. I’d seen a kid pee on the carpet in front of me while eating his own scabs – I’d have signed pretty much anything to get out of that. That still doesn’t make the system right.
This is now breaking 2,000 words for one post, which is far beyond any reasonable amount to expect anyone except those actually affected by this dick move by NDUS that seems to rely on the natural tendency of people who live in this region to accept authority without much complaining. In reality, it’s frickin hard for me to complain about a retirement system at all in today’s economic climate where I feel lucky to even be working, let alone for an employer that actually allows employees to roll over their funds. Add to that my retirement funds in TIAA-CREF have grown in the past two years to hit $28k during an economic recovery, and I feel like I’m complaining about being hung with a new rope.
To the people who are forced into this and have found this post because you turned to the internet for help, I say, it’s just not going to happen. They won. They have thoroughly pretended to fulfill your retirement plans. They will not give you the ability to roll it over and you will be forever having to plan your future with several 401(k) accounts to keep track of for your retirement, no matter how inconvenient and stupid that is. (Imagine if every employer did this over the many careers we are expected to have in our lifetimes, especially Millennials)
I’m sorry, but the system you thought you were contributing to does not exist. In it’s place is a money trap.