Deferred Compensation Plan (DCP) FAQs

It is calculated according to a formula that considers:

1. The total amount of money allocated to the Secure Income Portfolio (SIP) over time.

2. The growth of that money from rising financial markets.

3. The withdrawal rates provided by insurers at the time your assets are allocated to the SIP.

In the investment line up there are four funds with withdrawal restrictions. The SURS U.S. Inflation Protected Bond Fund, SURS U.S. REIT Fund and SURS Non-U.S. Growth Equity Fund all have 30-day trading restrictions. This means if you move money out of these funds, you cannot move money back in until 30 days have passed. If you transfer funds out of the SURS LIS (LIS), you cannot trans-fer funds back into the SURS LIS for 90 days. 

Additionally, if you have already begun securing income and you change your target retirement age or secure income level, you cannot transfer additional funds into the SURS LIS for 90 days. 

Collective Investment Trusts (CITs), also known as commingled funds or collective investment funds, have been around for many years, but are generally less well known than mutual funds. While mutual funds and CITs are both an investment option funded by shareholders that trade in diversified holdings and are professionally managed, there are differences in how CITs are registered and what investors may access them. 

CITs are sponsored by a bank or trust company and are only available to certain retirement plan sponsors and their plan participants – retail (public) investment is not permitted. CITs pool assets from multiple retirement plans into a single investment fund, similar to a mutual fund. While mutual funds are regulated by the Securities and Exchange Commission (SEC), CITs are regulated by the Office of the Comptroller of Currency (OCC) as well as the IRS and DOL. As a result of the regulatory difference, mutual funds are required to report and disclose their holdings on a quarterly basis. Mutual funds are typically accompanied by a ticker symbol, so investors are able to search for more information about the security’s holdings and other characteristics. Unlike mutual funds, CITs are not publicly traded and are not subject to the reporting and disclosure requirements. As such, public information is generally unavailable for CITs. 

A comparison chart between mutual funds and CITs is provided below:

When you enroll in the SURS DCP through the online enrollment website, you will have the opportunity to electronically name beneficiaries at that time. The beneficiary information is then stored at Voya Financial, SURS recordkeeper. You should receive a confirmation letter. If you do not name a beneficiary during the online enrollment process, you can download a Beneficiary Designation Form from your DCP account. Under Plan Info tab, click on Forms, then Beneficiary Designation Form. Complete and sign the form and mail it directly to Voya at the address on the form.

Members incur certain fees depending upon their choices. A fee that applies to every member is a recordkeeping fee of $30 annually. This fee is charged quarterly. This covers the administration of the plan including tracking contributions, earnings, making distributions, filing all necessary forms with the SEC/DOL, maintaining data on the website, etc. 

A second fee is an expense ratio or investment management fee. This is the cost to be invested in each fund. This fee is deducted from your account daily. This type of fee is measured in basis points. For example, let’s say you have an account balance of $100,000 and are invested in a fund that charges 10 basis points (bps). The annual cost is $100 (100,000 x .10%). 

The final fee some members may incur involves those who choose to utilize the guaranteed income option under the LIS. The additional fee to secure and ensure this income is at most 95 basis points (.95%). This fee is calculated based on the amount invested in the Secure Income Portfolio. 

Members are gradually moved into this portfolio over the 15 years prior to their retirement date. Therefore, the full fee does not apply until a member is completely invested in that portfolio imme-diately prior to retirement. If a member does not choose to secure 100% of their account, the full fee does not apply. In exchange for the fee, members will receive guaranteed income for life that can increase with market gains but will not decrease with market declines. They will also maintain con-trol over their account balance giving them the flexibility to convert all or only a portion to income and to take ad-hoc distributions at any time. Additionally, any balance remaining at death is passed to beneficiaries. 

SURS reviews the plan and its fees on a regular basis to ensure only cost-effective, high quality options are provided. For more information on fees, members may consult the DCP materials, the Voya website or contact the SURS Defined Contribution Contact Center at 800-613-9543. 

If you wish to use the SURS LIS as a target-date portfolio only, you can simply set your secure in-come level to 0%. This may be done via the SURS DCP website. To access the site, go to the SURS Member Website, then follow the prompts to select View/Manage My DCP Account, Lifetime Income Strategy, My Ac-count, Change Account Settings, Select Your Secure Income Level Retirement Age. 

There is a 90-day period in which you can withdraw from the SURS DCP and elect to receive a Permissible Refund of your deferred contributions. The 90-day period begins the day the first contribution was made to the DCP. Permissible refunds are issued by Voya Financial, SURS recordkeeper. Voya will also issue a 1099R the following January for income tax purposes. A Permissible Refund is not subject to the IRS 10% early withdrawal penalty.

SURS is committed to providing members with informational materials and tools to help members make informed decisions about their retirement plan. This includes providing general plan information and general financial, investment and retirement information. However, SURS is not permitted to give investment advice to members or their beneficiaries and does not offer specific investment recommendations that take into consideration your personal finances, goals and risk tolerances.

In the event that you reach the annual contribution limit, the recordkeeper will update your DCP deferral amount to $0 or 0%. The updated deferral amount will transmit to the employer(s) and will be effective the beginning of the following month. Depending on timing and payroll frequency, it is possible that another payroll deferral could go through to the DCP after the limit is reached. In addition to regular monitoring, the recordkeeper will also work with all involved recordkeepers to perform an end of the year aggregate limit monitoring test. If necessary, the recordkeeper will return the contribution overages directly to the you as soon as administratively possible but no later than April 15 of the following year. The recordkeeper will also provide the W2 tax form for those earnings for the appropriate tax year. 

Information is available from numerous sources. In addition to the link to the Investment Options Guide and this table, the primary sources of information would be the SURS DCP page and the Registered Representatives available at Voya Financial, SURS recordkeeper. Neither SURS nor Voya are allowed to provide ANY type of investment advice. Members should utilize any resources available or consult their financial advisors.

If you pass away while actively working, your surviving spouses is not eligible for survivor benefits from the SURS LIS. Instead, a lump sum of your SURS LIS account balance will be payable to your beneficiary. A spouse who is not age 45 on the date of retirement is not eligible to utilize the LIS.

You can enroll in the DCP by logging into the SURS Secure Member Website. Refer to the How to Enroll in the SURS Deferred Compensation Plan (DCP) page.

Yes, the SURS DCP will accept a roll-in from another plan. A rollover maintains the tax-favored status of your assets. 

• You may roll over balances from your former employer’s 457(b) plan, 401(a) plan, 401(k) plan, 403(b) plan or a Traditional IRA. 
• You may roll over balances from a Roth 401(k), 403(b), or 457(b) plan into a Roth account in the DCP. 
• The plan will not accept a rollover from a Roth IRA. Only pre-tax IRA funds may be rolled into an employer-sponsored plan. 
• The plan does allow post-termination rollovers into the plan, including a refund of survivor contributions or a refund of excess service or excess contributions payable from SURS at retirement. 

If you are considering a roll-in, ask the current plan administrator whether the funds are allowed to be rolled out of the plan. Most plans do not allow in-service distributions. For example, if you have an account balance in the state of Illinois’ 457 plan administered by Empower and you are still employed by the SURS-covered employer that you contributed through, you will not be able to roll-over the balance to the SURS DCP. To initiate a rollover into the plan, complete the Rollover Form which can be found on your SURS Member website under the Forms tab, or call the SURS Defined Contribution Contact Center at 800-613-9543 for assistance.

It is the amount the member can withdraw monthly from the Secure Income Portfolio during retirement and the amount the participating insurers will pay the member annually for the remainder of their lifetime (or the remainder of the spouse’s lifetime, if applicable) if the Secure Income Portfolio account balance is exhausted because the Guaranteed Income Withdrawal Amount depleted the ac-count. This amount is recalculated each year on the member’s birthday.

The Target Retirement Age is the age at which the member plans to retire. The default retirement age is 65, but it can be changed to any age between 50 and 70. The retirement age setting determines your investment horizon and allows the SURS LIS to personalize the member’s asset allocation, including the timing and purchases of the Secure Income Portfolio. The allocation of the LIS assets to the Secure Income Portfolio is targeted to reach the Secure Income Level two years before retirement age in most cases.

As with any investment account there are no guarantees. Markets move up and down daily, thus your account balance changes daily. The economy, interest rates, inflation, global factors, investment horizons, fund selection, etc. are just a few of the factors that may impact your account balance. 

The SURS Lifetime Income Strategy (LIS) option is designed to help SURS members meet basic income needs in retirement. It is a flexible, target date portfolio that automatically adjusts its asset allocation based on your age, target retirement date, and selected secure income level. As you near retirement, you have the option to secure guaranteed retirement income that you can’t outlive. 

If you invest in the SURS LIS and do nothing, you will automatically be on the path to receive guar-anteed monthly income for life in retirement that will increase with market gains and not decrease with market declines.

Statements from Voya Financial, SURS recordkeeper, are made available quarterly. You can access the statement by logging in to your SURS Deferred Compensation Plan (DCP) account through the SURS Secure Member Website. From your online DCP website, click on the Statements & Documents tab, then click on Statements. You should see a list of statements for each quarter. If you are also in the SURS Retirement Savings Plan (RSP), you will receive a combined statement for both accounts.

Yes. Members are only allowed to roll their vacation payouts into their DCP account if they have enrolled in the DCP prior to termination of employment. Once enrolled, you can initiate the process by talking to HR/Benefits at your employer. After speaking with your employer, please contact Voya Financial, SURS recordkeeper, at 800-613-9543 and let them know you are terminating employment, but request to rollover a post-termination vacation payment to your DCP account. Since the process may take a while, you should request the account remain open awaiting the vacation payout rollover.

Yes. You can increase or decrease your deferral amount, change your deferral from a percentage to a flat dollar amount, change your contributions from pre-tax to Roth, or change your investment allocation.  In addition to the default investment option, the SURS LIS, there are 15 other core investment options to choose from within the SURS DCP.   

During the 30-day opt out period, you can opt out of automatic enrollment or make changes to the default deferral settings through the SURS member website.  To access the site, go to surs.org and click on the Member Login button.  You will need to register as a SURS website user the first time you visit.  From the member website, click on “Enroll in the SURS Deferred Compensation Plan (DCP)” button in the middle of the page.  You will then be redirected to the Voya website and presented with three options:  1) I want to personalize my enrollment, 2) I want to confirm my scheduled automatic enrollment, or 3) I don’t want to save. 

After you have enrolled in the DCP, you can access your account and make deferral setting changes by going to the SURS Member Website, and then click on SURS Deferred Compensation Plan (DCP). 

SURS has full-time dedicated Defined Contribution Account Representatives. You may schedule an appointment with them by going to sursrsp.timetap.com.

Contributions will be returned in a last in, first out manner.

The LIS is designed to help you meet your basic income needs in retirement. The default settings have been carefully considered and if you do nothing after you enroll, you will be on target to re-ceive 100% of your account as guaranteed secured income beginning at age 65. 

Here’s how. When you enroll in the LIS, you will be placed in a target date portfolio that automati-cally adjusts as you age to become more conservative. Approximately 15 years prior to the default retirement age of 65, you will automatically start securing guaranteed income for life that you are able to receive when you retire. When you retire, 100% of your account will be secured and will pro-vide you with guaranteed monthly income for life. Your guaranteed income amount can increase with market gains but will not decrease if the market declines. You will maintain control of your ac-count balance and can take ad-hoc distributions at any time. If you pass away, the balance of your account is paid to your beneficiaries. 

If you prefer to retire before or after age 65, or if you wish to secure less than 100% of your account, you may change your preferences at any time by logging into your account at surs.org. 

The SURS LIS can be a very simple, hands-off approach to meeting your retirement income needs. Like other target date funds, there is a lot of action behind the scenes.

A member may begin the “activation” process for the LIS as early as age 60. For members desiring to retire under the age of 60 and utilizing the LIS, a special arrangement has been made to permit this, primarily so that insurance benefits can begin on the date of retirement. This is a complex process that requires calculations to estimate the benefit at age 60. That amount will then be withdrawn, usually from the non-secured portion of the LIS for each month the member is under the age of 60. Members are strongly encouraged to have a counseling appointment to gain a better understanding of how this process will work.

The SURS DCP is a 457(b) defined contribution plan. Participation is voluntary. 

A 457(b) plan is an employer-sponsored, tax-favored retirement savings account. Unlike other retirement plans, a 457(b) plan allows you to withdraw funds without a penalty before the age of 59½ as long as you either leave employment or have a qualifying hardship. You can also withdraw funds while still employed after you reach age 59 ½. 

The SURS Lifetime Income Strategy (LIS) is a professionally managed target-date portfolio that adjusts its investment mix to become more conservative as you age. During your saving years, when you are building your retirement wealth, the SURS Lifetime Income Strategy invests in four investment portfolios: 

• SURS LIS Stock Portfolio 
• SURS LIS Bond Portfolio 
• SURS LIS Real Asset Portfolio 
• SURS LIS Cash Portfolio 

The allocation to each portfolio automatically adjusts overtime to maintain an appropriate investment mix, just like a target-date fund. The underlying funds for the Stock, Bond, and Real 

Asset Portfolios are comprised of low-cost index funds which are also available on the core investment lineup. 

When you are approximately 15 years away from retirement and if you are vested, you will gradually begin investing a portion of your current and future balances into the Secure Income Portfolio. The assets in the Secure Income Portfolio are invested in a passive, index-managed fund composed of 50% stocks and 50% bonds. 

For a general overview of the SURS Lifetime Income Strategy, please refer to the LIS Brochure and for specifics on the underlying investments of the SURS Lifetime Income Strategy, please refer to the Investment Options Guide.

At retirement, you may choose to convert all or a portion of your account to monthly income through the Lifetime Income Strategy (50% must be converted to maintain insurance eligibility). Any portion of your account that you convert to monthly income will then be considered “secured” and invested in a Secure Income Portfolio. The assets secured in the Secure Income Portfolio remain in the market and have the ability to increase your monthly income in retirement with market gains but will not decrease your income with market losses. 

Any assets you do not convert to income will be considered “non-secured” and will remain in a target-date portfolio that is customized based on your age. 

After retirement, you have full control over your non-secured assets. You may leave them in the SURS LIS target-date portfolio, take additional withdrawals or move them to any of SURS core funds. 

You also may access secured assets. However, if you have chosen to maintain insurance eligibility, you can only access any secured assets over and above the 50% level. Keep in mind, choosing to move or take additional withdrawals from secured assets will reduce your guaranteed monthly retirement income.

The core fund lineup offers funds in the major asset classes that range across the risk and return spectrum. A significant decision if you decide to build your own portfolio is determining the asset allocation and finding the right balance of investments to meet your specific goals. Because the investment options on the core fund lineup can change periodically, it is best to access the most up-to-date information through your Retirement Savings Plan online account at surs.org/login. 

A description of the major asset classes is outlined below: 

Capital Preservation: This conservation option is intended to offer safety of principal and stability of growth in principal and earned interest that does not fluctuate with the stock and bond markets. 

• Fixed Account/Stable Value funds invest in diversified bond portfolios and uses contracts from banks and insurance companies to protect against a decline in yield or loss of capital. These funds are designed to preserve capital and deliver steady returns with volatility similar to that of money market funds or other cash instruments. 
• Money market funds invests primarily in low-risk, short-term securities that mature in 397 days or less. This includes treasury bills, government securities, certificates of deposit and other highly liquid, safe securities. Money market rates are highly dependent on short-term interest rates. 

Bonds: Bonds are basically loans in which the borrower agrees to pay back principal, plus interest (income), by a certain time. The borrower’s ability to repay typically impacts the bond’s rate. Bonds are closely tied to changes in interest rates – i.e., when rates fall, bond prices rise – and are considered less risky than stocks in general. 

• Intermediate-term core bonds invest primarily in investment-grade U.S. fixed income issues including government, corporate, and securitized debt, and hold less than 5% in below-investment-grade exposures. 
• Inflation-protected bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation and thus, are designed to protect investors from the decline of their purchasing power. 
• Multisector bonds seek income by diversifying their assets among several fixed-income sectors, usually U.S. government obligations, U.S. corporate bonds, foreign bonds, and high-yield U.S. debt securities. 
• High yield bonds invest in corporate bonds rated below BBB- from S&P or Baa3 from Moody’s to offer higher coupons than government bonds or high-grade corporate bonds and have the potential for price appreciation. 

Equity: Stocks represent equity or ownership in a corporation. If an investor owns stock in a company, they own a piece of that company. Stocks have historically produced the highest returns; however, they also carry the most risk, with a tendency towards greater price swings – highs and lows – that makes them more volatile than either fixed accounts or bonds. Equity funds can be categorized by: 

• Market Capitalization (or the total dollar value of all outstanding shares of a company)
  • Large Cap Funds are representative of the overall U.S. stock market in size, growth rates, and price. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap. 
  • Mid-Cap Funds invest in stocks of medium-sized companies. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market. 
  • Small-Blend Funds invest in stocks of small companies. Stocks in the bottom 10% of the capitalization of the U.S. equity market are defined as small cap 
• Investment Style 
  • Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow). 
  • Blend is assigned to portfolios where neither growth nor value characteristics predominate. 
  • Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields). 
• Specialty funds (invest primarily in the securities of a particular industry, sector, type of security or geographic region)
  • Real Estate Investment Trust (REIT) funds invest in companies that own or finance income-producing real estate across a range of property sectors. 
  • Environmental, Social and Governance (ESG) funds are portfolios of equities and/or bonds in which ESG factors have been integrated into the investment process. 
  • Target date funds hold a mix of stocks, bonds, and other investments. Over time, the mix gradually shifts according to the fund’s strategy. A typical target-date fund will grow more conservative as it approaches the target retirement age. 

Investing in any securities involves some risk, and there is always the potential of losing money. There is market risk, which is the risk that securities may decline in value due to factors affecting the securities markets, as well as longevity risk, which is the possibility that you may outlive your retirement savings. 

SURS recognized these common risks that members face when it comes to their retirement plan and created the SURS Lifetime Income Strategy. The SURS Lifetime Income Strategy protects against market downturns and the potential that you may outlive your money by establishing a retirement income plan that is backed by multiple insurance companies. If you deplete the balance in the Secure Income Portfolio while taking monthly guaranteed lifetime withdrawals, each participating insurance company will pay you its portion of your Guaranteed Income Withdrawal Amount for the rest of your lifetime (and for the rest of your spouse’s or civil union partner’s lifetime, if applicable). 

Other risks include inflation risk, which is the risk that securities may decline in value due to fluctuations in interest rates. Inflation risk, or purchasing power risk, is the possibility that your investment income will not be worth as much in the future. Investment behavior risk is the risk that investors are influenced by their emotions and make irrational decisions that can disrupt a long-term investment strategy, such as moving in and out of the market and specific asset classes at the wrong time. Opportunity cost represents the potential benefits an investor foregoes by choosing one alternative over another. This may include a young investor keeping cash holdings in a rising, bull market. 

The risks associated with the investment options in the core lineup vary, so it is important to carefully review and compare the investment objectives, strategies, fees and risks in the fund fact sheets before making any investment decisions.

No, contributions that are rolled into the SURS DCP do not count towards the annual contribution limit.