NADART Retirement Library - Tools, Resources, Information

Frequently Asked Questions on Current Market Conditions

The current financial markets and economic uncertainty have affected everyone and their investments, including participants’ retirement accounts. The volatility in the price of oil and the high cost of gas, the continued downturn in the housing market, and recent failings of large financial firms has kept our economic outlook “gloomy” to say the least. While many people are feeling panic and fear, it is during these difficult times that you should take a long-term view of market cycles, and realize the benefits of continuing to invest in your retirement future.

Should I continue to invest in my retirement account or stop contributing altogether?
Where is my money invested, and can I switch investments?
Can I take all of my money out of my retirement plan?
Are my retirement assets protected if my company goes out of business?
Is the money in my NADART Retirement Plan safe?
Will the stock market turn around?
What if I have additional questions?

Should I continue to invest in my retirement account or stop contributing altogether?

Because of the current state of the economy, it is often difficult to see past the short term. However, a long-term investment plan is precisely what is needed, and there are a number of reasons why you should continue to invest in your retirement plan:

1. Buying Low- The major indexes and many of the funds available have had significant losses for the year, so you are able to buy more shares now at a lower price.
2. Employer Match- If your employer offers a matching contribution in your plan, you should contribute at least enough to receive this ‘free money’.
3. Compounding- The income on your investments is automatically reinvested in your account. As your investment grows, the returns you earn are proportionately bigger because income on your original investment and on any income or dividends accelerates the growth. This compounding continues until you withdraw your investments.

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Where is my money invested, and can I switch investments? *

Classic Plans: The two funds in the NADART Classic Plans are the NADART Fund and the Income Fund. All Employer Contributions and Employee Contributions (except After-Tax Voluntary Contributions) are invested in the NADART Fund. The After-Tax Voluntary Contributions (if permitted in the plan) are invested in the Income Fund.

The NADART Fund is a balanced fund diversified among U.S. and foreign stocks, fixed income instruments and cash. It is designed to have an asset mix of approximately 65% equities and 35% fixed income investments. With the NADART Fund’s investment strategy, participants can expect performance and risk characteristics commensurate with those of balanced mutual funds.

The Income Fund is a “stable value” fund, which invests in longer term bonds, and also providing a “crediting rate wrap”, which allows the Income Fund to maintain a positive yield. The crediting rate is calculated based on the yield of the underlying bonds plus or minus changes in market value of the portfolios. NADART uses highly rated financial institutions to provide the wrap and calculate the crediting rate.

The investments in a Classic Plan are determined by the type of contribution. Participants are not asked to choose investments for their contributions.

Investment Choice Plans: Participants in the NADART Investment Choice Plan may choose to invest in any of the 27 different funds offered in seven different categories. Those categories include: Income Funds, Balanced Funds, International Funds, Large Cap Stock Funds, Mid Cap Stock Funds, Small Cap Stock Funds and Target Dated Funds. An overview of all the funds offered (including the NADART Fund and Income Fund) is available here.

Investment Choice Plan participants who have not made an affirmative election to invest their contributions in any of the funds offered by NADART will have their contributions (except After-Tax Voluntary) invested in the NADART Fund, a Qualified Default Investment Alternative (QDIA). If a participant fails to make an affirmative investment election regarding Employee After-Tax Voluntary Contributions, those contributions will be invested in the Income Fund, a stable value investment fund.

If you would like to transfer your monies (or change your investment elections) between funds, you may do so using your Social Security Number and PIN (Personal Identification Number) either on the Voice Response System (877-487-4015) or on PlanWeb. Please remember that only trades made before 4:00 pm Eastern Time will be processed at the closing price for that business day. Any trades made after 4:00 p.m. Eastern Time will be processed at the following business day’s closing price. (If the stock market has an alternate closing time, the trading deadline will coincide with that alternate time.)

*What Type of Plan Do I have?

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Can I take all of my money out of my retirement plan?

The primary purpose of your employer sponsored retirement plan is to enable you to accumulate assets and provide you with greater financial security at retirement. Consistent with that purpose, any Employee Contributions (except Voluntary After-tax Contributions) and Company Contributions cannot be paid to you or your beneficiaries until a “Qualifying Event” occurs. A “Qualifying Event” occurs when you: (1) reach the Plan’s Normal Retirement Age, (2) leave employment under the Plan’s early retirement provision, (3) terminate employment prior to early retirement, (4) attain age 59 ½ in a 401(k) plan (age 62 in a Pension/Profit Sharing Plan), (5) become disabled or (6) die.

Are my retirement assets protected if my company goes out of business?

Yes, your retirement assets are protected if your company goes out of business. Because the monies in your retirement account are kept separate from your employer’s business assets (and NADART’s), they are safe and not subject to your employer’s creditors.

Is the money in my NADART Retirement Plan safe?

While the assets in your retirement plan are not insured by the FDIC (Federal Deposit Insurance Corporation), these assets are protected by federal regulations. These regulations state that participants’ contributions to their retirement account be held in an account separate from that of their employer and from companies who manage their retirement plans. The funds in your retirement account are handled by investment managers who must also carry insurance that protects against fraud or other misconduct.

Participants’ retirement accounts are also offered protection through the Employee Benefits Security Administration (EBSA), a part of the U.S. Department of Labor, which protects pensions, health plans and other employee benefits.

However, the monies in your NADART retirement account are invested in funds subject to gains and losses in the financial markets. Even prudent investments may suffer losses from time to time.

Will the stock market turn around?

The financial markets will always expand and contract, and determining the short-term direction is an extremely difficult task. Trying to “time the market” has historically been a losing proposition for most participants. In the long run, establishing a sensible contribution and investment strategy and sticking with it has ultimately provided the best result. Remember that your retirement plan is a long-term commitment.

What if I have additional questions?

If you have any additional questions or concerns, please contact our Plan Information Center at (800) 462-3278 or e-mail nadart@nada.org and a specialist will be happy to assist you. The Plan Information Center is open Monday through Friday, 8:30 a.m. to 5:45 p.m. Eastern Time.