Investment and Withdrawal Choices
for Retirement Accounts Within the
Optional Retirement Program
Page 2

As a result of the elimination of fund categories under (1), above, the TIAA
Real Estate Account(offered through the Teachers Insurance Annuity
Association/College Retirement Equities Fund [TIAA-CREF]) has now been
approved as a new investment vehicle under the ORP; and this
Administrative Memorandum announces the account's present availability
to ORP participants. The investment objective of the account is to seek a
favorable long-term rate of return through rental income and capital
appreciation from a diversified portfolio of commercial real estate. The
account's quarterly fund performance information can be accessed via the
Internet’s World Wide Web at http://www.ga.unc.edu/benefits.

In consequence of (2), above, an ORP participant who has not yet begun to
receive a retirement payout has been made eligible to receive at retirement or
cessation of employment the cashout of vested ORP contributions attributable
to both employee and employer accumulations, subject to the ORP carrier’s
restrictions. (For example, the ORP carrier may restrict full cashability of
account contributions that are invested in fixed account assets.)By this
Administrative Memorandum the cashout of ORP account value attributable
to vested employer contributions is made available on or after July 1, 1999, to
retiring participants who have NOT otherwise first effected an election to
receive a form of retirement payout that may restrict this option. Each retiring
participant should be encouraged to contact his or her ORP carrier(s) to
determine cashout availability. It is important, though, to understand that, in
consequence of G.S. 135-40.1(17), upon retirement, an ORP participant must be
in receipt of an ORP monthly retirement benefit to continue participation in
the State Health Plan. If an ORP carrier allows an ORP participant the
opportunity to elect full cashability at retirement of both employer and
employee accumulations, the individual’s State Health Plan coverage will be
lost unless the participant opts, instead, for some form of monthly ORP
payout during retirement.

Approval by the Board of Governors of Fidelity Investments as an ORP
carrier, reported in (3), above, was achieved with the assistance and advice of
an independent consultant. The consultant assisted the University to conduct
through a publicly advertised, competitive bid process the selection of a
mutual fund family as an investment option for ORP participants’ accounts,
in addition to annuity contracts offered by the three currently authorized
vendors. Addition of an ORP mutual fund option through Fidelity
Investments will require that many administrative details first be addressed,
and a fall 1999 implementation is expected. Further information about this
process will be made available from time to time.