401(k) Changes as of July 1, 2019

What’s happening with the 401(k)?

After careful review of the current offerings, Baker Hughes’ Investment Committee decided to make changes to the 401(k) fund lineup. On July 1, 2019, Baker Hughes added three new passive funds and removed one fund from our investment lineup. See the Investment Option Overview Chart for the full fund lineup as of July 1, 2019.

Why is this change happening?

With the addition of these three passive funds, you’ll have more flexibility and more opportunities for investing your dollars in the 401(k) Plan. Passive funds have lower investment fees than active funds because they hold securities that match the relevant market index and do not conduct investment research to hold amounts different from the index. Passive funds try to track the performance of a certain market index while active funds try to outperform the index.

Do I need to take action?

No action is required but you should carefully read and review the mailer (also sent to your home) to determine if you need to make any decisions regarding the investment of your account balance under the Plan.

This is also a good opportunity to review your investment options. The Fund Fact Sheets for the new funds are available on myRewards as of July 1, 2019. However, you can review detailed information regarding the indexes (the US Aggregate Bond, S&P 500, and MSCI EAFE) tracked by the three new funds.

Are there any dates or deadlines I need to be aware of for this change?

Keep the following dates in mind:

  • From now until Friday, June 28, 2019, access your account and make any changes as usual. No action is required, but if you have existing account balances and future investments in the Passive Global Balanced Fund, and you do not make any changes by June 28 at 3:00 p.m. CST, your existing account balances and future investments will automatically map to the new investment options. Click here for mapping details.
  • On Monday, July 1, 2019, new investment options become available. You can make changes to your account, as you do now, including but not limited to: changing the way your money is invested, viewing your account balance and changing your contribution election, subject to Plan rules. To help you compare investment options under the Plan, see the Investment Option Overview.

Remember, you can make changes to your investment elections at any time. Any investment changes made after 3:00 p.m. CST will usually be effective on the next business day that markets are open. For example, any investment election change made after 3:00 p.m. CST on July 1 will be effective on July 2.

I heard there are more changes coming in 2020. What will happen then?

We will be making more changes to the investment lineup in 2020. We’ll add Target Date Funds, which are investment options that allocate among investments based on your anticipated retirement date. You will receive information later this year about these new investment options.

What’s happening with the Global Passive Balanced Fund?

Amounts in the Passive Global Balanced Fund are being mapped into the three new passive funds: the S&P 500 Index Fund, International Equity Index Fund, and U.S. Bond Index Fund. Any existing account balances and future investments you have in the Passive Global Balanced Fund as of June 28, 2019, will be mapped at the end of the day on July 1, 2019. For more details, read the mailer (also sent to your home).

Up until 3:00 p.m. CST on June 28, 2019, you can invest in – or move investments out of – the Passive Global Balanced Fund.

Who do I contact if I have questions about the changes?

If you have questions after you’ve read these FAQs, contact the Baker Hughes Benefits Center at 1-866-244-3539.

What is the Investment Committee?

Baker Hughes has an Investment Committee, made up of  senior executives, to oversee the 401(k) Plan’s assets. The Investment Committee generally meets quarterly and is responsible for:

  • Establishing the number and types of investment funds available;
  • Selecting service providers including investment managers, custodians, and investment consultants;
  • Monitoring and evaluating the performance of all service providers and the funds;
  • Monitoring Plan fees and
  • Providing information about the 401(k) Plan to help employees make investment decisions.

Can I choose my own investments and manage my own portfolio?

Yes, Baker Hughes offers Core Funds – including three new funds – across the major asset categories.

What is a Core Fund?

Core Funds give you more involvement in choosing and managing your investment mix. Baker Hughes offers eight Core Funds from which you can choose to build your own portfolio. In choosing your own portfolio from the Core Funds, you should consider your retirement financial goals, risk tolerance and time horizon.

With greater control, comes greater responsibility. You’ll need to carefully monitor your investments so they continue to support your retirement goals.

Are there different kinds of Core Funds?

Baker Hughes offers eight Core Funds from which you can choose to build your own portfolio. To learn more about the funds, log in to myRewards.

Is there a way to invest without having to manage my own portfolio?

Yes, a Style Fund might be right for you if you want a pre-mixed, diversified fund that has a quick and easy method for diversifying your investments with a single selection.

What is a Style Fund?

Style Funds are pre-mixed, diversified funds, which provide a quick and easy method for diversifying your investments with a single selection. A Style Fund may be the right choice for you if you want a simplified investment strategy, because each fund allows you to make a single choice for a specific investment objective and risk tolerance.

Are there different kinds of Style Funds?

Yes, Baker Hughes offers three Style Funds: Conservative, Moderate, and Aggressive. All three seek to provide a simplified investment strategy for investors by investing in a pre-mixed and diversified set of Core Funds in different asset classes. To learn more about the funds, log in to myRewards.

What’s the difference between Core Funds and Style Funds?

Core Funds give you more involvement in choosing and managing your investment mix. In choosing and managing your own portfolio from the Core Funds, you should consider your retirement financial goals, risk tolerance and time horizon.

A Style Fund may be the right choice for you if you want a simplified investment strategy, because each fund allows you to make a single choice for a specific investment objective and risk tolerance.

What is active management?

An actively managed investment fund is a fund in which a manager or a management team makes decisions about how to invest the fund’s money. An actively managed fund is attempting to earn more than the index it is measured against.

What is passive management?

A passively managed fund, by contrast, simply follows a market index. It does not have a management team making investment decisions, and therefore has lower fees. It is trying to match the return of the index it is measured against.

I’m investing in a Style Fund. Should I invest in a Core Fund too?

You may want to consult a financial advisor before making any investment decisions. As a general rule of thumb, while you may choose one or more Style Funds and any combination of other 401(k) Plan funds (Core Funds), Style Funds are already diversified, so there is generally no need to invest in additional Style or Core Funds. Each Style Fund is constructed from Core Fund options.

What is a custom fund?

Custom funds provide flexibility to select fund managers and establish specific investment objectives. Custom funds are maintained in a separate account only for the use of a single plan sponsor or investor.

Why does Baker Hughes have custom funds?

The Investment Committee has chosen custom funds for the 401(k) Plan. Unlike mutual funds, which pool the funds of several plan sponsors and/or investors, custom funds are maintained in a separate account only for the use of a single plan sponsor or investor. Custom funds provide Baker Hughes the flexibility to select fund managers and establish investment objectives specifically for Baker Hughes' employees.

What is the advantage of a custom fund?

Custom funds offer many advantages over retail mutual funds, including:

  • Lower fees for participants. Fund managers are paid a percentage of the assets which they manage. Due to the size of retirement plan assets, the Investment Committee is able to negotiate fund managers’ fees below many retail mutual funds. Lower fees mean that the expense ratio is lowered, therefore your investment returns could be higher than returns via retail mutual funds.
  • No fees for marketing or advertising. Retail mutual funds charge distribution fees, known as 12b-1 fees, which pay for the marketing and advertising of the fund. Custom funds do not charge this type of fee.
  • Fund managers must invest according to the guidelines set by the Investment Committee. Baker Hughes has no say in how a retail mutual fund is managed.
  • The 401(k) custom funds are available only to Baker Hughes retirement plan participants.

What are plan fees?

There are costs to providing, managing and administering a 401(k) plan, called plan fees. Employers choose to share the costs in several different ways. BHGE focuses our dollars on our match and base contribution of up to 9% of eligible pay. So, when you choose a fund, you need to be aware of the plan fees you’ll pay that are associated with the management of that fund and the Plan.

What is a total expense ratio?

A total expense ratio (also called Estimated Total Expenses) is the sum of the investment fees and the administrative fees.

  • Investments expenses are the costs for the professional investment management of the funds.
  • Administrative expenses cover items such as trustee services; record keeping; compliance; communications; and legal, auditing, and consulting services.
  • Administrative expenses are paid from Plan assets to the extent permitted by law.

What are the Transaction Fees for the 401(k) Plan?

There are two transaction fees that occur in the 401(k) Plan: an origination fee for the processing of a participant loan in the amount of $50 and a redemption fee of 2% on amounts transferred out of the International Equity Fund within seven calendar days of being transferred into the fund.

You can find fee information in the Investment Option Overview Chart or on each Fund Fact Sheet on myRewards. Fees may change over time and will be reflected in the Fund Fact Sheets and fee disclosure notices.

How do I enroll in the 401(k)?

To enroll in the Baker Hughes 401(k), you need to access myRewards:

  • Log in to myRewards with your username and password.
  • From the Baker Hughes Intranet, type in go.bakerhughes.com/myRewards.
  • Call the Baker Hughes Benefits Center at 1-866-244-3539.

Once you’re enrolled, you can check your account balance, change contribution elections and change the investment of existing account balances and future contributions through myRewards.

How do I access my 401(k) account?

You have several options:

  • Log in to myRewards with your username and password.
  • From the BHGE Intranet, type in go.bakerhughes.com/myRewards.
  • Call the BHGE Benefits Center at 1-866-244-3539 to access your account information or make changes to your account.

Through myRewards, you can check your account balance, change contribution elections and change the investment of existing account balances and future contributions.