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Defined Contributory Program
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The Retirement Benefit to be received under the Plan depends upon
factors such as the amount of funds contributed, the investment returns on the
funds contributed to over time, and the distribution or withdrawal option
selected at the time of retirement.
Defined Contribution 401(a) Plan (SPD)
How is the Defined Contribution Program Classified by the IRS?
Investment Options
The current investment options have a combined total in excess of 60 funds
with various risk and reward choices from either:
Making Changes to your Options
How is the Defined Contribution Program Classified by the IRS?
The Defined Contribution Program is designed under Internal Revenue Service
(IRS) Code 403(b) and 401(a). 403(b) refers to the IRS rules
governing the Individual Contribution, while 401(a) refers to the IRS rules
governing the Employer Contribution.
| 401(a) |
401(a) |
| 403(b) |
403(b) |
Basic Contribution
The Basic Contribution refers to an amount, between 3% and 8%, that a
participant may contribute of their monthly salary. The Basic
Contribution also refers to the amount that is matched by the University.
Subject to a calculation based on IRS regulations, the entire Individual Basic
Contribution Requirement may be processed as: deferred from federal
income taxation; partially deferred with a portion being on an after tax
basis; or not deferred with the entire amount being on an after tax
basis.
Supplemental Contribution
Participants may have the option of contributing above their Basic
Contribution, or more than the 8% level (also subject to the calculation based
on IRS regulations). This amount is a Supplemental Contribution.
A Supplemental Contribution is employee-only money (not matched by the
University) and must be tax-deferred.
A Supplemental Contribution may also be available for individuals who
are not eligible for the University Match through the Basic
Contribution.
Maximum Annual Limit
The IRS limits the amount a person may tax-defer in a calendar
year. The maximum annual limit on voluntary pre-tax
contributions made by employees to 403(b) plans is $15,500 or up to 100% of
compensation, whichever is less.
Employees who will be age 50 or older by the end of 2007 will now be eligible
to make an additional $5,000 catch-up contribution to 403(b) plans on a pre-tax
basis for 2007.
The 15-year rule is also available for employees who have worked for the
University for 15 or more years. Participants who have not yet exhausted their
$15,000 lifetime limit under this provision may be entitled to contribute up to
an additional $3000, depending on their circumstances.
If an individual participates in any other qualified retirement plan during a
calendar year, he / she will need to be aware of two limits.
First, the annual limits (as discussed above) apply to all 403 (b) and
401 (k) pre-tax contributions made by you during any calendar year.
New hires and employees with a second job need to take contributions
under the other employer's plan into account before making an election
under the University's plan. Second, if you own more than 50% of
a trade or business (such as a consulting practice) that sponsors a retirement
plan (including a Keogh plan), your total contributions under that plan and the
403 (b) plan may not exceed the "415 limit" ($45,000 for 2008).
Contact Human Resources if you think that you have a problem with a limit.
The Accelerated Option
The Accelerated Retirement Option is available to fully vested participants
between the ages of 52 and 65 who are contributing at least 8% of their
salary.
When an eligible participant joins the Accelerated Option, the University will
increase its match contribution from 12% to 14.5%.
This increase is effective for up to 120 months (10 years) or age 65,
whichever comes first.
When the Accelerated Option ends, the participant may continue to make
contributions, however the University match stops completely.
Participants must actively elect to join the Accelerated Option.
After making the election, participants may lower their election to less than 8%
and do not fall out of the Accelerated Option. They will receive
their normal 150% match to their lower election, and they may again receive a
14.5% match by increasing their election to 8% at a later date.
If participants lower their election, their “ten year clock”
keeps running, and their ability to receive a University match contribution
expires on the same date as if they had kept their 8% election in place.
The University of Pittsburgh will administer the plan to the
extent necessary to comply with the Uniformed Services Employment and
Reemployment Rights Act of 1994. (“USERRA”) and other laws protecting veterans.
Participants may revoke their election to participate in the
Accelerated Option if the revocation is made, by submitting it in writing to
the Human Resources Benefits Department, by the last day of the twenty-third
(23rd) month following the month during which the election became
effective.
Participants who have elected the accelerated option during the
period January 1, 2006 through July 31, 2007 will have until July 31, 2008 to
exercise the revocation provision listed above.
[Example: If a participant’s election was effective April 1,
2007, the participant may revoke the election by submitting a signed revocation
to the Human Resources Benefits Department not later than March 31, 2008.]
After you revoke your election, no University contribution
will be allocated to your account until the amount of the 2.5% matching
contribution (in dollars, measured from the date that the election to
participate in the Accelerated Option became effective) plus a 5%
usage factor has been recovered by the University.
Once an election to participate in the Accelerated Option is
revoked, it may not be reinstated.
Please contact a Benefits Representative by visiting the Benefits Staff Home
Page, or you may call (412) 624-8160.
University Match
During the 3-year delayed vesting period, the University will match the
participant's Basic Contribution (between 3% and 8%) dollar for
dollar, or 100%.
| 3.0% |
4.0% |
5.0% |
6.0% |
7.0% |
8.0% |
| 3.0% |
4.0% |
5.0% |
6.0% |
7.0% |
8.0% |
| 6.0% |
8.0% |
10.0% |
12.0% |
14.0% |
16.0% |
During the delayed vesting period, the University Match must go to
TIAA-CREF, however the participant can choose the funds.
After becoming vested, the participant may continue to contribute between
3% and 8% and the University match increases to a dollar and a half for
every dollar, or 150%.
| 3.0% |
4.0% |
5.0% |
6.0% |
7.0% |
8.0% |
8.0% |
| 4.5% |
6.0% |
7.5% |
9.0% |
10.5% |
12.0% |
14.5% |
| 7.5% |
10.0% |
12.5% |
15.0% |
17.5% |
20.0% |
22.5% |
Vesting Period
The Vesting Period under the Defined Contribution Program is approximately three
years with a 1000 or more hours worked in each calendar year.
An individual is credited with 190 hours each month regardless of
percent effort.
The participant must be contributing to accrue vesting.
Most individuals vest in June of each year.
Investment Company - TIAA-CREF
*(During Delayed Vesting, the University Match Must Go To TIAA-CREF)
With over $300 billion in assets and serving over 9,000 institutions, Teachers
Insurance Annuity Association - College Retirement Equities Fund (TIAA-CREF)
is the largest privately managed pension system in the world, based on
assets under management. It is a nationwide pension and insurance
organization for persons employed in colleges, universities, independent and
public schools, teaching hospitals, and other non-profit organizations.
Investment Company - The Vanguard Group
The Vanguard Group is the second largest mutual fund complex in the
world comprised of both individual and institutional investors. The Group
is a $525 billion investment firm serving 10 million individuals and 4,000
institutions.
Making Changes to your Options
At any time, you may wish to consider the following actions:
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Increases or decreases in the amount being withheld from your paycheck can be
changed monthly as often as you prefer by making the change online
through the University Portal.
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Select or change the Allocation of Contributions between investment companies - TIAA/CREF
and/or The Vanguard Group - monthly as often as you prefer.
Submit the change online prior to the month in which you would like the
investment change to occur.
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Transfer of Assets and Change of Funds - moving the deposit of the prior
contributions back and forth between TIAA/CREF and The Vanguard Group
and/or between funds within the same company- by contacting TIAA/CREF and/or
The Vanguard Group.
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Update your Home Address and/or Beneficiaries by obtaining forms from the
Benefits Department.
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