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.
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.
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.
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.
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 $18,000 or up to 100% of compensation, whichever is less.
Employees who will be age 50 or older by the end of 2015 will now be eligible to make an additional $6,000 catch-up contribution to 403(b) plans on a pre-tax basis for 2015.
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" ($53,000 for 2015). Contact Human Resources if you think that you have a problem with a limit.
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%.
|SCHEDULE OF OPTIONAL CONTRIBUTION RATES DURING THREE-YEAR
DELAYED VESTING PERIOD (AS % OF CONTRACT SALARY)
|University Matching Contribution||3.0%||4.0%||5.0%||6.0%||7.0%||8.0%|
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%.
|SCHEDULE OF OPTIONAL CONTRIBUTION RATES AFTER VESTING
PERIOD REQUIREMENTS FULFILLED (AS % OF CONTRACT SALARY)
|University Matching Contribution||4.5%||6.0%||7.5%||9.0%||10.5%||12.0%||14.5%|
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.
*(During Delayed Vesting, the University Match Must Go To TIAA-CREF)
TIAA-CREF is a Fortune 100 financial services organization that is the leading retirement provider for people who work in the academic, research, medical, and cultural fields. TIAA-CREF serves 3.7 million active and retired employees participating at more than 15,000 institutions and has $487 billion in assets under management (as of 3/31/12). TIAA-CREF has served University of Pittsburgh since 1920. Learn more >>
New Mutual Fund Class from TIAA-CREF
Effective November 2010, TIAA-CREF introduced a new lower-cost investment option exclusively to the University of Pittsburgh and the Medical and Health Sciences Foundation participants. The Premier Share Class work to reduce the plan's overall fund expenses, thereby giving participants' retirement account balances more earnings potental. The new lower-cost investment options in the Premier Share Class, along with TIAA-CREF's prudent investment management and objective advice services, are part of TIAA-CREF's ongoing committment to help University faculty and staff ensure a long-term financial future.
For more information on the Premier Share Class please review the below announcement from TIAA-CREF.
- Announcement Letter to University Faculty and Staff
- Announcement Letter to Pitt-UPMC Health Sciences Foundation
- Premier Share Class Frequently Asked Questions
With over $1.6 trillion dollars in assets, Vanguard is one of the world’s largest investment management companies, serving individual investors, institutions, employer-sponsored retirement plans, and financial professionals. It offers investors an exceptional value through a dedication to outstanding performance, superior service, and low costs. Learn more >>
Vested participants between the ages of 52 and 65 who contribute at least 8% of their salary can choose to receive accelerated contributions from the University. When this option is elected, the University will increase its matching contribution from 12.0% to 14.5%. Learn more >>
Making Changes to your Options
At any time, you may wish to consider the following actions:
- 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.
- Select or change the Allocation of Contributions between investment companies - TIAA/CREF and/or Vanguard - monthly as often as you prefer. Submit the change online prior to the month in which you would like the investment change to occur.
- Transfer of Assets and Change of Funds - moving the deposit of the prior contributions back and forth between TIAA/CREF and Vanguard and/or between funds within the same company- by contacting TIAA/CREF and/or Vanguard.
- Update your Home Address and/or Beneficiaries by obtaining forms from the Benefits Department.