Employee Benefits – Fringe Benefits
C.E.S.P. 8-19: UA Retirement Funding PlansDate Revised: 6-27-2016
Summary: Establishes for Extension employees on University appointment the policies and procedures for participation in the University of Arkansas Retirement Plan (consisting of TIAA-CREF and/or Fidelity Investments).
The University assists employees in planning for life beyond their working years with generous and flexible retirement benefits. All benefits-eligible employees are required to participate in the UA Retirement Plan. The UA Retirement Plan consists of 403(b) and/or 457(b) investment options with Teachers Insurance Annuity Association (TIAA) & College Retirement Equalities Fund (CREF) and/or Fidelity Investments. Benefits-eligible employees must contribute a mandatory percentage of their pay from 1% to 5% according to the plan year minimum limits outlined below. The University will match your combined mandatory and voluntary contribution of 6% - 10%. Employees have 31 days from the beginning date of employment to enroll in the retirement plan.
- Defined Contribution Plan: TIAA-CREF and/or Fidelity investments
A defined contribution plan does not pay a specific pension benefit when you retire. Your retirement benefit is dependent on the earnings or losses of your retirement investments. At retirement or separation of service from the University, you can withdraw this money in a lump sum or over time, subject to plan limitations. Or before you retire, once you reach age 59½, you may begin withdrawing both the employee voluntary and mandatory contributions in your retirement account, but not the employer contributions.
The University gives you the option of investing with two companies, TIAA-CREF and/or Fidelity Investments, and offers the following retirement options: regular 403(b), Roth 403(b), and 457(b) plans. These are defined contribution retirement plans which work in much the same as way as 401(k) plans and are available to employees of government and tax-exempt groups, such as schools, hospitals and churches.
Employees may choose to invest with one or both companies. TIAA-CREF is a nonprofit financial services company which offers investment opportunities in long-term bonds and common stocks. Fidelity Investments is a mutual fund company which offers the employee an opportunity to make pooled investments in stocks, bonds, and short-term investments. Retirement benefits from each company include lifetime annuities and lump sum payments. Within the IRS limits, you may enroll, end, increase, decrease, or suspend your voluntary contributions at any time. At no time may you decrease the mandatory pretax contribution percentage according to the plan year minimum limits as outlined below.
Contributions to TIAA-CREF and Fidelity Investments
The University contributes an amount equal to 5% of your regular salary to your TIAA-CREF and/or Fidelity Investments retirement plan. Beginning in July 2016 the University will move toward a 5% mandatory pretax employee contribution. The mandatory pretax contribution process will begin slowly. Effective July 2016, all benefits-eligible employees are required to make a pretax retirement contribution of at least 1% per pay period. Each July the mandatory employee pretax contribution will increase by 1% until it reaches 5%:
July 2016 through June 2017……….1% employee contribution required
July 2017 through June 2018……….2% employee contribution required
July 2018 through June 2019……….3% employee contribution required
July 2019 through June 2020……….4% employee contribution required
July 2020 and forward……………...5% employee contribution required
The University will continue to match any contributions you make over 5% up to a maximum employer contribution of 10%. Any retirement contribution you make above 10% of your regular annual salary is not matched by the University. At no time can the combined employee and employer contributions exceed the annual contribution limits established by the Internal Revenue Code.
Contribution Limits for 2016
Employees Below Age 50
Employees Age 50 and Above
You must reach your 403(b) contribution limit before the end of the calendar year in order to participate in the 457(b) plan, which requires completion of a Salary Deferral Agreement.
Mandatory contributions must be pretax; however, you may make voluntary contributions to your 403(b) plan in one of two ways:
- Pre-tax: Retirement contributions are deducted from your salary before state and federal taxes are calculated, and your taxes are based on your income after your retirement contribution. Pre-tax retirement contributions and earnings are taxed at withdrawal.
- After tax (Roth): Retirement contributions are made after the applicable taxes have been deducted from your salary. Therefore, taxes on Roth retirement contributions are paid in the year they are contributed rather than when they are withdrawn at retirement.
Vesting (Ownership) - TIAA-CREF and Fidelity Investments
To be vested in the UA Retirement Plan means that you own the money in your retirement account. Employee contributions are 100% vested immediately. University (employer) contributions are vested if, while employed in a benefits-eligible position, the employee either:
- Completes 12 consecutive months of employment, if hired in a benefits-eligible position on and before June 30, 2016;
- Completes 24 consecutive months of employment, if hired in a benefits-eligible position on and after July 1, 2016;
- Reaches age 65;
- Becomes disabled as determined by the Social Security Administration or the University's long-term disability insurance provider; or
Employees not vested when they leave University employment forfeit any University employer contributions made to their retirement plan.
The University of Arkansas has a once vested, always vested rule. Your retirement funds will follow you if you change jobs within the University of Arkansas System. If you previously worked for a UA System campus and were vested when you left employment, you will retain that vesting status when you are re-employed by any UA System campus. Consequently, you should inform Human Resources of any prior UA System employment you have had. If you are not vested when you leave University employment and return to the University with a separation of 30 or more days, your vesting period starts over.
For new enrollments and any subsequent changes, you must also complete the Salary Deferral Agreement form to:
- Start your retirement contributions
- Increase or decrease the amount you contribute to retirement. Note: At no time may you decrease the mandatory pretax contribution percentage below the plan year minimum limit.
- Change the mix of your contributions between TIAA-CREF and Fidelity Investments
- Change your contributions to be traditional tax-deferred or Roth contributions
- Stop your retirement contributions. Note: At no time may you decrease the mandatory pretax contribution percentage below the plan year minimum limit.
All changes to your 403(b) and 457(b) deductions will be effective at the beginning of the next payroll period, unless you specify a later effective date.
A beneficiary is the person or entity you name to receive funds from your UA Retirement Plan when you die. Follow the links below to make beneficiary changes.
- TIAA-CREF: See the TIAA-CREF Beneficiary Change Instructions. Change your beneficiary online at www.tiaa-cref.org.
- Fidelity Investments: See the Fidelity Beneficiary Change Instructions. Change your beneficiary online at Fidelity Investments.
Employees may contact TIAA-CREF and Fidelity Investments directly to schedule free telephone consultations or make appointments at their local company offices. Counselors from both TIAA-CREF and Fidelity Investments also provide free individual retirement planning counseling sessions at the LRSO on a quarterly basis.
- Defined Benefit Plan: APERS
Also called a pension plan, a defined benefit plan pays a specific amount per month at retirement based on a formula that takes into account earnings, years of service and age rather than depending directly on individual investment returns. In the past, the University of Arkansas offered a defined benefit plan option provided through the Arkansas Public Employees Retirement System (APERS).
Effective July 1, 2016 and forward, there will be no new enrollments into the APERS plan. Current University of Arkansas System (UAS) employees transferring between UAS campuses will be eligible to continue enrollment with APERS. For UAS employees currently enrolled in APERS, APERS participation will continue without change. If you participate in APERS, you may also choose to make unmatched contributions to TIAA-CREF and/or Fidelity Investments.
Contributions to APERS for those enrolled prior to July 1, 2016
In the past, the APERS defined benefit plan was non-contributory. However, the Arkansas Contributory Program Act 2084 of 2005 required all APERS participants to be in the APERS contributory plan. Contributory means that both the employee and the employer contribute to the plan. Required plan contributions are:
- University employer contributions - 14.50% (varies occurring to AR State Board Policy)
- Required employee tax-deferred contributions - 5%
If you had past service with APERS before it became a contributory plan, you may have been eligible to continue participating in the APERS non-contributory plan at the University prior to 2005. Non-contributory means that you did not contribute to APERS, but you still receive the employer APERS contribution. Your pension with the non-contributory APERS plan is expected to be less than with the contributory plan.
Vesting in APERS
You are vested after you have five years of service credit in the plan. If you leave employment before your APERS service is vested, you will not be eligible for a pension, but you can be refunded the 5% you contributed. If you leave University employment after you are vested but choose to be refunded your 5% contributions, you will lose the APERS service credit for that period of University of Arkansas employment.
APERS Retirement Benefits
In determining APERS retirement benefits, there are age and length of service requirements:
- Full benefit at age 65 with a minimum of 5 years of credited service.
- Full benefit at age 55 with a minimum of 35 years of credited service.
- Full benefit at any age with 28 years of actual service.
The benefit formula can be found on the APERS website: Arkansas Public Employees Retirement System (APERS). For additional information, contact the APERS office directly.
Extension employees electing to retire from a State of Arkansas Retirement Plan [i.e., Arkansas Public Employees Retirement System (APERS) or Arkansas Teacher’s Retirement System (ATRS)], are advised to contact their retirement plan administrator directly as there may be a “mandatory wait period” before the employee can return to any form of employment with Extension.
APERS Beneficiary Changes
A beneficiary typically refers to someone who is eligible to receive distributions from your defined contribution plan upon your death. To change your plan beneficiaries, complete the APERS Employee Contributions Beneficiary Designation form and send to:
UA Division of Agriculture
Cooperative Extension Service
2301 S. University Ave
Little Rock, AR 72204
- Retirement Option for Employees Not Eligible for Benefits
The University offers a retirement option for employees who are not eligible for benefits. Any University employee can participate in a Supplemental Retirement Plan with TIAA-CREF and/or Fidelity Investments. If you are not in a benefits-eligible position, you will not receive any employer contributions to your 403(b) retirement plan, but you can make voluntary, unmatched contributions. Contributions can either be tax-deferred or after tax. Within IRS limits, you may enroll, end, increase, decrease or suspend your contributions at any time. You may contact the Human Resources Office for more information.
- Salary Deferral Agreement
- How to complete the Salary Deferral Agreement Video
- TIAA-CREF Enrollment Guide
- TIAA-CREF Enrollment Site
- Fidelity Guide to Getting Started
- Fidelity Enrollment Guide
- Fidelity Enrollment Site
- Retirement Summary Plan Description
- Retirement Plan Options – Comparison Page
- Taking the Mystery Out of Retirement Planning
- Ultimate Guide to Retirement
- America Saves
- Social Security
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