Retirement Benefits

Updated : Aug 30, 2019 in Articles

Retirement Benefits


Welcome to Retirement Planning at the
University of Arkansas. This program will cover your mandatory and optional
choices to support your decision process. Participation in a retirement plan is
required for all University of Arkansas benefits eligible employees. Mandatory
participation is defined by the University of Arkansas system board
policy. The University of Arkansas retirement plan is a 403 B _ 457 defined
contribution plan. A defined contribution plan does not pay a specific benefit
when you retire; it is dependent on the earnings or losses of your chosen
investment options. At retirement or separation of service you can withdraw
your vested contributions in lump sum amounts over time subject to plan
limitations. There are several ways contributions are made to your
retirement plan. The university makes a 5% monthly basic employer contribution.
The current required employee contribution is 3% tax deferred. You can
make voluntary contributions beyond the required contributions on a tax deferred
or Roth after-tax basis and the university will match any voluntary
contributions over 5% up to a maximum of 10%. You will acknowledge your acceptance
of this requirement during webBASIS enrollment or by submitting the
voluntary salary deferral agreement and employee acknowledgment during your 31-day enrollment period. The mandatory retirement contribution will increase to
4% on July 1st 2019 and max out at 5% on July 1st 2020. You will acknowledge your
acceptance of this requirement during webBASIS enrollment or by submitting
the voluntary salary deferral agreement and employee acknowledgment during your 31-day enrollment period. Some important facts to know about your 403 B plan are
all employer and mandatory employee contributions are tax deferred
contributions. Non-benefits eligible employees may contribute to the
retirement plan on a non-matching basis. You may change your allocation of future
contributions anytime. You can change your investment
options online with your retirement vendor at any time and once you are
vested you can borrow against your employee contributions for a minimum of
$1,000 loan. Vesting or ownership of the employer funds takes 24 consecutive
months of service; also if you reach age 65 or incur a disability or death while
employed or on a qualified military leave you become fully vested.
Once you’re vested in the employer funds you are always vested. The UFA offers
both tax deferred and after tax savings plans. The tax deferred method creates a
regular 403 B account from your salary contributions before taxes are
calculated. The money becomes taxable during the year you withdraw it from your
account. The theory is you will be in a lower tax bracket after you retire and
will be deferring paying any taxes until that time. If you expect to be in a
higher tax bracket upon retirement a Roth account may be right for you. The
Roth 403 B contribution is deposited into your retirement account after taxes
are calculated each pay period. If you withdraw this money after age 59 and
a half and have held the account for five years or more you will not pay
taxes on the principle or any earned interest. You may incur penalties if you
withdraw funds before age 59 and a half or have not held the account for at
least five years. The US Internal Revenue Service sets the maximum allowable
contribution limits every year. If you hit the defined savings limit in your
403 B account but still want to save with the University you may participate
in a 457 B. A 457 B account is offered to governmental agencies for employees who have maximized their 403 B and wish to continue saving. You may only save in a
457 B account after you save the maximum allowed in the 403 B plan. The plan
follows the same savings rate by age group for higher paid staff. Under IRS
limits the U of A can only make employer contributions on the first two hundred
and seventy five thousand dollars of gross pay. For every percentage you
add between six to ten percent, the U of A will match up to 10% giving you a 20%
maximum contribution to your retirement savings. Your employee portion is vested
or owned by you immediately. After you decide how much money to set aside for
retirement you must then decide where to save it. Since 1922 the U of A system has
participated in TIAA, a Fortune 100 company, and since January 1st 1994 we’ve participated in Fidelity Investments, a Fortune 500 company. You may choose one or the other or any combination of these two companies you
wish. You can modify your decision online at webBASIS after your initial
first-time enrollment. We urge you to look at each company online for a deeper
understanding of their options for you. Also an online appointment calendar at
hr.uark.edu allows you to set a free consultation with each vendor. You may
change your vendor at any time. For your convenience representatives from both TIAA and Fidelity are available to provide free on-site group presentations
or individual retirement planning sessions. Once your earnings are
deposited to either company the funds are held in a money market for you until
you make arrangements to choose your specific investments. You may reach them by phone or online. If you do not choose your own investments you will be
defaulted into a target date or lifecycle fund. This offers a hands-off
method to save for retirement. Each fund title contains the year you
expect to retire. The accounts start more aggressive when you are younger and get
more conservative as you near your retirement age. The fund allocations are
actively managed by fund managers. The composition of stocks, bonds and cash shifts each year based on your projected retirement year. If you change your mind
you may move your funds easily into other investments. Please review the fund
lineups offered by both TIAA and Fidelity. Both plans offer target date
funds, passive funds and actively managed funds. Some funds may be offered at TIAA but not Fidelity, and some offered at
Fidelity but not TIAA. Both retirement vendors allow you to open self-directed brokerage accounts. These accounts allow you a greater selection of investment
opportunities beyond those offered directly through the plans. Fact sheets
and commission schedules are available from the vendor. When you leave the
University of Arkansas talk with your tax advisor or a retirement vendor
representative to determine your best option for your retirement account. How
you funded your account will determine your options. For example, you can leave
the money where it is, you can rollover your investment into another retirement
plan or you can withdraw it as cash and pay any penalties in taxes. Contact your retirement company for more information regarding any tax
consequences that may apply. Retirement fund distribution is based on the following specific criteria. Vested employer contributions are available only upon termination from the university employment, and active
employees may withdraw employee contributions at age 59 and a half or
older. Your payments will be based on the amount of money in the plan. There will
be an automatic 20 percent federal tax withholding and a five percent state tax
withholding on all lump sum distributions. There is also a ten
percent penalty by the IRS for early withdrawal before age 55. You can enroll
your contributions using webBASIS or complete the salary deferral agreement
form and send it with all of your enrollment paperwork to Human Resources. Use the retirement quick references to access information fast. We are here to
support any questions you may have. Thank you for watching Retirement
Planning at the University of Arkansas.

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