Policies, Union Contracts, Handbooks > Support Staff Policies and Procedures

Base Retirement Plan (Support Staff Policies and Procedures)

(Revised 09/07)

Policy

The University provides a defined contribution plan operated under section 403(b) and 403(b)(7) of the Internal Revenue Service (IRS) Code for eligible employees.

Eligibility:

The following employees are immediately eligible to receive the University matching contribution if they work 50% time or more and for 9 months or longer:

Administrative Professional Association (APA), Administrative Professional Confidential/Non-Union, Assistant Professor, Associate Professor, Coach, Contract Appointments (Coordinator, Director, etc.), Executive Management, Fraternal Order of Police (FOP), Hall Director (University Housing), IATSE Local 274, Librarian, MSU Extension Academic Staff (Agent, Associate, Program Director, Home Economist), Nurse, Professor, Resident Advisor, Senior Research Associate, Specialist (CAS Probationary).

These employees are required to participate in the Base Retirement Plan when they reach age 35 and have 24 full-time equivalent (FTE) months of continuous employment.

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The following employees are immediately eligible to receive the University matching contribution if they work 50% time or more and for 9 months or longer:

Administrative Professional Supervisors Association (APSA), AFSCME Local 1585 (including Off-campus), AFSCME Local 999, Clerical Technical Confidential, Clerical Technical Off-campus, Clerical Technical Union (CTU), MSU Extension Support Staff (4-H Program Associates).

These employees are required to participate in the Base Retirement Plan when they reach age 35 regardless of their length of service.

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The following employees are eligible to receive the University matching contribution, after completing 24 FTE service months of continuous employment, if they work 50% time or more and for 9 months or longer:

Fixed-Term Appointments (Specialist, Coordinator, etc.), Instructor, Assistant Instructor, Lecturer, Research Associate (hired prior to 10/1/2006), IUOE Local 547, Off-campus and Non-union (except MSU Extension Support Staff).

These employees are required to participate in the Base Retirement Plan when they reach age 35 and have 24 FTE months of continuous employment.

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The following employees are eligible to receive the University matching contribution, after completing 36 FTE service months of continuous employment, if they work 50% time or more and for 9 months or longer:

Research Associate (hired on or after 10/1/2006).

These employees are required to participate in the Base Retirement Plan when they reach age 35 and have 36 FTE months of continuous employment.

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The following employees are eligible to receive the University matching contribution, after completing 24 FTE service months of continuous employment, if they work 50% time or more and for 9 months or longer:

Consultant, Instructor Intern/Resident, Teacher and Visiting Scholar.

These employees are NEVER required to participate.

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Summary of benefits:

1. The benefit provides income during retirement and benefit payments to a beneficiary in the event of death prior to retirement.
2. Contributions from the employee and the University are paid into an individual contract between the employee and the investment sponsor:
   • Fidelity Investments (Fidelity),
   • Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), or
   • The Vanguard Group (Vanguard).
3. Withdrawals are allowed on or after retirement, termination or resignation, regardless of age or length of service.
4. In-service withdrawals are subject to IRS guidelines and are permitted under the following situations:
   • age 59 1/2,
   • death,
   • disability, or
   • financial hardship.
5. Loan options may be available with a particular investment sponsor.  Contact the investment sponsor for specific information on loans.
6. The employee assumes sole responsibility for the selection of the investment sponsor and any investment results/tax consequences.

Premium contribution:

1. Employee contributions are 5% of the employee's base salary or wage.
2. University contributions are 10% of the employee's base salary or wage. (VARIES: If enrolled after January 1, 1996, the University 10% contribution is restricted to a maximum of base salary/wage due to the Omnibus Budget Reconciliation Act [OBRA] 1993. There is an indexing component on the dollar maximum amount and MSU Human Resources Benefits may be contacted for the most current maximum.)
3. Contributions are made on a tax-deferred basis.  The deferred portion is not reported as earned income on the Employer’s Statement of Earnings (W-2) to the IRS.
4. An additional portion of the employee's salary may be tax-deferred, subject to IRS limitations, to a Supplemental Retirement Plan.
5. Base Retirement Plan contributions may be submitted to only one investment sponsor at any given time.

Distribution options:

1. If separated from service, employees may choose one or several of the following distribution options:
   • Lump sum distribution - If you have separated from employment at the University (i.e., resigned, terminated or retired), you may withdraw up to and including 100 percent of your accumulations, subject to fund sponsor limitations. The amount you withdraw will be taxed as ordinary income in the year in which it is distributed, and may be subject to early withdrawal penalties.
   • Rollover  - Rollover means to transfer accumulations from one retirement plan to another while maintaining the accumulations' tax-deferred status. Rolling over your accumulations will continue the tax deferred status and you will not have to pay income tax or early withdrawal penalties.
   • Annuity distribution - An annuity is a stream of payments for life from a retirement plan and may provide income for the life of one person (single-life annuity), or two people (joint-life annuity). Joint-life annuities provide income ranging from full payment in the event of the death of either person, to payment of two-thirds or even one-half in the event of either person's death. Investment sponsors provide information about available annuity options.
   • Fixed-period distribution - In addition to the various annuity options, you may elect to receive distributions for a fixed time period. Under this option, regular payments are dispersed over the number of years selected.  When the fixed period is complete, payments stop.
   • Interest/dividend only distribution - This option allows you to draw only the interest or dividends generated from your accumulations.  Contact the investment sponsor to inquire as to which funds have this option.
   • Systematic/installment withdrawal distribution - This option allows you to specify a dollar amount you would like to withdraw at specific intervals, such as  monthly or quarterly.
   • Minimum distribution – This option allows you to receive the smallest amount that meets the federal minimum distribution rules.
   • Do nothing - You can maintain your Base Retirement Plan account balance for continued growth. In general, however, your distributions must begin minimum required distribution at age 70 1/2.

For a more detailed description of these and other distribution options, contact the  investment sponsor:

Fidelity Investments   800-343-0860    or      http://www.fidelity.com/

TIAA-CREF                800-842-2776    or      http://www.tiaa-cref.com/

Vanguard                     800-523-1188    or      www.vanguard.com

Worker’s Compensation offset:  University operating guidelines and administrative policies provide an offset to Workers’ Compensation payments due to receiving Base Retirement Plan income.   Therefore, if an individual is receiving Workers’ Compensation payments and chooses to receive income from his/her Base Retirement Plan, the Workers’ Compensation payments will be reduced by a portion of the money received from the Base Retirement Plan.

Termination date of benefit:

1. The University contribution to the Base Retirement Plan ceases with the last day of paid employment, a change to an ineligible employment status, or settlement with an investment sponsor of the individual contract, whichever comes first.
2. The University's Long-Term Disability (LTD) program pays both the employee's contribution and the University's contribution into the Base Retirement Plan when an employee is receiving LTD benefits.
3. Upon return from an unpaid leave of absence, the employee is automatically reinstated in the same program he/she participated in prior to the leave.

Death of employee: If the employee dies before retirement or receiving retirement income, the full value of the accumulation, both the employee's contribution and the University's contribution, is payable to the employee's named beneficiary. Check with your investment sponsor on the available options regarding payment to the beneficiary.

Procedure

Application for enrollment:

1.      Employees may enroll at any time after gaining eligibility and prior to mandatory participation.  Enroll online at www.hr.msu.edu; click the eHR Services Login link, enter your MSU NetID and password.  Click on Retirement Enrollment/Changes and proceed through the enrollment process.

2.      The enrollment process must be completed by the end of the month to be effective the first of the following month.  New employees may elect to have Base Contributions applied retroactively if they enroll within 60 days of hire.

3.      Employees may change their contribution amount and/or investment sponsor as often as once a month.

Changes in coverage or personal information:

1.      Employees may make changes by accessing www.hr.msu.edu; click the eHR Services Login link, enter your MSU NetID and password.  To make the following changes, clink on Retirement Enrollment/Changes:

• change in premium contributions (one per month),
• change in investment sponsor selection (one per month), or
• cancellation of plan, provided the employee is non-mandatory.

2.      Employees may make the following changes by contacting the investment sponsor:

• beneficiary change, or
• selection or allocation of funds.

Refer questions to: MSU Human Resources Benefits (telephone 517-353-4434 or e-mail benefitsinfo@hr.msu.edu)