Retirement Plans - Faculty Handbook
RETIREMENT PLANS 1
All faculty/academic staff members appointed at 50 percent time or more for a period of nine months or more are eligible to make contributions to a base retirement plan as well as a supplemental retirement or deferred compensation plan.
Eligibility
Participation in the Base Retirement Plan, with the University contribution, is initially optional and required for faculty/academic staff when certain service and age requirements are met. The general rules follow:
Faculty appointed 50 percent time or more for nine months or more with the rank of assistant professor, associate professor, professor or senior research associate may elect immediate participation, with University contribution, or may defer participation until completing 24 FTE service months and attaining age 35, at which time participation is mandatory for faculty/academic staff.
A specialist with a probationary or continuing appointment of 50 percent time or more may elect immediate participation, with University contribution. A specialist who does not have a probationary or continuing appointment will become eligible for the University contribution 24 FTE service months from the date of initial appointment. Participation for all specialist appointments may be deferred until completing 24 FTE service months and attaining age 35.
Faculty/academic staff appointed 50 percent time or more for nine months or more as instructors, lecturers, or assistant instructors become eligible for the University contribution 24 FTE service months from the date of initial appointment to an eligible status. (See #4, below, for change in eligibility for research associates). Participation is required for instructors, lecturers and assistant instructors upon completion of 24 FTE service months and attainment of age 35. Instructor/residents and instructor/interns are never required to participate.
Effective October 1, 2006, faculty/academic staff appointed 50 percent time or more for nine months or more as a research associate become eligible for the University contribution 36 FTE service months from the date of initial appointment to an eligible status. Participation is required for research associates upon completion of 36 FTE service months and attainment of age 35.
Once required participation commences for faculty/academic staff appointed for nine months or more, it is not possible to withdraw from the Base Retirement Plan while employed at the University.
Faculty/academic staff members appointed 50 percent time or more previously enrolled in a contributory retirement program before appointment at MSU or are age 55 or older upon appointment, may elect immediate participation regardless of rank, with the University contribution.
Participation in the Base Retirement Plan is possible at any time without University contribution.
Faculty/academic staff must enroll in the Base Retirement Plan by completing an investment sponsor application and a salary deferral election prior to the first of the month the application is to be effective. Failure to apply prior to the first of the month in which faculty/academic staff are eligible for the University contribution will result in lost contribution without retroactive recovery.
Coverage
The Base Retirement Plan provides retirement income based upon the total amount accumulated from the employee's contribution, the University's contribution, and any earnings on those amounts over the period of the working years.
A faculty/academic staff member may commence to draw his/her accumulation under a variety of payment options after leaving the University; however, to be considered a retiree from the University, faculty/academic staff must meet the minimum University retirement requirements. The earlier retirement income begins, the smaller the payment.
The Base Retirement Plan is fully vested indicating that both the faculty/academic staff member's and the University's contributions are placed directly in the faculty/academic staff member's account each month. In the event the faculty/academic staff member leaves the University, ownership of the total accumulation is retained by the faculty/academic staff member. The faculty/academic staff member may elect to receive an immediate retirement income or may defer the receipt of his/her retirement income until a later date. Cash withdrawal options are available if age 55 or older, and terminated or retired.
Cost
The Base Retirement Plan is financed by a reduction of 5% from the faculty/academic staff member's base salary and a matching University contribution of 10%
2
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Faculty/academic staff members appointed at 50% time or more for a period of at least nine (9) months may make additional tax-deferred contributions to the supplemental retirement plan subject to IRS limitations. Participation in the supplemental retirement plan is never required, and no matching contribution is made by MSU.
- To be considered a retiree from Michigan State University, a faculty/academic staff member must meet one of the following minimum University retirement requirements:
- Be at least 62 years of age and have completed 15 years of service; or
- Have completed 25 years of service at any age.
- Faculty/academic staff meeting the minimum University retirement requirements will remain eligible to maintain health and dental coverage and receive a University contribution toward the premiums based on the number of full-time equivalent (FTE) service months at retirement.
For faculty and academic staff hired on or after July 1, 2005, the University will contribute to the lowest cost health plan's single rate for which the employee/retiree is eligible. (The contribution is based on the full-time equivalent (FTE) service months at the time of retirement). At retirement, the employee must designate whether the employee receives the University contribution or whether the contribution is to be split 50/50 between the employee and his/her spouse or MSU-recognized same-sex domestic partner. This designation is irrevocable regardless of circumstance, including returning to work or death. The designation of the 50/50 contribution is also non-transferable to future spouses or MSU recognized same-sex domestic partners.
Retirees (their spouse or MSU-recognized same-sex domestic partner) age 65 and over are required to enroll for Medicare Parts A & B at which time MSU's health plan coverage is adjusted to a Medicare supplement policy. Medicare Part B requires a monthly premium that is not reimbursed by MSU. Individuals may contact their local Social Security office for information on the monthly premium cost for Medicare Part B. - Faculty/academic staff meeting the minimum University retirement requirements may continue participation in the employee-paid life program after retirement until age 70.
- Faculty/academic staff meeting the minimum University retirement requirements and who are appointed less than 90% time may be eligible to continue receiving the full University contribution toward the health and dental plans based on their FTE service months; continue coverage under Long Term Disability, Expanded Life, and may continue participation in the Course Fee Courtesy program. If you are vested for retirement, please contact MSU Human Resources Benefits at (517)353-4434.
- Faculty/academic staff members participating in the employee-paid life plan at the time of retirement and who were enrolled prior to July 1, 1976 will receive a $2,000 life benefit fully paid by the University.
- Faculty/academic staff employed prior to July 1, 1958, who meet the minimum University retirement requirements as defined above, may have "frozen benefits" from the University Non-Contributory Retirement Plan, in addition to their base retirement plan. Full information is available from MSU Human Resources Benefits.
- Retirement survivor options, if any, are available and may be selected immediately prior to retirement. In the event a survivor option is selected, the spouse is guaranteed payments for life. Spouses of retired faculty/academic staff members are guaranteed lifetime participation in the health and dental plans.
1For benefit purposes only, half-time is defined as 50.0-64.9 percent time; three-quarter time is defined as 65.0-89.9 percent time; full-time is 90.0-100.0 percent time.
