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SRA Brochure

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Human Resources Supplemental Retirement Account brochure
12
Saving For Your Future UNIVERSITY OF MARYLAND HUMAN RESOURCE SERVICES
Transcript

Saving For Your Future

U N I V E R S I T Y O F M A R Y L A N D

HUMAN RESOURcE SERVIcES

SUPPLEMENTAL RETIREMENT ACCOUNT PLANS

Th e University of Maryland (UM) in Baltimore participates with the three supplemental retirement account (SRA) vendors listed at right. Th e SRA advisors can assist you with portfolio selection and answer your questions about their products and services. Please contact them directly regarding transfers, rollovers, loans, and fees. If necessary, schedule an appointment to meet with them on their designated days on campus.

Employees may enroll, change, or stop SRA contributions at any time. For more information, visit our website at http://hr.umaryland.edu/benefi ts/benefi ts_retirement_programs_supplem.htm

We have made every eff ort to explain these plans accurately. However, if there is a confl ict between this document and the source document, the latter shall govern.

� is document is for informational purposes only and should not be interpreted as tax or investment advice. If there is a discrepancy between this document and the source document, the source document shall prevail. � e University does not endorse any one product or vendor.

ON-CAMPUS VENDOR SCHEDULE

All of the vendors have on-campus offi ce hours to assist employees in enroll-ing and planning for retirement. Th e 2012 IRS contribution limit is $17,000 for a 401(k) or a 403(b) plan. You may also contribute an additional $17,000 to a 457(b) plan. If you are age 50 and older, you may be able to contribute an additional $5,500 ($22,500 overall) to the plans. Contact your vendor for additional details and IRS restrictions.

Vendor Contact Information

Web Address

Vendor Days on Campus

by Appointment only

HRS Benefi ts Room 3-146

Fidelity Investments 403(b), 457(b),

and ORP

Christopher Barnes

1-800-642-7131

[email protected]

www.fi delity.comThe fi rst and third Thursday of the

month

Nationwide (Maryland Teacher & State Employees

Supplemental Retirement Plans), 401(k), 403(b), 457(b) and Roth 401(k) and Roth 457(b) plans

Kerri Kennedy Green

410-804-4897

[email protected]

www.msrp.state.md.us

Account Info website:

www.MarylandDC.com

The second Tues-day and Wednes-day of the month

TIAA-CREF 403(b), 457(b), and ORP

Eric L. Berry1-800-732-8353

[email protected]

http://www.tiaa-cref.org/public/

products-services/retirement-consultation/

index.html

The fi rst and third Tuesday of the

month

Please note, this information is subject to change. Check the Human Resources website for the most up-to-date information.

AIG VALIC’s contracts were discontinued e� ective Jan. 1, 2008. Dan Bissontz 410-706-8254 Fax 410-720-0419 [email protected]

SUPPLEMENTAL RETIREMENT ACCOUNT PLANS

QUESTIONS & ANSWERS

Roth, 401(k), 403(b), and 457(b) Deferred Compensation Plans

1. Who is eligible to participate in these plans? All full-time, part-time regular, contingent category II (contractual), and contingent category I (which includes adjunct faculty) employees of the University System of Maryland (USM).

2. How much can I contribute? A. Employees can contribute a combined total of $17,000 to a 403(b) or 401(k) and a separate $17,000 to a 457(b). Th e minimum is as little as $1 per pay.

B. Employees age 50+ can contribute an additional combined total of $5,500 to a 401(k) or 403(b) and a separate $5,500 to a 457(b) for a total of $22,500. (Th e amounts to the 457(b) deferred compensation is a separate limit from the 401(k) or 403(b) annual contribution.)

3. Are my payroll deductions pre-tax for federal, state, and local income taxes? Yes, except the Roth (see question No. 7).

4. Are my payroll deductions pre-tax for FICA? No, FICA (Social Security) tax is based on your gross annual salary.

5. If I am age 50 or older, am I eligible for the “age base catch-up” provision? Deferred Comp 457(b) Yes, an additional $5,500. However, you cannot use this provision with the original catch-up provision available during the three years prior to retirement.

403(b) and /or 401(k) Yes, an additional $5,500.

Consult your SRA advisor.

SUPPLEMENTAL RETIREMENT ACCOUNT PLANS

QUESTIONS & ANSWERS

6. May I participate in more than one plan? Yes. Th e employee is responsible for monitoring combined deferral amount to the plans so these amounts do not exceed the allowed Internal Revenue Service (IRS) maximums. UM advises that you contribute to either a 403(b) or 401(k) rather than both. It will be easier to monitor. (Exceeding the IRS limit will have tax implications.) 7. Does participation in the Maryland State Retirement & Pension System aff ect how much I may contribute to these plans? What about participa- tion in the Optional Retirement Program? Pre-tax contributions made to the Maryland State Retirement & Pension System, as an employer pick-up, reduce the total compensation amount that investment providers consider in calculating your annual, maximum tax shelter limits under IRS regulations. Th is may lower the maximum amount you are eligible to contribute to the tax-deferred investment plans. Th e state contributes 7.25 percent of the fi rst $250,000 (or $17,762.50) of your fi scal year salary into the Optional Retirement Program (ORP). Th e IRS contribution limit applies to employees beginning ORP participation on or aft er July 1, 1996. Your contributions to a 403(b) (tax-deferred annuity), combined with the state’s contribution to your ORP, cannot exceed the lesser of 100 percent of your salary or $49,000. (Th e age 50+ catch-up provisions are in addition to the $49,000 limit.) 8. What are my current investment options? All plans off er a variety of fi xed/guaranteed and variable investment options. Contact the SRA advisor for investment options that are available to employees of the USM or obtain current prospectus information from the UM Benefi ts Offi ce.

9. When can I receive payments from my account? Deferred Comp 457(b) When you leave state employment, regardless of your age. Or if you are still employed, payments can be received due to an unforeseeable emergency (unforeseeable emergency as defi ned by the plan). 403(b) and/or 401(k) Payments may be received when you leave University employment, regard- less of your age, or if still employed, when you reach 59½, experience hard- ship, disability, divorce, or death. You may be subject to a 10 percent excise tax in addition to other required personal income tax if your distribution is made before age 59½, except in the following situations: death, disability, separation from service, or retirement aft er age 55, selection of annuity payments based on your life expectancy, or tax-deductible medical expenses. 10. Is there a hardship provision? Deferred Comp 457(b) No, but withdrawals can be made if you are over 70½ or meet the conditions for withdrawals due to unforeseeable emergency. 403(b) and /or 401(k) Yes, must be verifi ed by employer. Only contributions would be available and future contributions are suspended for six months following the withdrawal. A 10 percent penalty may apply if less than 59½ years of age. 11. Can I receive payout while employed? Deferred Comp 457(b) Yes, if 70½ years of age or older, you may stop deferrals and elect to start payout. 403(b) and /or 401(k) Yes, if you are 59½ years of age or older, you may elect to take distributions from your account. If you request a single distribution and not a systematic distribution, the vendor will automatically withhold Maryland state taxes per state law (7.75 percent) and a 20 percent federal tax also will be withheld. Also, you may be able to withdraw money if you encounter hardship, as defi ned by the IRS. Hardship withdrawals are from contributions only, not investment earnings.

SUPPLEMENTAL RETIREMENT ACCOUNT PLANS

QUESTIONS & ANSWERS

You must fi rst exhaust all loan opportunities before requesting a hardship and provide hardship documentation (eviction, mortgage payment for primary residence, etc.). Contact your vendor for further details. Th e UM Benefi ts Offi ce must sign off on all hardships and loans.

12. When am I required to take withdrawals from these plans? If retired or separated from service, payout must begin by April 1 of the year following the calendar year in which you reach age 70½; however, you’re not required to take payout until retired or separated from University service. A 50 percent federal excise tax may be assessed by the IRS if the required distri- butions have not begun by the later of the above April 1 date or retirement.

13. What are my options upon separation from employment? If you are age 55 or older, you can receive your account balance as taxable income, transfer your account to another plan, or elect to defer your distribution to a later date, but no later than April 1 in the calendar year following the attainment of age 70½. Life annuities, lump-sum distributions, rollovers, and payout over time are available. 14. When I withdraw my account, will I pay a withdrawal or deferral sales charge? Deferred Comp 457(b) With some companies, there may be certain charges when you switch companies or make early withdrawal. 403(b) and/or 401(k) No. 15. Can I use money from my SRA to purchase service credits for the Maryland State Retirement & Pension System? Yes.

16. Can I roll over my earned unused holiday and vacation time to an SRA when I retire? Yes, this request requires pre-planning and you cannot exceed the IRS’ limitations for contributions. Be sure to talk with the HR Benefi ts Specialist at least a month in advance of retiring.

SUPPLEMENTAL RETIREMENT ACCOUNT PLANS

QUESTIONS & ANSWERS

INSTRUCTIONS

USM Sponsored Supplemental Retirement Account/SRA403(b), 457(b), and 401(k) Plan/s Paperwork Directions

SRA calculations are determined on a calendar year from January through December (over 26 pays). If you are enrolling mid-year and the “per pay” amount you wish to contribute when multiplied by less than 26 pay periods meets the maximum for the current year, you must submit additional paperwork simultaneously for the following calendar year. You may either lower the contribution eff ective the fi rst pay in January or stop the current contribution the pay aft er the maximum contribution will be made. Th is will prevent you from exceeding the IRS maximum, which has tax implica-tions. Please note: Deductions are not automatically stopped when the IRS maximums are reached and the maximums are the limit regardless of the number of employers i.e., Veterans Aff airs, University Physicians, Inc., within a calendar year.

Please note:

SRA contributions must be taken as payroll deductions according to what your salary can support within the IRS guidelines; the minimum contribution an employee can make is $1 per pay period.

New employees must have received one paycheck before SRA deductions can start, which impacts the number of remaining pays available for the initial enrollment.

You may enroll, change, or stop deductions at any time (with the above exception for new hires).

You may change vendors at any time, but need to submit USM paperwork to stop contributions and open a new account.

The total between a 401(k) and 403(b) plan together cannot exceed the IRS’ annual limit. As opposed to opening both a 401(k) and 403(b) plan, for diversifi cation purposes, it is recommended you open a 457(b) plan to avoid over-contributing. 457(b) plans allow you to contribute an additional annual limit.

You should review your paychecks to ensure the correct contributions are taken out of your paycheck.

Contact the Benefi ts O� ce immedi- ately if there are any discrepancies.

Remember contributions are NOT AUTOMATICALLY stopped when the maximums are reached.

Consider rolling over your leave payout when you separate/retire from employment.

FIDELITY and TIAA-CREF USM Salary Reduction Agreement Form indicating vendor of choice and action USM Deduction Authorization Form indicating initiate, change, or cancel (use black ink only) (Mark o� “cancel” and 0 in current amount to stop contributions) Submit to the UM Benefi ts Offi ceWhen enrolling, your account will be estab-lished electronically upon receipt of funds and directed into a TIAA-CREF Lifecycle

Fund or a Fidelity Freedom Fund. Th e ven-dor will send you additional information for designating your benefi ciary(ies) and other allocation options available under USM. If opening another account and or chang-ing vendors, you must send supporting documentation (i.e., cancellation forms). A second account cannot be initiated until the Benefi ts Offi ce has documentation that de-ductions have stopped in the fi rst account.

BENEFITSSalary Reduction Agreement Calculation Instructions for Employees Changing Contribution Amount Mid-Year (less than 26 pays)

1. Yearly amount employee wishes to contribute within the IRS guideline: (2012 maximum = $17,000, age 50 or older = $22,500) $___________.

2. YTD (year to date) employee contributions: $___________ (Current dollar amount ___________ X number of paychecks received YTD _______, look at processing schedule on reverse side to determine if upcoming pay check will have current deduction to determine how many pays received) Be sure to include any additional contributions made through another employer or former employer within the calendar year.

3. Subtract annual amount (No. 1) from YTD (No. 2) to determine amount left in the calendar year $ ___________.

4. Determine how many pay periods are left in the calendar year: _____________ (Must look at processing schedule to determine how many pays are le� in calendar year)

5. Divide the number of pay periods remaining by the amount in No. 3 in order to obtain the new deduction/contribution amount: $_____________.

Change in contributions will become eff ective as of ___________. (see processing schedule)

NATIONWIDE (only vendor with a 401(k) plan, Roth 457(b), Roth 401(k) in addition to 403(b) and 457(b) plans) Enrollment Application (select 401(k), 403(b), or 457(b))

Deferral Change Form (if you are changing or stopping your Nationwide contributions) Send original directly to Nationwide and a copy to the UM Benefi ts Offi ce

Enrollment /Change Checklist

Maximum Amount/Pay SRA Forms due to Benefi ts O� ce by

Pay Date Change is E� ective

Remaining Pays in 2012

Number of Paychecks

Received in 2012

Pay Period Ending Dates

$653.84 $865.38 *12/14/11 1/6/12 26 1 12/31/11

$680 $900 1/4/12 1/20/12 25 2 1/14/12

$708.33 $937.50 1/18/12 2/3/12 24 3 1/28/12

$739.13 $978.26 2/1/12 2/17/12 23 4 2/11/12

$772.72 $1,022.72 2/15/12 3/2/12 22 5 2/25/12

$809.52 $1,071.42 2/29/12 3/16/12 21 6 3/10/12

$850 $1,125 *3/13/12 3/30/12 20 7 3/24/12

$894.73 $1,184.21 3/28/12 4/13/12 19 8 4/7/12

$944.44 $1,250 4/11/12 4/27/12 18 9 4/21/12

$1,000 $1,323.52 4/25/12 5/11/12 17 10 5/5/12

$1,062.50 $1,406.25 5/9/12 *5/24/12 16 11 5/19/12

$1,133.33 $1,500 5/23/12 6/8/12 15 12 6/2/12

$1,214.28 $1,607.14 6/6/12 6/22/12 14 13 6/16/12

$1,307.69 $1,730.76 6/20/12 7/6/12 13 14 6/30/12

$1,416.66 $1,875 *7/3/12 7/20/12 12 15 7/14/12

$1,545.45 $2,045.45 7/18/12 8/3/12 11 16 7/28/12

$1,700 $2,250 8/1/12 8/17/12 10 17 8/11/12

$1,888.88 $2,500 8/15/12 *8/30/12 9 18 8/25/12

$2,215 $2,812.50 8/29/12 9/14/12 8 19 9/8/12

$2,428.57 $3,214.28 9/12/12 9/28/12 7 20 9/22/12

$2,833.33 $3,750 9/26/12 10/12/12 6 21 10/6/12

$3,400 $4,500 10/10/12 10/26/12 5 22 10/20/12

$4,250 $5,625 10/24/12 11/9/12 4 23 11/3/12

$5,666.66 $7,500 *11/6/12 *11/20/12 3 24 11/17/12

$8,500 $11,250 *11/19/12 12/7/12 2 25 12/1/12

$17,000 $22,500 *12/5/12 12/21/12 1 (fi nal deduction for 2012 SRA)

26 12/15/12

2013 Limits Unknown *12/12/12 1/4/13 First pay of the year 1 12/29/12

$17,000Up to age 49

$22,500Age 50+

*Dates advanced due to holiday scheduling or state service reduction days. All dates subject to change.

Maximum Amount/Pay SRA Forms due to Benefi ts O� ce by

Pay Date Change is E� ective

Remaining Pays in 2012

Number of Paychecks

Received in 2012

Pay Period Ending Dates

$653.84 $865.38 *12/14/11 1/6/12 26 1 12/31/11

$680 $900 1/4/12 1/20/12 25 2 1/14/12

$708.33 $937.50 1/18/12 2/3/12 24 3 1/28/12

$739.13 $978.26 2/1/12 2/17/12 23 4 2/11/12

$772.72 $1,022.72 2/15/12 3/2/12 22 5 2/25/12

$809.52 $1,071.42 2/29/12 3/16/12 21 6 3/10/12

$850 $1,125 *3/13/12 3/30/12 20 7 3/24/12

$894.73 $1,184.21 3/28/12 4/13/12 19 8 4/7/12

$944.44 $1,250 4/11/12 4/27/12 18 9 4/21/12

$1,000 $1,323.52 4/25/12 5/11/12 17 10 5/5/12

$1,062.50 $1,406.25 5/9/12 *5/24/12 16 11 5/19/12

$1,133.33 $1,500 5/23/12 6/8/12 15 12 6/2/12

$1,214.28 $1,607.14 6/6/12 6/22/12 14 13 6/16/12

$1,307.69 $1,730.76 6/20/12 7/6/12 13 14 6/30/12

$1,416.66 $1,875 *7/3/12 7/20/12 12 15 7/14/12

$1,545.45 $2,045.45 7/18/12 8/3/12 11 16 7/28/12

$1,700 $2,250 8/1/12 8/17/12 10 17 8/11/12

$1,888.88 $2,500 8/15/12 *8/30/12 9 18 8/25/12

$2,215 $2,812.50 8/29/12 9/14/12 8 19 9/8/12

$2,428.57 $3,214.28 9/12/12 9/28/12 7 20 9/22/12

$2,833.33 $3,750 9/26/12 10/12/12 6 21 10/6/12

$3,400 $4,500 10/10/12 10/26/12 5 22 10/20/12

$4,250 $5,625 10/24/12 11/9/12 4 23 11/3/12

$5,666.66 $7,500 *11/6/12 *11/20/12 3 24 11/17/12

$8,500 $11,250 *11/19/12 12/7/12 2 25 12/1/12

$17,000 $22,500 *12/5/12 12/21/12 1 (fi nal deduction for 2012 SRA)

26 12/15/12

2013 Limits Unknown *12/12/12 1/4/13 First pay of the year 1 12/29/12

*Dates advanced due to holiday scheduling or state service reduction days. All dates subject to change.

Produced by the Office of Communications and Public Affairs, 2012

Human Resource Services620 W. Lexington StreetBaltimore, MD 21201

Benefits Office410-706-2616

www.hr.umaryland.edu/benefits


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