Retirement Frequently Asked Questions
- Who is eligible for the University Contribution?
- Who is eligible to make Voluntary Contributions?
- What is the University’s Direct Contribution to the Retirement Program?
- What options do I have for my Voluntary Contributions?
- What is the maximum that I can contribute from my salary to the Retirement Program?
- What options do I have for investing my Voluntary and/or University Contributions?
- Can I make changes to my investments? How often?
- How do I make a change to my future investment allocations and/or transfer existing balances?
- When can I withdraw my retirement accumulations?
- What options do I have with my retirement accounts when I sever from employment from the University and members of its controlled group?
- What is a controlled group and who are the members?
Q. Who is eligible for the University Contribution?
A. If you are a regular full-time or regular part-time faculty or staff member, the University will make a Direct Contribution on your behalf after two years of service. The University’s Direct Contribution and the earnings on that Contribution accumulate on a tax-deferred basis until you take a distribution.
TAR staff are eligible if they satisfy the two-year service requirement described above. Additionally, TAR staff must work a minimum of 1,000 hours per Plan Year to receive the University’s Direct Contribution.
For eligibility purposes, a year of service means a 12 month period starting with the date you commence employment and any anniversary date thereof during which you complete 1,000 or more hours of service.
Service completed at any higher educational institution, teaching hospital, not-for-profit research foundation, or not-for-profit support organization for higher educational institutions, as well as service at a member of the controlled group of the University, will count towards the two-year service requirement. To receive this service credit, you must complete a Retirement Service Credit Form . If this form is received more than 90 days after your appointment to the University or your change to an eligible status, it will not be processed retroactively.
You are not
eligible to receive the University’s Direct Contribution if you
are a temporary employee, departmental fellow, intern, resident, fellow,
postdoctoral fellow, postdoctoral research associate, postdoctoral
teaching fellow, EDC associate, non-GFT clinical faculty, visiting
faculty, adjunct/per session faculty, part-time assistant coach,
in-house agency nurse, in-house operating room technician, leased
employee, student whose employment is incidental to your education at
the University, or the University treats you as an independent
contractor (regardless of your actual status).
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Q. Who is eligible to make Voluntary Contributions?
A. As an employee of the University, you may elect to make Voluntary Contributions as soon as you are hired, except that you are not allowed to participate if you are a student whose employment is incidental to your education at the University.
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Q. What is the University’s Direct Contribution to the
A. Once you are enrolled and have met the two-year service requirement, the University makes a Direct Contribution to the Retirement Program on your behalf each Plan Year you are either scheduled to complete or actually complete 1,000 or more hours of service. For the Plan Year during which you satisfy the eligibility requirements, Direct Contributions will only be made for base salary paid for full payroll periods after you satisfy the eligibility requirements (i.e., after you complete two years of service.) The University’s Direct Contribution is related to your base salary* during the Plan Year (July 1 – June 30) according to the following formula:
* Base salary means, in the case of nonexempt staff and PAS staff in salary grades 50-55, gross wages (as defined below), and in the case of faculty and PAS staff in salary grades 56 and above, annual base pay rate (as defined below) plus summer compensation. In addition, for faculty under the School of Medicine and Dentistry Faculty Compensation Plan, overage paid as extra compensation is included. Base Salary shall not include any amount in excess of the limit imposed by Code section 401(a)(17) as of the start of each Plan Year.
Gross wages means the total remuneration reported in Box 1 of Form W-2 that is paid to a Participant for personal services actually rendered, plus the Participant’s pre-tax elective deferrals under the University’s 403(b) and cafeteria plans, but excluding wellness incentives, tuition assistance, taxable relocation assistance, sign-on bonuses, severance benefits and forms of extra remuneration not related to actual services.
Annual base pay rate means the base salary reported in Box 1 of Form W-2 that is paid to a Participant for personal services actually rendered, plus the Participant’s pre-tax elective deferrals under the University’s 403(b) and cafeteria plans, but excluding all other forms of compensation.
** The breakpoint amount will be indexed annually based on national changes in average wages.
*** The IRS limit will be indexed in $5,000 increments.
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Q. What options do I have for my Voluntary Contributions?
A. The University provides you with the opportunity to supplement the retirement income that can be provided by the Direct Contribution with retirement income that can be provided by your making Voluntary Contributions.
To make Voluntary Contributions, you must enter into an agreement with the University to reduce your salary by the amount of your contributions. You may change or stop the percentage or dollar amount that you elect for your Voluntary Contributions anytime during the year. You may also select Auto Save, which is an enrollment feature that’s designed to make it easier and more convenient than ever to set aside additional money for retirement. The Auto Save feature automatically increases your Voluntary Contributions once each year by 1% on the first pay date following July 16th.
You may make your Voluntary Contributions in one of the two ways listed below or a combination of both:
1) Pre-Tax 403(b): Tax-deferred Voluntary Contributions are deducted from your gross wages before amounts are taken out for income taxes and deductions. This reduces your taxable income by the amount of your Voluntary Contributions, which means you pay less in income taxes. However, Voluntary Contributions are subject to Social Security and Medicare taxes.
Making Voluntary Contributions to the University’s Retirement Program on a pre-tax basis gives you a tax break now, by lowering your current taxable income. You don’t pay taxes on your contributions and any earnings until you take the money out, typically in retirement.
2) Roth After-Tax 403(b): With the Roth after-tax option, your contribution is taken out of your paycheck after your income is taxed, which does not lower your current taxes. However, when you withdraw the Roth after-tax portion of your Voluntary Contributions, you won’t pay taxes on any earnings on your Roth after-tax contributions, as long as you’re at least age 59½ (or die or become disabled) and your withdrawal is made at least five years after making your first Roth after-tax contribution*.Withdrawals of Roth after-tax contributions are generally tax-free since you have already paid the taxes on the contributions.
Which choice, pre-tax or Roth after-tax contributions, is best for you depends on your situation. Generally, if you anticipate being in a higher tax bracket during retirement, you’ll benefit from making Roth after-tax contributions. If you think you’ll be in a lower tax bracket at retirement, pre-tax contributions may be the way to go. Because of the tax implications associated with pre-tax and Roth after-tax contributions, you should consult with a tax advisor regarding what is your best option.
If you make a Roth after-tax contribution and take a distribution of such contribution before attaining age 59½ or within 5 years of making your first Roth after-tax contribution to the Plan, you will be taxed on the earnings attributable to your after-tax Roth contribution. For example, assume that your Roth 403(b) account holds $10,000, consisting of $9,400 in contributions and $600 in investment earnings, you terminate employment at age 40, and you withdraw 50% of the account ($5,000). Because you are younger than age 59½, the amount you receive is a nonqualified distribution, and it will be treated partly as a tax-free return of contributions ($4,700) and partly as taxable investment earnings ($300) based on the pro rata portion of the distribution that is treated as a Roth after-tax contribution versus earnings.
* The five-year period begins on the first day of the year in which you
make your first contribution to your Roth after-tax account.
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Q. What is the maximum that I can contribute from my salary to the
A. Your combined pre-tax and Roth after-tax Voluntary Contributions to the Retirement Program may be made in any amount up to the limits imposed by the Internal Revenue Code. In general, for calendar year 2013, your own Voluntary Contributions may not exceed $17,500. If you will be age 50 or older by the end of the year, however, your Voluntary Contributions limit can be increased by an additional $5,500 (i.e., for a total of $23,000). Certain employees with 15 or more years of service with the University and members of its controlled group may be able to contribute up to an additional $3,000 per year. Additionally, the aggregate contributions by you, the University and members of its controlled group may not exceed $50,000. Finally, despite the foregoing dollar limits, total contributions may not exceed 100 percent of your gross wages. These annual limits will be subject to inflation adjustments in future years. Note: Please be aware that any employee contributions made to another employer’s plan in the current calendar year count in applying the employee contribution limits (i.e., the $17,500 and $23,000 limits).If you would like to request a calculation of your maximum, please refer to a Benefits Representative in the Retirement Area for further assistance.
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Q. What options do I have for investing my Voluntary and/or University
A. Your investment menu consists of a wide range of mutual funds and annuity options from well-known financial providers. These choices give you the flexibility to create a retirement portfolio that’s aligned with your investment preferences and goals. More information on these funds, including performance, can be found at www.tiaa-cref.org/rochester and select “Investment Choices.”
If you fail to complete the enrollment or investment election process and,
therefore, do not provide direction on how you want to have your contributions invested,
then those contributions will be invested in a “default” fund.
If you fail to provide any investment instructions for the University’s Direct
Contribution or your Voluntary Contributions or if your investment fund allocation
is missing or incomplete, such contributions will be invested in the age-appropriate
Target Date Fund based on your date of birth. View the
for more information.
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Q. Can I make changes to my investments? How often?
A. You may allocate the University’s Direct Contribution and your Voluntary Contributions to the same or different funds. You may also change your future allocations as often as you wish. Changing the investment of your existing accounts is subject to the terms of the investment fund which holds these accounts. You may also change or stop the percentage or dollar amount that you elect for your Voluntary Contributions any time during the year.
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Q. When can I withdraw my retirement accumulations?
A. Retirement accumulations derived from the University’s Direct Contribution may be withdrawn when you have a severance from employment from the University and members of its controlled group, or after age 70½ for any reason. In addition, if you are a retiree of the University over the age of 59½ who has returned to work at the University or a member of its controlled group, you may withdraw retirement accumulations. (TIAA Traditional GRAs* are generally subject to the 9-year payout rule stated above. However, TIAA Traditional GRA funds may be withdrawn in a lump-sum during the 120 day window period following severance from employment from the University and members of its controlled group.)
Retirement accumulations derived from Voluntary Contributions may be withdrawn when you have a severance from employment from the University and members of its controlled group, or after age 59½ for any reason. (TIAA Traditional GRAs* are generally subject to the 9-year payout rule stated above. However, TIAA Traditional GRA funds may be withdrawn in a lump-sum during the 120 day window period following severance from employment from the University and members of its controlled group.)
In addition, before age 59½ , retirement accumulations derived from Voluntary Contributions may be withdrawn if you become disabled. You may also take a hardship withdrawal before age 59½ based on an immediate and heavy financial need that cannot be satisfied from other sources. An immediate and heavy financial need means amounts required(1) for expenses incurred for medical care for you, your spouse, or your dependent; (2) for the purchase of your principal residence; (3) for the tuition or related educational fees for post-secondary education for you, your spouse, or your dependent; (4) to prevent eviction or mortgage foreclosure on your principal residence; (5) to pay for burial or funeral expenses for your parents, spouse, or dependents; or (6) to pay expenses for the repair of damage to your principal residence that would qualify for the casualty deduction. No hardship distribution is permitted unless you have first taken all loans available to you under this or any other plan, unless the loan itself would result in a financial hardship. Additionally, you may not make any contributions to any retirement plan of the University or members of its controlled group for at least six months following the hardship withdrawal. Hardship withdrawals are available only from your Voluntary Contributions.
* For those who have a TIAA RA established prior to 7/1/04, the same
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Q. What options do I have with my retirement accounts when I sever
from employment from the University and members of its controlled
A. You have four options with your accounts:
- Continue to maintain your accounts with the University's recordkeeper, TIAA-CREF.
- Withdraw your accumulations. You will be required to pay ordinary income taxes, as well as a 10% penalty if you withdraw before the age of 59½ in most instances.
- Rollover your accumulations to an IRA*.
- Rollover your accumulations to another employer retirement plan, if the plan accepts the rollover.
* You cannot rollover Roth 403(b) accumulations to an IRA that does not
qualify as a Roth IRA.
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Q. What is a controlled group and who are the members?
A. A controlled group means any entity in which the University of Rochester directly or indirectly, owns a controlling interest in or any tax-exempt organization(s) that is under “common control” with the University based on 80% of the directors or trustees being either representatives of or directly or indirectly controlled by the University of Rochester. As of August 2012, members of the controlled group of the University of Rochester include: FF Thompson Health System Inc, Highland Hospital, Highlands at Brighton, Highlands at Pittsford, Highlands Living Center, Visiting Nurse Service (VNS), Visiting Nurse Signature Care and High Tech Rochester.
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