THE UNIVERSITY SYSTEM OF GEORGIA

Transcription

1 THE UNIVERSITY SYSTEM OF GEORGIA BOARD OF REGENTS OPTIONAL RETIREMENT PLAN SUMMARY PLAN DESCRIPTION January 1, 2006 Creating A More Educated Georgia Board of Regents Optional Retirement Plan Summary Plan Document January 1, 2015

2 BOARD OF REGENTS OPTIONAL RETIREMENT PLAN Table of Contents SECTION 1 INTRODUCTION... 1 SECTION 2 ELIGIBILITY AND PARTICIPATION... 1 ELIGIBLE EMPLOYEES... 1 INELIGIBLE EMPLOYEES... 2 ELIGIBILITY REQUIREMENTS... 2 PARTICIPATION IN THE EVENT OF YOUR REEMPLOYMENT... 3 TRANSFERS... 3 EFFECTIVE DATE OF PARTICIPATION... 4 SECTION 3 CONTRIBUTIONS AND SUB-ACCOUNTS... 4 INSTITUTION CONTRIBUTIONS... 4 PARTICIPANT CONTRIBUTIONS... 5 ROLLOVER CONTRIBUTIONS... 5 SUB-ACCOUNTS... 5 LIMITS UNDER SECTION 415 OF THE INTERNAL REVENUE CODE... 6 SECTION 4 PLAN INVESTMENTS... 6 FUND SPONSORS... 6 INVESTMENT FUNDS... 6 INVESTMENT RISK... 7 SECTION 5 DISTRIBUTIONS FROM YOUR ACCOUNT... 8 TERMINATION OF EMPLOYMENT... 8 MANDATORY DISTRIBUTIONS AT AGE 70 1/ DEATH... 8 DISTRIBUTION OF BENEFITS... 8 FORM OF PAYMENT... 9 TAX TREATMENT OF DISTRIBUTIONS... 9 SECTION 6 IN-SERVICE BENEFITS...10 SECTION 7 MISCELLANEOUS INFORMATION...10 QUALIFIED DOMESTIC RELATIONS ORDERS...10 ANTICIPATION OF BENEFITS...10 PLAN AMENDMENT, MODIFICATION OR TERMINATION...10 NOTICES; MISSING PERSONS...10 PAYMENTS TO MINORS AND OTHER PERSONS UNDER LEGAL DISABILITY...10 MILITARY LEAVE...10 CONTACT INFORMATION...11 i

3 BOARD OF REGENTS OPTIONAL RETIREMENT PLAN SUMMARY PLAN DESCRIPTION SECTION 1 INTRODUCTION The Board of Regents of the University System of Georgia (the Board) maintains the Board of Regents Optional Retirement Plan (the Plan) on behalf of eligible employees of the Board and its member Institutions. This Summary Plan Description is effective as of January 1, It explains the major features of the Plan and how they apply to you. If the Plan is amended in a way that will affect your benefits, you will be notified. The purpose of this Plan is to provide a defined contribution alternative to the Teachers Retirement System of Georgia (TRS). TRS is a traditional defined benefit plan that provides retirees with a guaranteed lifetime benefit, usually in the form of an annuity for the life of the retiree or the joint lives of retiree and his or her spouse. This Plan requires that you and your Employer contribute to the plan. The Employee and Employer contributions vary from year to year. You then direct the investment of the contributions to your account. Upon your retirement or other termination of employment, you are entitled to the dollar amount in your account, as it has been adjusted for earnings or losses from your investments. You do not receive cost of living adjustments or additional amounts if you outlive your account, but your heirs will receive any amount that remains upon your death. This Summary Plan Description is a summary only. It does not discuss every detail of the Plan, and it does not present some technical aspects of the Plan that may affect your right to participate in or receive benefits under the Plan. You should refer to the Plan document for all details of the Plan's operation. If there is any inconsistency or ambiguity between the Plan document and this Summary Plan Description, the Plan document will control. If you have any questions that are not answered by this booklet, please contact your Institution s Human Resources or Payroll Office or the Board. Only responses from the Board are binding on the Plan s operation. Eligible Employees SECTION 2 ELIGIBILITY AND PARTICIPATION In general, employees of the Board or of any Institution who are members of the faculty or are classified as "principal administrators" are Eligible Employees meaning 1

4 they are eligible to participate in the Plan in lieu of participating in TRS. Certain assistant coaches also were given a one-time election to participate in the Plan, but the window for making that election has closed, so new assistant coaches may not participate in the Plan. In limited cases, certain individuals will be allowed to continue participating in the Plan even if they transfer to a position that is not classified as faculty or principal administrator. See Transferring to a position eligible for TRS under Transfers below. Your Employer is an Institution if it is an institution of post-secondary education included in the University System of Georgia. For purposes of this summary, the term Employer will be used to refer to the Board and each Institution. Ineligible Employees The following individuals are not Eligible Employees and may not become Participants in the Plan: individuals leased to an Employer through a temporary or staffing agency or otherwise; individuals hired by an Employer on a contract basis; individuals classified by an Employer as leased employees or as independent contractors; temporary employees, including students; employees designated by regulations of the Board as (1) not being eligible to participate in the Plan or (1) being in a class of employees other than "faculty" or "principal administrators"; and certain employees who transfer employment or are rehired after participating in TRS, as described in Participation in the Event of Your Reemployment and Transfers below. Participation Requirements for Eligible New Hires You may not participate in this Plan and TRS. Please contact TRS directly (see the contact information at the end of this Summary) for more information on the benefits TRS provides. You also may wish to refer to a financial advisor for help in determining whether this Plan or TRS is more appropriate for your situation. If you are a Participant in this Plan (and thus have already opted out of TRS) as of January 1, 2006, you will remain a Participant as long as your employment status does not change. If you have a change in employment status, refer to Participation in the Event of Your Reemployment and Transfers below. If you are not a Participant on January 1, 2006, you may become a Participant only by making an election to participate within 60 days after your employment 2

5 commencement date. Your election to participate must be made in the form prescribed by the Board. Contact your Human Resources or Payroll Office for the appropriate forms. If you do not make an election to participate in this Plan within 60 days after your employment commences, you will automatically be deemed to be a Participant in TRS and may not later elect to participate in this Plan. Participation in the Event of Your Reemployment General rule. Except in the case noted below, if you are an Eligible Employee and are reemployed by an Employer after terminating employment, you will be treated as a new Eligible Employee. In this case, you will not be bound by your prior election to participate in the Plan or in TRS, and you will be free to make a new election to participate in the Plan upon your rehire. This rule applies regardless of whether your prior period of employment with an Employer was as an Eligible Employee or in some other capacity. Rehire after participating in TRS. The general rule above will not apply if you (1) are rehired after a termination of employment; (2) participated in TRS during your former period of employment, and (3) terminated employment after you were 100 percent vested in your TRS benefit. In such a case, you are not eligible to participate in this Plan and will be treated upon your rehire as if you elected to participate in TRS, rather than this Plan. This rule applies regardless of whether you were an Eligible Employee during your previous period of employment, so it does not matter that you may never have had the opportunity to participate in this Plan. Transfers General rule. Except in the cases noted below, if you are a Participant in this Plan and are transferred to a position in which you are not an Eligible Employee, you may continue to direct the investment of your Account, but you will not be eligible to make or receive new contributions if transferred to an ineligible position. You will not be treated as having terminated employment for purposes of receiving a distribution of your Account until you are no longer an employee of the Board or an Institution. Transferring to a position eligible for TRS. If you are transferred to a position with the Board or an Institution in which you are not an Eligible Employee but you are eligible for TRS, you will nevertheless continue to participate in this Plan, provided that it is only your ineligible position that keeps you from being an Eligible Employee. For example, if you transferred to a state position with an entity other than the Board or an Institution, or to a position that is not benefits eligible, you would not remain a Participant in this Plan. On the other hand, if you transfer to a position with an Institution in administration, rather than as a faculty member or a principal administrator, and that position is eligible for TRS, you would continue to participate in this Plan. 3

6 Transfer to a position as an Eligible Employee. Generally, if you are not an Eligible Employee but transfer to a position in which you are an Eligible Employee, you are considered a new hire (as of your transfer date) for purposes of electing to participate in this Plan. If, however, your previous position was eligible for TRS but not this Plan, you must continue in TRS and may not participate in this Plan. Transfers to another position as an Eligible Employee. If you are an Eligible Employee and transfer employment to another position in which you are still an Eligible Employee, you are bound by your prior election (either to participate in this Plan or TRS) and may not make a new election. Effective Date of Participation Your participation in the Plan will be effective as of the first pay period that begins after your Employer receives your election to participate. No retroactive or makeup contributions will be paid or withheld from compensation for the period between your initial eligibility date and your Employer's receipt of your election. Institution Contributions SECTION 3 CONTRIBUTIONS AND SUB-ACCOUNTS Each Institution will contribute to the Plan, on behalf of the Participants it employs, an amount equal to the normal cost contribution. This is the amount the Institutions are required to contribute to ORP on behalf of their employees who participate in ORP. It is expressed as a percentage of each participating employee's Compensation (as defined below under Participant Contributions ). Although this amount can vary from year to year, the amount for the current year is 9.24%. Following are percentages that were in effect for several recent years: % % % % A contribution percentage, once announced, will not vary during the [calendar] year to which it applies. The amount in effect could be higher or lower than the historical amounts noted above. For purposes of allocating the Institution contributions, no more than $265,000 (in 2015) in Compensation may be taken into account. The IRS indexes this amount for inflation, so it may increase in future years. 4

7 Participant Contributions In General. For each payroll period, you will contribute a mandatory percentage of your Compensation. This percentage, which is what ORP Participants are required to contribute to ORP, can change from time to time but will not be less than 5% or more than 6%. Your Contributions will be deducted from your paycheck each payroll period and credited to your Account in the Plan. Compensation generally is your full rate of regular compensation paid by your employing Institution for your normal working time, including amounts paid by the Institution from grants and contracts. Compensation also includes any pre-tax contributions to a Section 125 plan, 403(b) plan or Section 457 plan, and amounts withheld from your compensation on a pre-tax basis under a qualified transportation fringe benefit program, such as amounts you pay for parking or transit passes. Compensation includes housing supplements or stipends but not the value of housing that is provided in kind or as a working condition fringe benefit. Your contributions are not immediately subject to federal income taxes, and you will not pay taxes on your contributions (or on the earnings generated by the investment of your contributions) while they remain invested in the Plan. Your contributions will be subject to Social Security taxes if your Institution participates in Social Security [check]; as a result, your Social Security benefits will not be reduced as a result of your participation in the Plan. Limits on Participant Contributions. Participant contributions will not be withheld from Compensation that exceeds the dollar limit imposed by the Internal Revenue Code. For 2015, this dollar limit is $265,000, but it may be adjusted upwards for future years. This means that once you earn this amount in a Plan Year, no more Participant contributions will be withheld from your pay. Rollover Contributions The Plan does not accept rollover contributions from any source, including other qualified retirement plans, 403(b) plans, 457 plans or IRAs. Sub-Accounts Your Account under the Plan will be divided, for record keeping purposes (but not for investment, as described in more detail below) into two sub-accounts that represent different sources of contributions to the Plan (i.e., Participant Contributions and Institution Contributions). Each sub-account includes earnings and losses on those amounts. 5

8 Limits Under Section 415 of the Internal Revenue Code Section 415 of the Internal Revenue Code limits the annual additions that may be contributed to your Account, as well as similar accounts you may have through the Board or your employing Institution. Under Section 415, the total annual additions that may be made on your behalf to all such plans during a single calendar year may not exceed the lesser of $53,000 (in 2015) or 100 percent of your compensation. Annual additions are Participant Contributions and Institution Contributions, but do not include earnings on your Account. Section 415 does not apply to 457 (b) contributions. Compensation, for this purpose, is defined slightly differently than it is for purposes of calculating Participant and Institution contributions. The Board and your employing Institution will monitor the application of the Section 415 limits to your contributions to this Plan and advise you if your contributions exceed the limits. If you contribute to or receive contributions through a qualified defined contribution retirement plan maintained through another State entity during any year in which you also receive contributions under this Plan, please advise the Board so that we can determine whether we are required to limit your contributions under this Plan. The IRS may increase the dollar limit that applies to contributions in future years. You may obtain the dollar limit that will be in effect for a year from Human Resources or Payroll Office. The adjusted limit for the upcoming year is usually available in December of the previous year. Fund Sponsors SECTION 4 PLAN INVESTMENTS You will determine how your Account is allocated among the investment options selected by the Board. When you enroll (or before you enroll, upon request), you will receive more information from the Fund Sponsors that have been selected by the Board. Currently, there are three Fund Sponsors: Fidelity Investments, TIAA-CREF and VALIC. During open enrollment before the beginning of each year, you may select up to three Fund Sponsors and designate the percentage of your contributions (Participant and Institution) that each Fund Sponsor is to receive. This selection will remain in effect for contributions that are being contributed to the Plan for the entire year, so please choose your Fund Sponsor(s) carefully. Investment Funds Each Fund Sponsor has an array of Investment Funds available, and you will tell the Fund Sponsor how your contributions to that Fund Sponsor are to be allocated among those Investment Funds. This process is handled differently by each Fund Sponsor, and it is your responsibility to follow the Fund Sponsor s procedure to direct the allocation of your Account. Typically, the Fund Sponsors will allow changes through a website or by telephone. You will receive more information on this process during enrollment. 6

9 The Board may (but need not) specify a maximum number of Investment Funds into which you can direct the portion of your Account that is held by each Fund Sponsor. The Board also may limit the frequency with which you can change your allocation. In addition, the Fund Sponsors may have their own restrictions. Please review the materials you receive from the Fund Sponsors carefully, and contact the Fund Sponsor if you have questions that are not answered in these materials. Some Fund Sponsors may allow you to make separate elections as to the investment of existing contributions in your Account and any future contributions that may be allocated to your Account. Be aware of this distinction when you are making investment changes. If you do not select a Fund Sponsor, or you select a Fund Sponsor and do not elect specific Investment Funds, your Account will be invested in a conservative investment selected by the Board. Please read the investment information provided by each Fund Sponsor carefully before making your investment selection. It is important that you continue to monitor the performance of the investment selections and consider your own financial risk tolerance and objectives. Neither the Board nor your employing Institution is responsible for investment losses that are the result of your investment instructions. In other words, you are responsible for choosing how to invest your account among the available options. You must determine the best investment mix given your own situation; the Plan sponsor and your Employer are not responsible for your investment choices. If you need additional information on any investment vehicle in which you have invested, please request it from the Fund Sponsor. Investment Risk The benefit of investment gains and the risk of investment both flow to the Accounts of Participants. There is no guarantee that investment success will be achieved or that losses will not occur. Account Statements You will receive a statement of your Account at least annually. The statement will show the value of your Account. It is important that you review your statement carefully. If you find a mistake or discrepancy on your statement, you should inform your institution and your Fund Sponsor immediately. You also should promptly review any written or electronic confirmation you receive from your Fund Sponsor to ensure that your investment instructions were implemented properly. If you find any discrepancy, contact both your employing Institution and the Fund Sponsor. 7

10 Termination of Employment SECTION 5 DISTRIBUTIONS FROM YOUR ACCOUNT If you terminate employment with the Board or any Institution, you are entitled to receive a distribution of your entire Account. Mandatory Distributions at Age 70 1/2 As long as a participant is no longer employed at a USG Institution or System office in any capacity they may begin taking mandatory required distributions to be distributed by the later of your termination of employment or by April 1 following the calendar year in which you attain age 70½. Contact your Institution or your Fund Sponsor for more information on these distributions before your distribution is required to begin. Death If you die prior to receiving a distribution of your entire Account, your Beneficiary will be entitled to your Account. You should designate a beneficiary to receive your benefits under the Plan in the event of your death. You will receive the forms necessary to designate a beneficiary in the materials you receive from each Fund Sponsor. Each beneficiary designation form will apply only to amounts held with that Fund Sponsor when you die, so you may need to fill out multiple beneficiary forms. If you wish to change your beneficiary for the amounts held with a particular Fund Sponsor, contact the Fund Sponsor directly. Beneficiary designations must be in writing; an oral designation, or one made in your will or in any manner other than by submitting the Fund Sponsor s form to the Fund Sponsor, is not valid. If you fail to make a beneficiary designation, or your designated beneficiary does not survive you, the Plan provides for automatic payment of your account to your spouse if you are married, or to your estate if you are not married. Your spouse for purposes of determining your beneficiary is your spouse as of the date of your death. Distribution of Benefits Distribution Upon Termination of Employment (Other than Death). If you terminate employment, you may obtain a distribution of your Account at any time, but you also may postpone your distribution until any date before your Required Beginning Date, providing that you are no longer employed by USG. 8

11 Distribution Upon Death. In the event of your death, your beneficiary may obtain a distribution of your Account at any time but also may postpone the distribution until the Required Beginning Date. The applicable Required Beginning Date in this case depends upon whether (1) your sole Beneficiary is your Spouse, in which case the Required Beginning Date is December 31 of the year after the year in which you die or turn age 70 ½, whichever is later; (2) your sole Beneficiary or one of your Beneficiaries is someone other than your Spouse, in which case the Required Beginning Date is December 31 of the year immediately following the year in which you died. If you do not have a designated Beneficiary or your Spouse dies after you but before distributions begin, additional rules apply. Form of Payment Your Account will be distributed to you or your Beneficiary, if applicable, in any form of distribution allowed by the Fund Sponsor for the Funding Vehicle in which you are invested. The Fund Sponsor can provide you with more information on your distribution options. Tax Treatment of Distributions rules: Any distribution that is made to you from the Plan will be subject to the following You may elect a direct rollover of all or part of your distribution from the Plan to an IRA or other qualified Employer retirement plan if the distribution is in the form of a lump sum or installments over less than 10 years. The amounts would then be taxable to you as they are distributed from the IRA or other qualified plan. Any portion of your distribution that could be but is not rolled over to an IRA or qualified plan will be taxable to you as ordinary income in the year in which it is received, and will be subject to mandatory 20% income tax withholding. Any portion of your distribution that is not eligible for rollover will constitute taxable income in the year in which it is received, and will be subject to income tax withholding as if it were ordinary income unless you opt out of withholding. You will receive more information on opting out of withholding before you receive a distribution that cannot be rolled over. 9

12 SECTION 6 IN-SERVICE BENEFITS You may not withdraw any portion of your Account while you are employed by the Board or an Institution. Nor may you take a loan from your Account. Qualified Domestic Relations Orders SECTION 7 MISCELLANEOUS INFORMATION The Plan will honor a qualified domestic relations order ( QDRO ) issued by any court in connection with your divorce or legal separation. Anticipation of Benefits You cannot assign, pledge, encumber or otherwise alienate benefits payable under the Plan prior to receipt of those benefits. Plan Amendment, Modification or Termination The Board currently intends to continue the Plan indefinitely; however, it reserves the right to amend or terminate the Plan for any reason and at any time. Upon Plan termination, no further contributions will be made. Notices; Missing Persons It is your responsibility to keep the Board fully advised of any changes in your address. The Board will not be responsible for locating missing persons. Payments to Minors and Other Persons Under Legal Disability Any benefit payable to or for the benefit of a minor, an incompetent person, or other person incapable of receipting for his or her benefits will be deemed paid when paid to such person s guardian or to the party providing or reasonably appearing to provide for the care of such person. Military Leave If you are absent from your job with the Board or an Institution for an extended period due to service in the armed forces of the United States, upon your timely return to work, you are entitled to make up certain of the contributions you could have made during your absence. You also may be entitled to Institution Contributions you would have received during that time. The Board and the Institutions are committed to providing you with every protection required by law, but you must ensure that we know 10

13 your absence is on account of military leave. You also should contact the Board and your employing Institution as soon as possible following your release from service. Contact Information You may contact your employing Institution through the Human Resources or Payroll office. TRS may be contacted at or 11