ANN & ROBERT H. LURIE CHILDREN S HOSPITAL OF CHICAGO. RETIREMENT SAVINGS PLAN 403(b) SUMMARY PLAN DESCRIPTION

Transcription

1 ANN & ROBERT H. LURIE CHILDREN S HOSPITAL OF CHICAGO RETIREMENT SAVINGS PLAN 403(b) SUMMARY PLAN DESCRIPTION PLAN EFFECTIVE DATE: January 1, 1969 BOOKLET REVISION DATE: September 2015

2 TABLE OF CONTENTS SPD HIGHLIGHTS SUMMARY OF WHAT HAS CHANGED... 1 ABOUT THIS BOOKLET... 2 SECTION 1: GENERAL INFORMATION ABOUT THE PLAN... 2 ELIGIBILITY AND PARTICIPATION... 2 Eligible Participants... 2 Ineligible Participants... 3 When Does an Employee Become Eligible to Participate in the Plan?... 3 How Does an Eligible Employee Participate in the Plan?... 3 Automatic Enrollment... 3 CONTRIBUTIONS... 4 Pre-Tax Contributions... 4 IRC Limits Applicable to Pre-Tax Contributions Year Service Catch-up Contributions... 5 Age 50 Catch-up Contributions... 5 Matching Contributions... 6 Rollover Contributions... 6 No True-Up of Matching Contributions... 7 Contributions During a Leave of Absence... 7 Contributions During Active Duty in the Armed Forces... 7 VESTING... 7 Employee Pre-Tax Contributions... 7 Matching Contributions... 7 Forfeitures... 8 INVESTING PLAN CONTRIBUTIONS... 8 Risk and Return... 8 Investment Decisions... 9 How Accounts Are Invested... 9 Investment Funds Changing Investment Allocations LOANS Loan Amounts Loan Security Interest Rate Repayment Defaults WITHDRAWALS Hardship Withdrawals Age 59½ Withdrawals Age 70½ Account Distributions Start of Benefit Distributions If a Participant Dies Before Payments Begin Taxes and Penalties HOW PARTICIPANT S RECEIVE THEIR DISTRIBUTIONS Payment Options i-

3 Determining the Participant s Account Balance When a Participant Can Receive His/Her Distribution Requesting Payments to Commence If a Participant Does Not Request Payments to Commence Following Termination of Employment Survivor Benefits Beneficiary Designations Qualified Domestic Relations Order (QDRO) REHIRES AFTER SEPARATION Break in Service Rehires HOW BENEFITS ARE TAXED Where to Go for More Tax-Related Information Important Tax Information An Overview Rollovers Payments That Can and Cannot Be Rolled Over Direct Rollovers Taxes on a Payment Made Mandatory Income Tax Withholding Voluntary Income Tax Withholding Withholding for Nonresident Aliens Sixty-Day Rollover Option Additional 10% Tax If Under Age 59½ Repayment of Plan Loans Alternate Payees Surviving Spouses Beneficiaries Other Than a Surviving Spouse PLAN FEES AND EXPENSES SECTION 2: OTHER IMPORTANT PROGRAM INFORMATION BENEFIT LIMITATIONS Loss of Benefits Maximum Benefits Assignment of Benefits If the Plan Becomes Top Heavy If the Plan is Amended or Terminated No Guarantee of Employment Failure to Apply for Benefits Rights to Information Qualified Domestic Relations Orders (QDROs) Facility of Payment Custodial Accounts No Plan Insurance SECTION 3: ADMINISTRATIVE INFORMATION PLAN INFORMATION Plan Name Plan Sponsor ii-

4 Plan Sponsor Employer Identification Number (EIN) Plan Number Type of Plan Plan Year Plan Administrator Plan Administrator Employer Identification Number Type of Administration Custodial Account Agent for Service of Legal Process BENEFIT CLAIM DETERMINATION AND APPEAL PROCEDURES General Benefit Claims and Appeals Information Designation of an Authorized Representative Benefit Claims and Appeals Procedure Vesting and Contributions Appeals Procedure STATEMENT OF RIGHTS UNDER ERISA Receive Information about Plan and Benefits Prudent Actions by Plan Fiduciaries Enforce Your Rights Assistance with Questions iii-

5 SPD HIGHLIGHTS SUMMARY OF WHAT HAS CHANGED Effective January 1, 2014, the Ann & Robert H. Lurie Children s Hospital of Chicago Retirement Savings Plan (the RSP ) will: Increase Matching Contributions under the RSP from current 2% match to a 5% match of eligible salary. Allow all employees who participate in and make pre-tax salary contributions to the RSP to be eligible for the Matching Contributions. Deem Matching Contributions made prior to January 1, 2014 as 100% vested. Deem Matching Contributions made on and after January 1, 2014 to require employees to have completed three (3) years of service to be vested in the post-2013 Matching Contributions. Employees who have three (3) years of service or more as of January 1, 2014 are fully vested in future Matching Contributions. Employees with less than three (3) years of service as of January 1, 2014 will receive Matching Contributions but remain unvested until they have completed the three (3) years of vesting service. Auto enroll benefits eligible employees who have never previously participated in the RSP (i.e., do not have an account with TIAA CREF). This group will then be auto-enrolled in the RSP on January 1, 2014 at a 1% contribution level and will receive a 100% matching contribution from the hospital. These employees received a separate notice regarding this process, including how to increase contributions or, alternatively, how to opt out of the auto-enrollment. (Auto-enrollment will not be applied to benefits eligible employees who waived out of the plan in writing at hire, reduced their contribution level to zero, or have a suspended contribution due to hardship withdrawal.) 1

6 ABOUT THIS BOOKLET This summary plan description ( SPD ) is intended to serve as a summary of the Ann & Robert H. Lurie Children s Hospital of Chicago Retirement Savings Plan. It should not be considered as a substitute for the formal plan document, which governs the operation of the Plan. The plan document sets forth all of the details and provisions concerning the Plan and is subject to amendment. If any questions arise that are not covered in this booklet or if this booklet appears to conflict with the official plan document, the text of the official plan document will determine how questions will be resolved. For anyone wishing to read the actual 403(b) plan document and related custodial account agreements, they may request a copy from the Plan Administrator. A reasonable fee may be charged to cover the cost of reproduction. SECTION 1: GENERAL INFORMATION ABOUT THE PLAN The Ann & Robert H. Lurie Children s Hospital of Chicago Retirement Savings Plan (the Plan ) is a defined contribution plan that operates under Section 403(b) of the Internal Revenue Code of 1986, as amended (the IRC ). The Plan was established in This 403(b) plan is also intended to qualify under Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). The Plan is an arrangement allowed under IRC Section 403(b), where employees of tax-exempt organizations can enter into salary reduction agreements with their employers. Under the salary reduction agreement, a portion of an employee s Compensation is applied on a pre-tax basis to an annuity contract owned by the employee, rather than being paid directly to the employee. These amounts, together with any earnings, are not subject to federal income tax until they are paid to the employee (or beneficiary) in the form of benefits. Benefits are provided through: A. Teachers Insurance and Annuity Association ( TIAA ). TIAA provides a traditional annuity and a variable annuity through its real estate account. B. College Retirement Equities Fund ( CREF ). CREF is TIAA s companion organization, providing variable annuity fund options. C. TIAA-CREF Retirement Share Class Mutual Fund Accounts. Contact TIAA-CREF for more information about TIAA-CREF annuities and mutual funds. Ann & Robert H. Lurie Children s Hospital of Chicago (the Institution ) is the administrator of the Plan and is responsible for plan operations. The plan year begins on January 1 and ends on December 31. ELIGIBILITY AND PARTICIPATION Eligible Participants All Employees of the Institution are eligible to participate in the Plan. An employee means an individual treated as an employee by the Institution for purposes of employment taxes and wage withholding regardless of any subsequent reclassification by the Institution, governmental agency or court. Individuals deemed by the Plan Administrator to be independent contractors are not eligible to participate in the Plan. 2

7 Employees of designated affiliated organizations may also be eligible to participate in this Plan. An affiliated organization is a member of an affiliated service group (under IRC Section 414(m)), a controlled group of corporations (under IRC Section 414(b)), or a group of trades or businesses under common control (under IRC Section 414(c)) of which the Institution is a member, and any other entity required to be aggregated with the employer pursuant to IRC Section 414(o). Ineligible Participants Employees who are performing services for the Institution pursuant to an agreement that provides that such individual is not eligible to participate in the retirement plan or other benefit plans of the Institution are not eligible to participate in the Plan. Participation Eligibility Timeframe Eligible employees may begin participation in this Plan immediately following the start of his/her employment at the Institution. Becoming a Plan Participant To be considered a Participant in this Plan, an employee must complete the on-line enrollment process, which includes completion of a salary reduction agreement, unless automatically enrolled as described below. Completing a Salary Reduction Agreement for Participant Plan Contributions The salary reduction agreement is the formal notice the Participant completes to inform the Institution of the percentage of his/her compensation to be elected as Plan Contributions to his/her account. The salary reduction agreement is completed through the Institution s benefit enrollment system. Under the salary reduction agreement, the Participant s Compensation paid is reduced by the percentage elected and the amount of the reduction is contributed to one or more of the funding vehicles selected by the Participant that are available under the Plan. Contribution elections may not be made retroactively and will remain in effect until modified or terminated. A Participant may change or terminate his/her salary reduction agreement at any time. However, the ability to modify the salary reduction agreement may be subject to such reasonable restrictions as established by the Plan Administrator. The salary reduction agreement will be legally binding and irrevocable with respect to salary paid while the agreement is in effect. Automatic Enrollment Participation in this Plan is voluntary. However, certain employees who are classified as.5 FTE Status Employees or higher (as described below) may be automatically enrolled, unless an employee opts out of participation prior to that date. Once an employee begins participating in the Plan, he/she will continue to be eligible for the Plan until he/she ceases to be an eligible employee or the Plan is terminated, whichever occurs first. An employee is a.5 FTE Status Employee or higher if the employee is budgeted to work 40 or more hours per biweekly pay period. Such employees will be subject to automatic enrollment provided they are: First hired; or Classified as a.5 FTE Status Employee or higher prior to December 31, 2013, AND never previously waived out of this Plan (i.e., never had an account under the Plan). Auto enrollment for this group was a one-time event effective first day of the pay period of the first paycheck in Such an employee will be automatically enrolled to participate in the Plan with a default contribution amount of one percent (1%) of pay, unless he/she elects to waive participation in the Plan. For a newly 3

8 hired employee, if he/she does not waive participation within the first sixty (60) days of employment, he/she will become a Participant in this Plan. For a non-participating.5 FTE Status Employee or higher, actively employed on December 31, 2013, that does not waive participation by January 1, 2014, he/she will become a Participant in this Plan. Waiving participation in the Plan before contributions start is done by waiving participation on the plan website on or before the sixtieth (60) day of employment. The waiver will be effective until the date the eligible employee voluntarily elects to enroll in the Plan on-line to begin making contributions. However, if an eligible employee does not waive participation within the first sixty (60) days of employment and still wishes to not participate after the first paycheck, the employee may waive enrollment on-line at any time. Notwithstanding this, the eligible employee s account will remain active and he/she cannot receive a refund of contributions made before the waiver is completed. If during the automatic enrollment process the eligible employee does nothing, he/she will be considered to have entered into a salary reduction agreement for the default amount of one percent (1%) (or such other default percentage of pay as is determined from time to time by the Plan Administrator and applied on a nondiscriminatory basis). Contributions upon initial eligibility to participate automatically begin with the first pay date after the first day of the month following sixty (60) days of employment (or earlier upon the employee s request). Setting Up the Participant s 403(b) Annuity Account, Beneficiaries and Investment Allocations. Upon completion of the salary reduction agreement through the online benefit enrollment system, the Participant is to complete an online account application with TIAA-CREF. The Participant sets up his/her personal account information as well as designating his/her beneficiaries and allocating the investment accounts to which his/her Plan Contributions are to be allocated. TIAA-CREF will then process the application, establish the Participant s account and send the Participant his/her formal annuity contract. CONTRIBUTIONS Pre-Tax Contributions A Participant may contribute any percentage of his/her eligible Compensation to his/her account on a pre-tax basis subject Institution and IRC limitations. Compensation that is eligible for contribution includes regular bi-weekly earnings, including overtime, shift differentials premium pay and other similar reoccurring payments, paid by the Institution to a Participant that must be reported as wages on the Participant s Form W-2 plus compensation that is not currently includable in the Participant s gross income because of the application of IRC Sections 125, 132(f), 403(b) or 457(b) through a salary reduction agreement. This does not include payments while on short-term disability or the amount of one time or irregular payments such as bonuses, merit lump sum payments, or other supplemental payments as may be designated from time to time by the Plan Administrator. If an eligible employee participates in the Plan for only a part of a year, his/her contributions will be based on the portion of Compensation earned during the period in which he/she participated. Total Compensation taken into account under the Plan cannot exceed the IRC Section 401(a) (17) limit, which is equal to $255,000 in 2013 and adjusted periodically by the IRS for increases in the cost-of-living. For example, if an eligible employee makes $355,000 per year, the maximum amount, which can be considered for making pre-tax contributions, is $255,000 for The Institution will monitor changes in the IRC Section 401(a) (17) compensation limit, communicate those changes and implement the necessary payroll controls to be in compliance. 4

9 If Participants are veterans and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994 ( USERRA ), their qualified military service may be considered service with the Institution. If a Participant receives wage continuation payments during their leave (referred to as differential pay), then the Plan may treat these amounts as Compensation for salary deferral purposes. If a Participant thinks that he/she may be affected by these rules, ask the Plan Administrator for further details. IRC Limits Applicable to Pre-Tax Contributions Regardless of any IRC compensation limit, there are other IRC limits on the total amount of contributions that an eligible employee can make for any year. Generally, total contributions for a single year cannot exceed the limitations imposed by IRC Section 415, IRC Section 403(b) and IRC Section 402(g). The annual individual limit for 2013 is $17,500 or one hundred percent (100%) of the Participant s eligible Compensation, whichever is less. This limit may also be adjusted from time to time by the Internal Revenue Service (IRS). The latest limits can be found on the IRS website ( The Institution will also communicate these limits in various benefits publications and through the online benefits enrollment system. The IRC limit applies to all contributions combined that a Participant may make to all employers 401(k) or 403(b) plans in any calendar year. If a Participant has contributed to more than one plan in a year, they need to be aware of their total annual contribution amount. If a Participant has total contributions that exceed the dollar limits in effect under IRC Section 402(g) for the previous year, at the beginning of the then current tax year (i.e., the calendar year following the plan year to which the contributions relate), the Participant must notify the Plan Administrator of the excess contribution he/she made by March 1 of the current tax year. For example, if during the 2013 tax year, a Participant inadvertently contributed $18,000 instead of the $17,500 IRC Section 402(g) limit, the Participant must notify the Plan Administrator by March 1 of the $500 over contribution so that it can be returned to him/her by April 15, otherwise, additional tax penalties will apply to the Participant. Once a Participant has notified the Plan Administrator, the excess contribution will be distributed back to the Participant via payroll processing no later than April 15 of the current tax year. 15-Year Service Catch-up Contributions If a Participant has at least fifteen (15) years of service with the Institution, he/she is permitted to make additional contributions to his/her Plan account above and beyond the pre-tax contribution limitation (which is $17,500 for 2013) whereby his/her pre-tax contribution limit is increased by the least of: $3,000; OR $15,000 MINUS the additional pre-tax contributions made in prior years of this 15-year service rule; OR $5,000 times the number of the Participant s years of service with the Institution MINUS the total pre-tax contributions made by the Participant for earlier tax years. Because the IRC limits and the Participant s individual contribution limit can change annually, it is recommended that the Participant talk with TIAA-CREF for authorization before completing his/her 15- year service catch-up election on the on-line website. Participants should compute their individual limit each year to confirm whether they are in fact eligible for any additional contributions or not. TIAA-CREF authorization must be provided to the Institution plan administrator prior to adjusting contributions. Age 50 Catch-up Contributions If a Participant is age fifty (50) or older during a plan year, he/she may make additional pretax contributions to his/her Plan account. In 2013, a Participant may make an additional catch-up contribution of up to $5,500 if he/she will reach the annual IRC Section 402(g) limit. The maximum 5

10 catch-up contribution may be increased periodically by the IRS in subsequent years for cost-of-living adjustments. The Plan treats Age 50 Catch-up Contributions the same as Pretax Contributions to the Plan. A Participant may make Age 50 Catch-up Contributions concurrent with regular deferrals, or upon reaching the annual IRC Section 402(g) limit. Age 50 Catch-up Contributions are not subject to the overall Section IRC 401(a) (17) compensation deferral limit set by the IRS ($255,000 in 2013). Matching Contributions Any Participant who makes pretax contributions to the Plan is eligible to receive Matching Contributions from the Institution. Matching Contributions are made each pay period, based on the Participant s pretax contributions for the pay period. 15-Year Service Catch-up Contributions and Age 50 Catch-up Contributions made by the Participant are also eligible for Matching Contributions. The Institution matches one dollar ($1) for every pretax dollar a Participant contributes up to the first five percent (5%) of the Participant s Compensation contributed each pay period. As a result, the maximum Matching Contribution that may be received each pay period is five percent (5%) of the Participant s Compensation for the pay period. Additional pretax Compensation can be contributed to the Plan by the Participant above 5% as long as it does not exceed the annual IRC limit. To show how this works, assume a Participant s pretax contribution percentage is four percent (4%) for an entire year. As a result, the Participant in this example contributes $2,400 (4%) of his/her $60,000 Compensation to the account under the Plan from January 1 through December 31. Here are the Matching Contributions the Institution makes to the Participant s Plan account over the course of the plan year: Matching Contributions Percent of Pretax Pay Contributed Monthly Pretax Contributions Annual Pretax Contributions Matching Contributions Monthly Matching Contributions Annual Matching Contributions First 4% of Pay $ 200 $2,400 $1 for every pretax dollar contributed $200 $2,400 The above is merely a demonstrative example of how Matching Contributions work. In reality, Matching Contributions are made per pay period (bi-weekly). For certain employees who are, according to IRS regulations, considered "highly compensated," an additional IRC limit applies to employer Matching Contributions. This IRC limit must be determined each year as a percentage of the amount that all other employees receive and generally cannot be determined until the end of the year. Any employees affected by this IRC limit will be notified at the appropriate time if the limit has been exceeded and if any correction is needed. Rollover Contributions The Plan accepts rollovers from other tax-qualified plans and IRAs, including the following: Other companies tax-qualified retirement plans which qualify under IRC Sections 401(a) or 403(b); Conduit or traditional Individual Retirement Accounts (IRAs) or annuities; IRC Section 403(b) annuities; and 6

11 IRC Section 457 governmental plans. The Plan does not accept stock, other noncash property, or any after-tax or Roth amounts that are included as part of a Rollover Contribution. To make a Rollover Contribution, Participants may request a Rollover form from TIAA-CREF. The Participant and the IRA financial institution or administrator of the former employer s qualified plan must complete the Rollover form and return the completed form to TIAA-CREF as directed on the form. Participants must return the completed Rollover form, along with the Rollover Contribution. No True-Up of Matching Contributions Matching Contributions are only made on a per pay period basis. There is no year-end true-up with respect to Matching Contributions for contributions missed due to employee error or unpaid absence. Contributions During a Leave of Absence During a leave of absence, if a Participant receives any Paid Time Off (PTO) or any other pay through the Institution s payroll processing system, Plan Contributions, both from the Participant and the Institution, will continue to be made unless the Participant cancels his/her contributions on-line through the benefit enrollment system. Plan Contributions both from the Participant and the Institution, will not be made for any unpaid time off including any short term disability benefits or workers compensation payments that may be paid to the Participant. Contributions During Active Duty in the Armed Forces If a Participant is absent from employment by reason of service in the uniformed services of the United States, once he/she returns to actual employment, the Participant may make up contributions he/she would have made if he/she had remained employed at the Institution during the period of military service, to the extent allowed by law. If a Matching Contribution is available, the Institution will match any make-up contributions the same as would have been made if the Participant had remained employed at the Institution during the period of military service to the extent allowed by law. VESTING Definition of Vesting Vesting refers to the Participant s eligibility for and nonforfeitable right to receive the value of his/her Plan Contributions. Employee Pre-Tax Contributions A Participant is always one hundred percent (100%) vested in his/her own contributions to the Plan (i.e., Pre-Tax Contributions, 15-Year Service Catch-up Contributions, Age 50 Catch-up Contributions and Rollover Contributions). A Participant is also fully vested in the investment earnings on those employee contributions. This means a Participant has the right to receive the full value of these amounts if he/she leaves the Institution for any reason. Matching Contributions With respect to Matching Contributions made on a Participant s behalf to the Plan on or after January 1, 2014, the Participant vests in those Matching Contributions in accordance with the following: 7

12 Years of Service Vested Percentage 1 year 0% 2 years 0% 3 years 100% Regardless of the above table, if a Participant dies while still employed with the Institution (or while performing qualified military service) or becomes totally and permanently disabled while still employed with the Institution, his/her Matching Contributions shall become fully and immediately vested and nonforfeitable upon such death or disability. Disability is defined as being approved for benefits under the Lurie Children s long-term disability group insurance policy and/or the Social Security disability program. In addition, a Participant will be one-hundred percent (100%) vested if he/she is employed by a participating employer on or after attaining age sixty-five (65). Note Matching Contributions made on a Participant s behalf to the Plan prior to January 1, 2014, are one-hundred percent (100%) vested. Forfeitures If the Participant leaves the Institution and is not one hundred percent (100%) vested, he/she will forfeit the non-vested portion of his/her Matching Contributions. The Plan uses forfeitures to offset the cost of administration of the Plan as well as future Matching Contributions. If a Participant returns to employment after having incurred a period of severance of at least five (5) years, his/her prior forfeited amounts will not be restored. INVESTING PLAN CONTRIBUTIONS A Participant decides how to invest his/her own Plan account. The relevant account balance includes all employee contributions to the Plan and Matching Contributions, as adjusted for any investment earnings or losses on these amounts. Risk and Return A Participant may choose to invest his/her account in one or more of the investment funds that make up the Plan. As with any investment made, there are no guarantees against losses. Each fund is subject to increases and decreases in dollar value as the financial markets respond to economic, social, and political conditions. At any given time, the contributions made may decrease in value rather than increase. In general, the riskier funds are more likely to have greater gains and losses in the short run. They may, however, also have greater potential for a higher positive return over the long term. All investments involve some degree of risk. Even if an investment is categorized as lower risk, that investment could incur losses at any time. And, these losses may exceed the losses incurred during the same period by an investment categorized as higher risk. A Participant may view monthly and historical investment returns of the funds on the TIAA-CREF website at The fund prospectuses will be mailed or ed to a Participant once a year by each particular fund. 8

13 Investment Decisions A Participant may choose to direct all Plan contributions into one or more of the funding vehicles (variable annuities and mutual funds) listed on the funding vehicles list. The funding vehicle choices give a Participant access to all major types of asset classes. This will give a Participant the opportunity to invest in a diversified manner and grow his/her contributions to meet his/her retirement savings goal. A First time Participant (new or current employee) should designate the percent of his/her contributions he/she would like to go into one or more of the available funding vehicles as part of his/her initial account set up on-line. For any Participant automatically enrolled or otherwise who does not complete the investment allocation step of the enrollment process, his/her contributions will default into the Lifecycle Fund with the target date closest to the year of his/her 65 th birthday. A Participant s contributions will be invested in this default account until the Participant redirects contributions to one or more other funds. Because the fiduciaries of the Plan, including the Plan Administrators, have followed ERISA Section 404(c) in choosing the Plan funding vehicles, they may be relieved of liability for any losses, which are the direct and necessary result of Participant investment instructions. In other words, Participants are solely responsible for the results of their own investment choices. How Accounts Are Invested Participants may allocate contributions among the funding vehicles in any whole-percent proportion, including a one hundred percent (100%) allocation to any fund. Participants specify the percentage of contributions to be directed to the funding vehicles on-line at the TIAA-CREF website when they begin participation. As noted above, if a Participant does not specify the funds in which he/she would like his/her contributions to be invested, the Participant s contributions will automatically be invested in the Lifecycle Fund with a target date closest to the year the Participant will become sixty-five (65), until otherwise elected or specified When a Participant makes a contribution to his/her account (or the Institution previously made a Matching Contribution on the Participant s behalf), the Plan uses the most recent investment election on file to determine how the contribution is allocated among the various investment options. For example, if a Participant changes his/her investment election twice during the week, the Plan uses the last election to invest the contributions from the paycheck for that period. Participants may change the allocation of future contributions after participation begins by phone using the customer service number for TIAA-CREF or via the Internet using their ID and password to log in to their account on the TIAA-CREF website. However, TIAA-CREF reserves the right to suspend or terminate Participants rights to change allocations by phone or the Internet. When a participant receives his/her contract packet from TIAA-CREF, it will include a Personal Identification Number ( PIN ). The PIN enables the Participant to change his/her allocation by using the phone or the Internet. For more information on allocations, a Participant can call the customer service number or set up a personal counseling session with the TIAA-CREF representative. There are certain fees and expenses that a sponsor of an investment fund may charge either directly or indirectly as a result of any investment directions. Any brokerage commissions, transfer taxes, management fees and other charges and expenses related to the purchase and sale of any investment fund assets may be paid from the assets in the funds (including each Participant s assets), and reflected in the fund s net asset values. The fees and expenses of each of the investment funds are generally described in the prospectus or other documents for each fund. 9

14 Investment Funds Participants may invest in the Plan s many investment fund options. Before investing in any particular fund, the Participant should carefully consider the investment objectives, risks, charges and expenses of each investment fund. Investment fund information is available, including a prospectus, by logging on to the TIAA-CREF website at When a Participant enters the site selects Plans & Investments, Investment Choices, then the asset class or type. Then all the Participant needs to do is click on the respective fund for detailed information. Otherwise, the Participant can request the information by calling Changing Investment Allocations On a daily basis, Participants may transfer current balances in his/her account among investment funds and/or change the way future contributions to his/her Plan account are invested. Participants can perform these actions through the voice response system by calling the TIAA-CREF Participant Services Group at All changes in investment directions will be implemented as soon as administratively practicable but in no event later than 48 business hours. LOANS Loans are available, subject to the terms of each investment fund. If a Participant is married at the time he/she requests the loan, his/her spouse must consent to the loan in writing. If the Participant is unmarried, the Participant must provide proof of unmarried status to TIAA-CREF to waive the spousal consent requirement. All loans are administered by TIAA-CREF. The following terms and conditions are subject to the terms of each TIAA-CREF fund. Loan Amounts The minimum loan amount is $1,000, and the maximum loan amount is $50,000. The maximum amount a Participant can borrow may be less, however, depending on two factors: 1) the amount of the Participant s total employee contributions to the Plan, and 2) whether the Participant had any other loans from any of this Institution s plans within the last year. If a Participant hasn t had a Plan loan in the previous year, the maximum loan is the least of: (1) $50,000; or (2) fifty percent (50%) of the Participant s total employee contributions attributable to participation under this Plan. Loans may not be taken from a Participant s Matching Contribution account. In order to take a loan, the Participant must have over $2,000 in his/her Plan accounts (other than the Matching Contributions account) to take the minimum $1,000 loan. If the Participant has another loan from any plan of this Institution within the last year, the maximum that he/she can borrow will be reduced by the amount if the prior loan. Also, if more than one employer contributed to the Participant s Plan account, the Participant can only take loans against the amount he/she accumulated under this Plan. Participants should check with their other employers for their rules on loans. A Participant may not have more than two (2) loans outstanding at any one time from the Plan. If a Participant defaults on a loan (as described below) he/she must wait one (1) calendar year before obtaining a new loan under the Plan. Loan Security A Participant has to set aside an amount equal to one hundred percent (100%) of his/her loan as security for the loan. The security will continue to earn guaranteed interest as well as dividends. A Participant cannot make a cash withdrawal or begin retirement income from the funds that serve as security for his/her loan. As the loan is repaid, the amount reserved as security decreases, and more of the Participant s own contributions become available for withdrawal and retirement income. 10

15 If a Participant dies before repaying his/her loan, the remaining loan balance will be repaid from the security set aside. The Participant s beneficiaries would receive the balance, if any, of the Participant s employee contributions. Loan Interest Rate The loan interest rate is variable and can increase or decrease every three (3) months. The interest rate paid initially will be the higher of (1) the Moody s Corporate Bond Yield Average for the calendar month ending two (2) months before the loan is issued; or (2) the interest rate credited before the Participant s annuity starting date, as stated in the applicable rate schedule, plus once percent (1%). Thereafter, the rate may change quarterly, but only if the new rate differs from the current rate by at least one half of one percent (½%). Loan Repayment Participants have from one (1) to five (5) years to repay any loan. The one exception is if the Participant uses the loan solely to purchase a primary residence, in which case the Participant can take up to ten (10) years to repay. The term of the loan usually cannot extend past the April 1 st of the year after the year the Participant attains age 70½. The first loan payment will be due the first day of the third month after the loan is issued, and every three (3) months thereafter. A Participant can repay his/her loan early with no penalties. The Participant can also make partial prepayments at any time. If this is done, whatever is prepaid will be applied directly to the principal amount of the loan. (Regularly scheduled payments are applied first to interest, then to principal.) Any prepayments will reduce the amount of future repayments, not the number of payments. TIAA-CREF offers a free automatic loan repayment service. The Participant s bank will debit the Participant s checking account and send his/her repayment to TIAA CREF on the date it is due. If a Participant prefers to repay his/her loan directly, TIAA-CREF will send a bill every three (3) months, at least ten (10) days before the payment is due. Loan Defaults If TIAA-CREF doesn t receive a loan repayment by the last day of the calendar quarter following the calendar quarter in which the loan repayment is due, the Participant will be in default. It is possible that the Participant s entire loan balance will be considered in default if a single payment is missed. To the extent permitted by federal tax law, TIAA-CREF will deduct the amount in default from the collateral held and apply it toward repaying the loan. It is very important to keep in mind, however, that the IRS requires TIAA-CREF to report the default amount as income the Participant actually received. That means defaults are taxable as ordinary income in the year they occur. If the Participant is under age 59½, his/her default may also be subject to an additional ten percent (10%) federal tax penalty. TIAA- CREF assumes no responsibility for the tax consequences resulting from loan defaults. Tax law may prohibit TIAA-CREF from deducting the default amount from the Plan account until the Participant reaches age 59½, terminates employment, becomes disabled, or dies, whichever occurs first. In these cases, a Participant will be taxed on the default amount as if he/she received it as income in the year the default occurred. If a Participant defaults on a loan, his/her right to a future loan is restricted. A defaulted participant must wait one year after the date of the default to take another loan. The maximum future amount that a Participant can borrow from the Plan will be reduced by the amount in default (plus interest) until the defaulted amount can be deducted from the Participant s account or until he/she has repaid it. 11

16 To apply for a loan or to get answers to any questions a Participant may have about loans, contact TIAA- CREF. WITHDRAWALS The Plan s primary purpose is to help employees save for retirement. However, the Plan does permit withdrawals from an account under specific circumstances. Hardship Withdrawals The Plan allows Participants to withdraw their own contributions from their account to meet a financial hardship. If a Participant incurs a hardship before terminating employment, the Participant may receive a lump-sum cash payment, subject to the restrictions of the funding vehicle. Participants may not roll over a hardship withdrawal to another plan or IRA. Participants must have applied for a loan first from TIAA-CREF and been rejected before being eligible to apply for a hardship withdrawal. Hardship withdrawals are administered by TIAA-CREF. The following terms and conditions are subject to the terms of each TIAA-CREF fund. Participants may withdraw earnings credited to their account prior to January 1, IRC regulations do not allow the withdrawal of earnings credited on or after that date. The IRS requires Participants to meet specific conditions of financial hardship before they can withdraw funds from their Plan account. Participants may not withdraw more than the amount required to meet the financial need. Additionally, the Participant must be able to demonstrate that he/she is unable to meet the financial need by using other resources reasonably available to him/her (such as reimbursement from insurance, reasonable liquidation of assets, cessation of Compensation reduction amounts under the Plan or by loans from this plan or any other plan or from a commercial lender). Participants also may not take a hardship withdrawal to alleviate credit card debt, or to meet everyday living expenses. Participants may only take a hardship withdrawal to: Pay for unreimbursed medical expenses for him/her, his/her spouse, his/her dependents or his/her designated beneficiary (as permitted under the Plan); Pay expenses directly related to the purchase of a principal residence (excluding mortgage payments); Pay tuition, related educational fees, and room and board for twelve (12) months of postsecondary education for him/her, his/her spouse, his/her children, his/her dependents or his/her designated beneficiary (as permitted under the Plan); Prevent eviction from or mortgage foreclosure on his/her principal residence; Pay funeral expenses associated with the death of his/her parent, spouse, child, his/her dependent or his/her designated beneficiary (as permitted under the Plan); Pay expenses to repair damage to his/her principal residence (damage must qualify for the casualty deduction under IRC Section 165, which is determined without regard to any adjusted gross income limitation); or Pay other expenses creating a financial hardship, which are specifically identified in rulings, notice or other documents published by the IRS. 12

17 If a Participant takes a hardship withdrawal, he/she is prohibited from making pretax contributions under this Plan for six (6) months after he/she receives the hardship withdrawal. The Participant (or the Institution if the Participant fails to) must suspend contributions within 30 days of the withdrawal date. Age 59½ Withdrawals If a Participant is age 59½, then he/she is eligible for an in-service distribution of part or all of his/her account balance. (In-service defined as currently actively employed by the Institution). Age 70½ Account Distributions Start of Benefit Distributions Distributions via one of the payment options from a Participant s Plan account must begin by the later of: April 1 of the calendar year following the calendar year in which the Participant turns 70½, or April 1 of the calendar year following the calendar year in which the Participant terminates employment. If the Participant is approaching such an April 1 date and has not started his/her benefit payment under the Plan, his/her Plan account will be started by TIAA-CREF to be paid to the Participant in the form of a single life annuity (over the Participant s remaining life expectancy) (the Participant s Required Minimum Distribution ) by the April 1 of the calendar year following the calendar year in which occurs the later of: the Participant s attainment of age 70½ or the Participant s termination of employment with the Institution. Prior to this date, the Participant will be notified by TIAA-CREF that he/she is approaching a payment date and that he/she either needs to commence distribution of his/her Plan account or he/she will be defaulted into the above Required Minimum Distribution provision. TIAA-CREF will normally contact the Participant before the date he/she is required to start benefits, if the Participant s benefits have not already begun. If a Participant Dies Before Payments Begin If a Participant dies before the distribution of benefits begins, and the Participant has no beneficiary, his/her entire account normally must be distributed to his/her estate by December 31 of the fifth calendar year after the Participant s death. If the designated beneficiary is the Participant s spouse, the commencement of benefits may be deferred until December 31 of the calendar year that the Participant would have attained age 70½ had he/she continued to live. If the Participant has a non-spouse beneficiary, death benefits are payable as a lump sum cash out or rollover if the distribution is no later than December 31 of the calendar year immediately following the calendar year of the Participant s death. Taxes and Penalties A Participant is liable for payment of federal income taxes on a Plan withdrawal. A ten percent (10%) penalty also may apply to withdrawals made before the Participant attains age 59½. HOW A PARTICIPANT RECEIVES DISTRIBUTIONS As long as the vested value of a Participant s account is more than $1,000, he/she may choose from several payment options for distribution. If the vested value of a Participant s account is $1,000 or less, the Participant s only option will be a lump sum. 13

18 Payment Options The chart below shows the payment options available for distribution from the Plan. Lump Sum Direct Rollover Option Installments (periodic payments)* Partial lump sum distribution Single Life Annuity Survivor Annuity Payment Options Description Single payment of vested account balance. Transfer by the Plan of all or a portion of the Participant s account to an IRA or a qualified employer plan (such as a 401(k) plan), another Section 403(b) Plan, or Section 457 governmental plan. Payments made as needed, monthly, quarterly, semiannually, once a year, or over a certain number of years, not to exceed the Participant s life expectancy. Upon the Participant s death, the Participant s beneficiary receives the remainder of the account in one single-sum payment. Payment of the Participant s Plan amount will be distributed to the Participant in the form of a partial lump sum distribution with the remainder to be taken as a lump sum distribution or installments at a later time. An income stream payable for the Participant s life, with payments stopping at Participant s death. This is also available with a guaranteed payment period (so long as it does not exceed the Participant s life expectancy). If the Participant dies during the guaranteed period, payments continue to the designated beneficiary for the rest of the guaranteed period. A reduced income stream payable for the Participant s life, whereby if the Participant s annuity partner lives longer than the Participant, he/she will continue to receive an income stream payable for his/her life. These are offered with a benefit being paid to the survivor of fifty percent (50%) of the amount paid to the Participant, seventy-five percent (75%) of the amount paid to the Participant, or one hundred percent (100%) of the amount paid to the Participant. *The balance of the Participant s account (after each payment) remains invested in the funds the Participant elected. The Participant continues to have the same investment options as active employees, and investment returns may increase or decrease the amount of future payments. Once a Participant decides to receive his/her benefits as income, the Participant has the flexibility to begin income from any of the different funding vehicle accounts on different dates. Check with TIAA- CREF for more details. Determining the Participant s Account Balance The Plan processes and mails distributions on a daily basis. A Participant s Plan account balance is valued as of market close each day. A Participant may request that the Plan make a distribution by direct deposit, or mail it to him/her in the form of a check. When a Participant Can Receive His/Her Distribution A Participant may request his/her distribution from the Plan after he/she terminates employment with the Institution or all participating employers. Distributions will occur no sooner than 30 days after the 14

19 last day worked or as soon as administratively possible. This is to account for any contributions from final paychecks to clear and allow TIAA-CREF to receive the separation date. Requesting Payments to Commence A Participant will receive his/her distribution, along with a confirmation of the value of his/her Plan account and the payment option he/she elected. The Plan makes any payment due to the Participant (or his/her beneficiary) as soon as administratively possible after: The Participant s employment with the Institution and all of the participating employers ends or the Participant is determined to have become totally and permanently disabled; and The Participant requests a payment option by calling the Participant Services Group at or through the internet web site ( If a Participant Does Not Request Payments to Commence Following Termination of Employment The Plan holds the Participant s vested account balance until the Participant requests a payment option. If the Participant terminates employment with the Institution and all of the participating employers and is approaching age 70½ and has not yet commenced his/her distribution from the Plan, TIAA-CREF will notify the Participant. If the Participant does not commence, TIAA-CREF will commence a Required Minimum Distribution to the Participant no later than April 1 of the calendar year following the calendar year in which the Participant attains age 70½. Survivor Benefits If a Participant is married and monthly annuity payments commence before his/her death, the Participant s surviving spouse will receive the percentage of income option chosen at commencement (either 50%, 75% or 100% of monthly payment) for the rest of his/her life. If the Participant dies before annuity income begins, the Participant s surviving spouse will be able to receive a benefit that is equal to the current value of the Participant s account, payable in a single sum or under one of the income options offered. If the Participant is married, benefits must be paid to him/her as described above, unless the Participant files a written waiver of the benefits and his/her spouse s written consent is made to the waiver, which is filed in advance with TIAA-CREF on a form approved by TIAA-CREF. Each Participant will be provided a written explanation of: (a) the terms and conditions of a Qualified Joint and Survivor Annuity; (b) the Participant s right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity form of benefit; (c) the rights of a Participant s spouse; and (d) the right to waive a Qualified Joint and Survivor Annuity. A waiver of the Qualified Joint and Survivor Annuity must be made at least one hundred eighty (180) days before the commencement of benefits. The waiver also may be revoked at least one hundred eighty (180) days before benefits commence. It may not be revoked after annuity payments begin. All spousal consents must be in writing and either notarized by a Notary Public or witnessed by a Plan representative and must contain an acknowledgment by the Participant s spouse as to the effect of the consent. All such consents are irrevocable. A spousal consent is not required if the Participant can establish to the Institution s satisfaction that he/she has no spouse or that he/ she cannot be located. Unless a Qualified Domestic Relations Order ( QDRO ), as defined in IRC Section 414(p), requires otherwise, a Participant s spouse s consent will not be required if he/she is legally separated or he/she has been abandoned (within the meaning of local law) and the Participant has a court order to such effect. 15