The University of Chicago 457(b) Deferred Compensation Plan Enrollment Guide 2015

Transcription

1 The Uiversity of Chicago 457(b) Deferred Compesatio Pla Erollmet Guide Overview 3 How to Eroll 4 Your Cotributios 5 Ivestmets 6 Receivig Your Beefits 7 Additioal Iformatio

2 Overview The Uiversity of Chicago is pleased to offer you the Uiversity of Chicago 457(b) Deferred Compesatio Pla. Uder this pla, eligible faculty ad staff may elect to defer receipt of part of their compesatio (up to $17,500 for caledar year 2015, pedig fial IRS limits) util their Uiversity employmet eds. This oqualified pla of deferred compesatio will beefit eligible employees who already cotribute the maximum permitted uder the Uiversity s Supplemetal Retiremet Program (SRP) as it affords them the opportuity to defer additioal compesatio each year. Importat Differeces betwee the Sectio 457(b) Pla ad Other Retiremet Plas Features Eligibility Erollmet Uiversity Cotributios Vestig Requiremet Accout Owership Rollovers from Prior Employer s Pla Cotributory Retiremet Pla (CRP) Madatory upo appoitmet for full-time, beefits-eligible academic employees ad upo completio of oe year of service for part-time, beefits-eligible academic employees; madatory for highly compesated staff employees O paper as soo as eligibility requiremets are satisfied; if CRP applicatio is ot submitted o time, erollmet is made by Beefits Office uder default provisios 8.0% of compesatio (excludes certai extra service pay) You are always 100% vested i your payroll deductio cotributios; you are 100% vested i the Uiversity s cotributios upo completig 3 years of service Supplemetal Retiremet Program (SRP) All employees New erollmets, chage percetage allocatio betwee TIAA-CREF ad Vaguard, ad termiatio of participatio may be made either olie durig Ope Erollmet or o paper aytime throughout the year; uless you actively make a chage, percetage allocatio for September will automatically cotiue throughout the followig year Noe You are always 100% vested i your SRP accout 457(b) Deferred Compesatio Pla All beefits-eligible employees havig a beefit base salary equal to or greater tha $204,750 who are cotributig the maximum permitted uder SRP Must be reewed aually either olie durig Ope Erollmet (for Jauary 1) or o paper (for July 1) Noe Participat Participat Uiversity Accepted Accepted Not accepted Loas Available through TIAA-CREF Available through TIAA-CREF Not available Hardship Withdrawals I-Service Withdrawals Paymets Followig Employmet Termiatio Rollovers from This Pla after Uiversity Employmet Eds Not available Not available Beefits must commece whe participat attais age 70 1 /2 uless earlier paymet is requested May be made to IRA or to ew employer s Sectio 401(a), 401(k) or 403(b) pla (if pla accepts rollovers) Available to satisfy immediate ad heavy fiacial eed ; icludes tuitio ad purchase of primary residece; oly available through TIAA-CREF Available for hardship ad disability, ad for ay reaso after age 59 1 /2; hardship withdrawals oly available through TIAA-CREF Beefits must commece whe participat attais age 70 1 /2 uless earlier paymet is requested May be made to IRA or to ew employer s Sectio 401(a), 401(k) or 403(b) pla (if pla accepts rollovers) You are always 100% vested i your Sectio 457(b) deferral accout Uforeseeable emergecy requiremet difficult to satisfy; does ot iclude tuitio ad purchase of a home Available for ay reaso after age 70 1 /2 Etire beefit must be paid i immediate lump sum uless participat affirmatively elects to defer paymet withi 60 days followig employmet termiatio No rollovers are permitted 2 The Uiversity of Chicago 457(b) Deferred Compesatio Pla Erollmet Guide 2015

3 How to Eroll The remaider of this guide is preseted i questio-ad-aswer format to help you better uderstad the Sectio 457(b) pla ad how it works. Q: Who is eligible to participate i the Sectio 457(b) pla? A: All eligible faculty ad staff must reew their Sectio 457(b) pla erollmet each caledar year regardless of whether they cotributed to the pla i the past. You are eligible to participate i the pla begiig Jauary 1, 2015, if you satisfy all of the followig requiremets: You are a beefits-eligible employee of the Uiversity. Your beefit base salary as of the mothly payroll closig day for October 2014 equals or exceeds 175% of the 2014 Social Security taxable wage base ($117,000). I other words, your beefit base salary as of October 18, 2014, must equal or exceed $204,750 (175% of $117,000). Your beefit base salary does ot iclude cliical bouses, extra service pay ad compesatio for service performed while you are out of residece. You eroll i the 2015 Supplemetal Retiremet Program (SRP) for your maximum permissible cotributio coicidet with or prior to submittig your Sectio 457(b) pla erollmet. Pedig IRS chages, your 2015 maximum SRP cotributio is $17,500 if you will ot attai age 50 by December 31, 2015, ad $23,000 if you will attai age 50 by that date. WHAT YOU NEED TO DO You must eroll i the Sectio 457(b) pla o the Iteret as part of the Uiversity s aual Ope Erollmet. Ope Erollmet for 2015 begis Friday, October 3, 2014, ad eds Friday, October 17, The Sectio 457(b) pla offers oly two etry dates: Jauary 1 ad July 1. You may icrease or decrease your 2015 deferral rate oly oce, effective July 1, 2015, by submittig a properly executed Salary Reductio Agreemet to the Beefits Office. You may stop your deferrals at ay time throughout the year by otifyig the Beefits Office of your decisio i writig. Q: How do I eroll i the pla? A: I cotrast to the SRP (where erollmets are accepted throughout the year), the Sectio 457(b) pla offers oly two etry dates: Jauary 1 ad July 1. If you are eligible ad wish to participate i the Sectio 457(b) pla begiig Jauary 1, 2015, you must eroll o the Iteret as part of the Uiversity s aual Ope Erollmet for beefits begiig Friday, October 3, 2014, ad edig Friday, October 17, If you do ot complete your Sectio 457(b) pla erollmet o the Iteret durig the aual Ope Erollmet for beefits, your eligibility will be re-determied as of the mothly payroll closig day for April 2015 ad, if you are eligible to participate, you will be provided the opportuity to eroll effective July 1, Whe you eroll for the first time, you must select the TIAA-CREF ad Vaguard fuds that will be used to measure the ivestmet experiece of your deferral accout. Because the Sectio 457(b) pla is separate ad distict from the Uiversity s Sectio 403(b) defied cotributio plas (i.e., CRP, the Retiremet Icome Pla for Employees (ERIP) ad the SRP), you must complete a ew TIAA-CREF ad Vaguard applicatio as part of your iitial erollmet i this pla. Your Sectio 457(b) deferrals caot be ivested with your CRP ad SRP assets. All persos eterig the Sectio 457(b) pla for the first time effective Jauary 1, 2015, must complete the appropriate ivestmet compay applicatios by Wedesday, December 31, The TIAA-CREF applicatio must be completed olie at tiaa-cref.org/uchicago. The Vaguard applicatio must be prited from the Vaguard website at uchicago.vaguard-educatio.com, completed o paper, ad retured to the Beefits Office. Q: How ofte may I chage the amout I choose to defer? A: If you eroll i the pla effective Jauary 1, 2015, you may icrease or decrease your 2015 deferral rate oly oce, effective July 1, 2015, by submittig a properly executed Salary Reductio Agreemet to the Beefits Office. I order for the chage to be effective, the Beefits Office must receive your Salary Reductio Agreemet by Friday, Jue 12, You may stop your deferrals at ay time throughout the year by otifyig the Beefits Office of your decisio i writig. Your deferrals will cease as of the first day of the moth followig receipt by the Beefits Office of satisfactory writte otice of cessatio. Oce your deferrals have stopped, you may make a ew electio with respect to caledar year 2015, effective July 1, 2015, by submittig a properly executed Salary Reductio Agreemet to the Beefits Office. I order for the chage to be effective, the Beefits Office must receive your Salary Reductio Agreemet by Friday, Jue 12, Questios? Cotact Huma Resources at beefits@uchicago.edu humaresources.uchicago.edu 3

4 After Jue 12, 2015, you will ot be able to eter the pla for the first time, icrease or decrease your deferral rate, or make a ew electio followig cessatio of deferrals, util Ope Erollmet for Q: What happes durig a leave of absece? A: If your leave is paid i whole or i part, your Sectio 457(b) pla deferrals will cotiue, provided your pay is sufficiet (after other required deductios) to cover them. If your leave is upaid, your Sectio 457(b) pla deferrals will be discotiued util you retur to paid service. Whe you retur from your leave, your deferral rate will remai uchaged uless you elect to chage it (to make up for deferrals ot made durig your leave) by submittig a properly executed Salary Reductio Agreemet to the Beefits Office by Friday, Jue 12, After Jue 12, 2015, you will ot be able to chage your deferral rate util Ope Erollmet for the comig year. This meas that you will ot be able to make up for deferrals ot made durig your leave of absece. If your leave spas more tha oe caledar year, it will be ecessary for you to reew your Sectio 457(b) pla erollmet effective as of the ext available etry date (i.e., July 1, 2015, or Jauary 1, 2016). Your Cotributios Q: How much ca I defer uder the Sectio 457(b) pla? A: The Iteral Reveue Code (the Code ) limits the amout you ca defer each caledar year. Pedig fial IRS limits for 2015, you may defer $17,500 to this pla. You are ot required to defer $17,500 for 2015; istead, you may elect to defer whatever amout you deem appropriate, provided your electio does ot exceed $17,500. Q: What if the IRS limits icrease for 2015? A: If the IRS maximum employee cotributio limits for 2015 are greater tha $17,500, you will be allowed to icrease your 457(b) deferrals for caledar year The IRS will aouce the 2015 limits after the start of the 2015 Ope Erollmet period. For Jauary 2015 oly, you may icrease cotributios by submittig a completed 457(b) Deferred Compesatio Pla Salary Reductio Agreemet to the Beefits Office by December 31, To obtai a copy of this agreemet, cotact the Beefits Office by at beefits@uchicago.edu or phoe at Q: Does the Uiversity cotribute to this pla? A: The Uiversity does ot cotribute to this pla. Cotributios to this pla are made etirely through employee salary deferrals. 4 The Uiversity of Chicago 457(b) Deferred Compesatio Pla Erollmet Guide 2015

5 Ivestmets Q: How are my salary deferrals ivested? A: Whe you eroll i this oqualified pla, you elect to defer receipt of compesatio (ad taxatio) util your employmet with the Uiversity eds. I order for your salary deferrals (ad ivestmet earigs) to receive the tax-deferred treatmet you desire, federal law requires that this pla be ufuded. Your deferrals (ad ivestmet earigs) will ot be placed i a trust; istead, they will be held as geeral assets of the Uiversity ad will be subject to its creditors claims. Although the pla is ufuded, the Uiversity will maitai a record of your Sectio 457(b) pla deferrals ad will credit your deferral accout with ivestmet earigs based o the performace of the ivestmets you have selected. Your deferral accout is always fully vested. Whe you make a deferral electio, you must select the ivestmet fuds that will be used to measure the ivestmet experiece of your accout. You may select the fuds offered by either or both of the followig ivestmet compaies: Q: How ofte may I chage my ivestmet allocatio? A: You may chage your ivestmet allocatio at ay time, subject to the ivestmet compay s regulatios. To chage your allocatio betwee TIAA-CREF ad Vaguard, please cotact the Beefits Office. Oce you have established your Sectio 457(b) pla accout with TIAA-CREF ad Vaguard, you may chage your ivestmet allocatio withi each compay by cotactig them directly. Your ivestmet selectio uder the Sectio 457(b) pla is etirely separate from your ivestmet selectio uder CRP ad the SRP. Ivestmet allocatio chages made uder oe pla do ot chage ivestmet allocatios uder the other plas. Your deferrals (ad ivestmet earigs) will ot be placed i a trust; istead, they will be held as geeral assets of the Uiversity ad will be subject to its creditors claims. TIAA-CREF The Vaguard Group Keep i mid, your ivestmet selectio uder this pla is etirely separate from your ivestmet selectio uder CRP ad the SRP. Therefore, you must complete a ew TIAA-CREF ad Vaguard applicatio as part of your iitial erollmet i this pla. Your Sectio 457(b) pla deferrals caot be ivested with your CRP ad SRP assets. Q: If deferral accouts are ufuded ad subject to claims of the Uiversity s creditors, would it be better for me to take my compesatio i cash ad ivest it elsewhere? A: The Sectio 457(b) pla provides sigificat tax advatages as cotributios ad ivestmet earigs are tax-deferred util paid to you followig your termiatio of employmet with the Uiversity. You should cosult with a professioal tax or fiacial advisor to evaluate the beefits of this pla compared to the risks ad rewards of alterative ivestmet strategies. Questios? Cotact Huma Resources at beefits@uchicago.edu humaresources.uchicago.edu 5

6 Receivig Your Beefits Q: Whe may I receive paymet of my deferral accout? A: You (or, i the evet of your death, your beeficiary) may receive all or part of your deferral accout whe you attai age 70 1 / 2 or whe you termiate employmet with the Uiversity for ay reaso icludig death, disability or retiremet. Your deferral accout must be paid i a sigle lump sum o earlier tha 75 days ad o later tha 120 days followig your termiatio date (or, if earlier, the last day of the caledar year which cotais the 75th day followig your termiatio date) uless you (or, i the evet of your death, your beeficiary) elect a differet form of paymet or a later paymet date. I order to be effective, your electio must be made withi 60 days followig your termiatio date. I o evet may paymet of beefits begi later tha April 1 of the year followig the year i which you attai age 70 1 / 2 or, if later, April 1 of the year followig the year i which you retire. Q: What is the ormal retiremet age uder this pla? A: The ormal retiremet age is relevat oly for purposes of the pla s catch-up deferral provisios. You may specify your ow ormal retiremet age, provided that age is ot youger tha 65 ad ot older tha 70 1 / 2. You may begi receivig paymets from this pla followig termiatio of your Uiversity employmet eve if you have ot attaied your ormal retiremet age. Q: How do I apply for a deferred distributio? A: If you do ot wish to receive a lump-sum paymet of your deferral accout withi the period begiig 75 days ad edig 120 days followig your termiatio of employmet with the Uiversity (or, if earlier, the last day of the caledar year which cotais the 75th day followig your termiatio date), you (or, i the evet of your death, your beeficiary) must cotact TIAA-CREF ad Vaguard directly to obtai the requisite deferred distributio electio form. Your completed paperwork must be received by TIAA-CREF ad Vaguard o later tha 60 days followig your termiatio date. Your deferral accout must be paid i a sigle lump sum o earlier tha 75 days ad o later tha 120 days followig your termiatio date (or, if earlier, the last day of the caledar year which cotais the 75th day followig your termiatio date) uless you (or, i the evet of your death, your beeficiary) elect a differet form of paymet or a later paymet date. Q: What forms of paymet are available uder the pla? A: You may elect to receive your deferral accout i ay of the followig forms: A sigle lump-sum paymet of the etire balace of your deferral accout A auity payable i equal istallmets for your lifetime that eds upo your death A auity payable i equal istallmets for the joit lives of you ad your beeficiary Paymets for a fixed period of ot less tha oe year ad ot more tha fiftee years All forms of paymet are subject to the requiremets of TIAA-CREF ad Vaguard. Q: How are my Sectio 457(b) pla deferrals taxed? A: Your deferrals (ad ivestmet earigs) are ot subject to federal icome tax util you receive a paymet from the pla. Whe you do receive a paymet of your beefit, the etire amout paid will be taxed as ordiary icome. If you do ot wish to receive paymet i a lump sum or if you wish to defer paymet, it is importat that you cosider the paymet optios available to you or choose your deferred distributio date ad commuicate your electio to TIAA-CREF ad Vaguard withi the 60-day period followig your termiatio date. If you do ot commuicate your electio withi that 60-day period, your etire beefit will be paid to you immediately i a sigle lump sum. I that evet, your etire beefit will be taxed as ordiary icome for the year i which it is paid to you. Q: May I roll over my Sectio 457(b) pla distributio to a Idividual Retiremet Accout ( IRA ) or aother employer s retiremet pla? A: No. Uder federal tax laws, paymets from this pla ca ot be rolled over to a IRA, or ca they be rolled over to aother employer s Sectio 401(a), Sectio 401(k) or Sectio 403(b) pla. I certai circumstaces, you may be able to have your deferral accout trasferred to aother Sectio 457(b) private pla that accepts trasfers. Q: May I take a loa agaist my deferral accout? A: Ulike the Uiversity s Sectio 403(b) retiremet plas, loas are ot available uder the Sectio 457(b) pla. Paymets from this pla caot be rolled over to a IRA, or ca they be rolled over to aother employer s Sectio 401(a), Sectio 401(k) or Sectio 403(b) pla. I order to be effective, your electio must be made withi 60 days followig your termiatio date. 6 The Uiversity of Chicago 457(b) Deferred Compesatio Pla Erollmet Guide 2015

7 Q: Does the pla provide for hardship withdrawals? A: If you suffer a uforeseeable emergecy, you may request paymet of your deferral accout i a amout sufficiet to satisfy that emergecy. Federal tax laws defie a uforeseeable emergecy as a severe fiacial hardship resultig from your sudde ad uexpected illess or accidet (or that of your depedet), loss of your property due to casualty, or other similar extraordiary ad uforeseeable circumstaces arisig from evets beyod your cotrol. The circumstaces that costitute a uforeseeable emergecy will deped o the facts of each case. Paymet from this pla caot be made if your emergecy may be relieved: Through reimbursemet or compesatio by isurace, By liquidatio of your assets, to the extet the liquidatio would ot itself cause severe fiacial hardship, ad By stoppig deferrals uder this pla ad uder the SRP. You must borrow the maximum available from your Sectio 403(b) pesio plas before the Uiversity ca certify your uforeseeable emergecy. The uforeseeable emergecy requiremet uder this pla is more difficult to satisfy tha the fiacial hardship requiremet uder the SRP. Uder this pla, paymet of your deferral accout caot be made for tuitio for you or your depedet, or ca paymet be made to assist you i the purchase of your home. The amout paid to you because of a uforeseeable emergecy is taxable as ordiary icome for the year i which it is paid. The 10% pealty tax that applies to hardship withdrawals from the SRP for persos who have ot attaied age 59 1 / 2 does ot apply to paymets from this pla. Q: May I assig my beefit uder this pla? A: Beefits uder this pla caot be pledged, assiged or alieated (whether volutarily or ivolutarily) except as may be required by a Qualified Domestic Relatios Order (QDRO) pursuat to a legal separatio or divorce. The uforeseeable emergecy requiremet uder this pla is more difficult to satisfy tha the fiacial hardship requiremet uder the SRP. Uder this pla, paymet of your deferral accout caot be made for tuitio for you or your depedet, or ca paymet be made to assist you i the purchase of your home. Additioal Iformatio Q: Who admiisters the Sectio 457(b) pla? A: The Uiversity is the pla admiistrator for the Sectio 457(b) pla. As the pla admiistrator, the Uiversity is resposible for performig the duties required for the operatio of the pla. The Uiversity has the sole right to iterpret ad costrue the pla ad to determie coclusively all questios pertaiig to eligibility ad beefits uder the pla. Q: Whom may I cotact if I have questios about the pla? A: For more iformatio regardig this pla, please cotact: TIAA-CREF tiaa-cref.org Vaguard vaguard.com Beefits Office beefits@uchicago.edu Q: How will beefits be paid i the evet of my death? A: If you die before receivig the etire value of your deferral accout, your beeficiary will be etitled to receive the remaider. You may desigate ay idividual, trust, estate or other legal etity as your beeficiary by submittig the appropriate TIAA-CREF ad Vaguard forms to the Beefits Office. You may amed or revoke your beeficiary desigatio aytime prior to the commecemet of beefits. If you do ot desigate a beeficiary i a form acceptable to the Beefits Office or if your beeficiary predeceases you, your deferral accout will be paid to your estate. Questios? Cotact Huma Resources at beefits@uchicago.edu humaresources.uchicago.edu 7

8 Beefits Office 6054 S. Drexel Aveue Chicago, Illiois How to Cotact the Beefits Office Phoe: Fax: Web: humaresources.uchicago.edu Office hours: 8:30 a.m. 4:30 p.m., weekdays This brochure provides a overview of the Uiversity of Chicago 457 (b) Deferred Compesatio Pla. It is for iformatioal purposes oly. It is ot iteded to be a agreemet for cotiued employmet, or is it a legal pla documet. If there is a discrepacy betwee this brochure ad the pla documets, the pla documets will gover. I additio, the pla described i this brochure is subject to chage without otice. Cotiuatio of beefits is at the Uiversity s discretio. Copyright 2014 The Uiversity of Chicago HRS