Retirement Programs

 

All full-time, benefits-eligible and part-time employees may choose to participate in one or both of the College's tax-deferred voluntary retirement plans. Our tax-deferred plans, the 403(b) Supplemental Retirement Annuity (SRA) and the 457(b) Deferred Compensation Plan (457) allow you to contribute money toward your retirement on a pre-tax basis. You decide the amount of money per paycheck that you want to contribute. The College will deduct that amount before taxes are calculated. That amount is then invested, in the manner you choose, where it grows into a supplemental retirement benefit for you. You may direct your contributions to either AUL or TIAA-CREF.

Advantages

 

There are several advantages to the tax-deferred plans. First, because your contribution is deducted from your salary before taxes, you are taxed on a smaller amount of salary—therefore, the amount of your income tax will be lower. In addition, you are not taxed on any gains you make on your investment. You do not pay taxes on your contributions or its earnings until you receive the money. Generally, you begin to receive the money at retirement, when your income is lower and your tax rate is lower.

Contributions

 

To enroll in the SRA and/or 457 Plan, you must complete an application for either AUL or TIAA-CREF, and a Salary Reduction Agreement available in the Human Resources Office. The Salary Reduction Agreement authorizes the College to make the pre-tax deductions from your paycheck and forward them to AUL or TIAA-CREF. You can make only one salary reduction agreement for each plan with the College each calendar year. If you wish, you can adjust the amount of your reduction once per calendar quarter. You may stop salary reduction at any time. There is a minimum annual contribution required of $200. There is also a maximum annual contribution allowed, which is determined by law. Ivy Tech will notify you of the maximum allowable annual contribution for the next calendar year, along with information about how to change the vendor (AUL or TIAA-CREF) designated to receive your contributions in the third quarter of each year.  Your SRA and/or 457 Plan renews automatically each year unless you change or cancel it.

Investments

 

You direct how your contributions are invested on your application to AUL or TIAA-CREF. You can divide your contributions between investments within either company in any whole-number percentages. However, you may not split your contributions to either voluntary retirement plan between AUL and TIAA-CREF.  For example, 40% of your total annual SRA contributions cannot be invested with AUL, while the remaining 60% of your SRA contributions are invested with TIAA-CREF.  But you can direct all of your SRA contributions to AUL and all of your 457 Plan contributions to TIAA-CREF simultaneously. Once you are participating in the plan, you can change the division of your future contributions at any time by contacting AUL or TIAA-CREF directly. You will receive annual and quarterly statements showing your accumulation of benefit.

Leaving Employment with the College

 

If you leave the College, you may still retain your AUL and/or TIAA-CREF accounts. They will continue to earn interest and dividends. You may continue to make personal contributions to your accounts. If you are later employed by an organization that offers AUL or TIAA-CREF, you may be able to enter into a salary reduction agreement with your new employer.

If you leave employment with the College, you may wish to withdraw the funds from your retirement accounts at that time. If you do, the distribution will be subject to income taxes and may be subject to an additional 10% tax penalty. If you are married, your spouse may need to give consent in order for you to receive such a distribution..

Receiving Your Benefits

 

Because the purpose of the tax-deferred plans is to save money for retirement, there are certain restrictions on when you can receive your benefits. Apart from certain qualifying circumstances, you will not be allowed to begin receiving your benefit before you reach age 59 1/2. A withdrawal prior to age 59 1/2 is considered an early withdrawal of your money, and may be subject to a 10% tax penalty in addition to your regular income tax. If you are married, your spouse may need to consent to this type of distribution.

Withdrawals

 

You may be eligible to withdraw a portion or the entire amount accumulated in your SRA or 457 Plan if you become disabled, experience a financial hardship, or under certain other circumstances established by the IRS. You may also need the consent of your spouse, and there may be a 10% tax penalty for withdrawals made before you reach age 59 1/2.

Taxation of Benefits

 

Consult your tax advisor and AUL or TIAA-CREF about taxation of your benefit. The College does not presume to provide tax advice.

Additional Information

  You may contact AUL directly at 800-249-6269 or online at www.eretirement.aul.com or TIAA-CREF at 800-842-2776 or online at www.tiaa-cref.org.  Additional information, including the Summary Plan Descriptions, can be found at this link:  Ivy Tech Employee Benefits.
 
| next |