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All 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 how much money per paycheck that you want to
contribute. The College will deduct that amount before taxes are taken out.
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.
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Advantages
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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. |
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Contributions
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To enroll in the SRA and/or 457 Plan, you must complete an application
for either AUL or TIAA-CREF, a "hold harmless" agreement, 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
each year. You may stop salary reduction at any time. There is a minimum
annual contribution required of $200. There is also a maximum contribution
allowed, set by law. Your SRA and/or 457 Plan renews automatically each
year unless you cancel it.
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Investments
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You direct how your contributions
are invested on your application to AUL or TIAA/CREF. You can divide your
contribution between investments within either company in any whole-number
percentages. 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. |
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Leaving Employment with the College
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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 receive the
benefits of your 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.
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Receiving Your Benefits
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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.
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Withdrawals
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You may be eligible to withdraw
a portion or all of the 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. |
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Taxation of Benefits
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Consult your tax advisor and AUL
or TIAA/CREF about taxation of your benefit. The College does not presume
to be a tax advisor. |
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