Annual notice retirement savings
To VCU Faculty and Staff:
This annual communication is being sent to you in compliance with a federal requirement to let you know about your retirement savings options. Specifically, Virginia Commonwealth University (VCU) sponsors a Tax-Deferred Savings Plan (the “Plan”). As an employee of the university, you can voluntarily elect to defer a portion of your compensation to the Plan to supplement your retirement savings if you are not already doing so. Please review the information below as it provides important details about your tax-savings options.
Background
The Plan, commonly referred to as the VCU “Tax-Deferred Annuity” or “TDA,” is a supplement to the Virginia Retirement System (VRS) Defined Benefit Plan, the Virginia Retirement System Hybrid Plan, and the VCU Optional Retirement Plan (ORP). Participation in the Plan does not reduce any university benefits based on full salary, such as VRS, ORP, life insurance or disability.
Eligibility
Generally, all employees of the university who receive compensation reportable on a Form W-2 are eligible to participate in the Plan.
Contributions
An employee can elect to defer a portion of their compensation to the Plan on a pre-tax and/or post-tax (Roth) basis.
Pre-tax contributions– Both federal and state income taxes are deferred on the contributions and any earnings until distributed from the Plan. When distributions are taken, they are taxed as income in accordance with applicable federal and state tax regulations.
Post-tax (Roth) contributions – Federal and state income taxes are withheld from Roth contributions at the time that they are contributed to the Plan. However, contributions and any earnings are not subject to federal and state income taxes upon distribution if a five-year period has passed since Roth contributions were first made to the Plan and the distribution is a “qualified distribution.” A qualified distribution is a distribution (i) made on or after the date on which the participant reaches age 59½, (ii) made to a beneficiary after the death of the participant, or (iii) attributable to the participant’s being disabled.
Employees can invest their contributions to the Plan among the investment options offered by approved vendors under the Plan. Employees are 100% vested in their accounts under the Plan at all times.
Contribution limits
Annual contributions to the Plan are limited by IRS regulations. The contribution limits for the 2018 calendar year are as follows:
Basic Elective Contribution Limit: $18,500
Age 50+ Catch-Up Contribution: $6,000
Age 50+ 15-Year Catch-Up Contribution: $3,000*
*15-year service catch-up contribution applies before the age 50+ catch-up, and it is based on a formula that takes into account all past contributions to the Plan and the employee’s total years of service to the university. The maximum 15-year service catch-up contribution available is $3,000 per year up to a $15,000 lifetime benefit; however, an employee’s actual catch-up may be lower than this maximum.
Enrollment with approved vendors
Eligible employees may begin participating in the Plan at any time. To enroll in the Plan (other than through automatic enrollment, as described below), an employee must complete both (1) an approved vendor’s application to open an account, either on paper or online, for each vendor with which the employee wishes to invest contributions, and (2) a Salary Reduction Agreement (SRA), which is available at http://www.hr.vcu.edu/media/hr/docs/forms/SRA.pdf. Contributions may be designated as a flat dollar amount per pay period. The SRA will apply only to amounts earned after enrolling in the Plan, and an employee’s election will continue until the SRA is modified or revoked by the employee, or until employment is terminated.
Current approved vendors are TIAA and Fidelity. Employees should contact each vendor directly for information about specific investment options and services. Vendor contact information and instructions for opening a Plan account online are available at http://www.hr.vcu.edu/current-employees/benefits/a-z-list-of-benefits/tax-deferred-annuity-and-cash-match-programs/.
To modify a deferral election
Employees may increase, decrease or stop their contributions to the Plan at any time. Employees may also change the approved vendor(s) to which their contributions are made at any time. To make changes, employees must complete and submit a revised SRA. To begin contributions to an approved vendor to which an employee has not previously made contributions, the employee must submit an approved vendor’s application along with the SRA.
Automatic enrollment for new Faculty and University and Academic Professionals
VCU will automatically enroll new non-adjunct faculty and University and Academic Professionals into the Plan with a $20 pre-tax deferral per pay period unless they opt out of participating within 60 days of their hire date by completing and submitting a New Hire TDA Opt-Out Form, which is available at https://hr.vcu.edu/media/hr/docs/forms/TDA_AutoEnroll_Opt-OutForm.docx. An investment account with TIAA will be established for each automatically enrolled employee, and the deferrals will be directed to that account. Deferrals will be invested in the age-appropriate TIAA LifeCycle Fund based on the employee’s age at enrollment.
For more information
Email benefits@vcu.edu or one of the approved vendors directly with questions or for help enrolling in the Plan. A paper copy of this notice is also available from VCU Human Resources through email request.
All my best,
Cathleen C. Burke
Assistant Vice President for Human Resources
Virginia Commonwealth University
Copies:
Dr. Michael Rao
Dr. Kevin Allison
Mr. William H. Cole
Mr. Matthew A. Conrad
Mr. Jay Davenport
Ms. Deborah Davis
Ms. Karol Gray
Ms. Karah L. Gunther
Dr. Gail Hackett
Ms. Pamela D. Lepley
Dr. Francis L. Macrina
Mr. Edward K. McLaughlin
Dr. Marsha D. Rappley
Mr. Brian D. Shaw
Dr. Meredith L. Weiss