To: Vice Presidents, Chancellors, Deans, Directors, and Heads of Schools, Divisions, Departments, and Offices Re: Early Retirement Alternatives

EFFECTIVE DATE: 1999 tax year

In order to comply with the Internal Revenue Service Code 403(b), the handling of retirement contributions for participants on the Voluntary Early Partial Retirement Program must be modified. Section 3 under this policy is revised as shown below. This change was effective with the 1999 tax year.

INTRODUCTION:

In 1979, the University established the voluntary early partial retirement program. This program has provided faculty and administrative/professional staff with the opportunity for retirement prior to the normal retirement age and allowed the University to renew itself through the influx of new scholars and administrators. An additional retirement planning option, advance retirement declaration, is also available to provide additional flexibility for faculty and administrative/professional staff in preparing for retirement.

ELIGIBILITY:

The retirement options included as part of this policy are: (1) Advance Retirement Declaration; and (2) Voluntary Early Partial Retirement Program. These options are available to regular faculty and administrative/professional staff members who are covered under the University's defined contribution retirement plan. To participate in any of the retirement alternatives, the individual must be at least age 55 with a combination of age and years of service that equals or exceeds 70.

Advance Retirement Declaration

Faculty and staff nearing the end of their careers may need additional resources to prepare financially for their retirement years. Faculty and administrative/professional staff may receive cash withdrawals or annuity payments from their retirement accumulations while employed full time. The individual must specify a retirement date within two years of the commencement of withdrawal or payments from retirement accumulations. The payout options from the defined contribution retirement system will be the same as available to regular retirees.

Voluntary Early Partial Retirement

The provisions for participation in the voluntary early partial retirement program are outlined below:

1. An individual meeting the necessary age and service requirements may reduce his/her employment with an appropriate reduction in pay. The reduced employment under this policy will normally be 50 percent, although arrangements for other levels of part-time employment are acceptable. Sabbatical and faculty exchange leaves of absence shall be counted as years of service. Leaves of absence for other reasons shall not count as years of service; however, they will not constitute a break in continuous service. Teaching, administrative, and research assignments shall be determined for each individual through negotiations with the cognizant department head, dean, or director.

2. Participants in the partial retirement program must agree to accept full retirement from the University within five (5) years. Once a written agreement has been approved, the duration of the retirement accord cannot be lengthened nor the percentage of time employed increased; however, both may be decreased by mutual agreement. Participants may not supplement the terms of these agreements with employment elsewhere at the University.

3. During the period of reduced employment, the University shall continue its regular contribution to retirement based upon the staff memberís full-time basic annual budgeted salary. If Internal Revenue Service limits prevent the University from making contributions based on full-time budgeted salary, any amounts which cannot be paid into the retirement account/s will be paid directly to the participant. These payments will be taxable income, subject to all the appropriate taxes such as federal, state, county, Social Security/Medicare and reported on the W-2 for that year.

   During voluntary early partial retirement, the individual will qualify for all staff privileges and benefits with group insurance coverage levels and rates based upon a full-time salary. The University will continue its regular contributions, if any, to these programs during this period. Vacation and sick leave will be paid based on the salary rate for reduced employment. At the termination of the voluntary early partial retirement arrangement, a staff member will be paid for terminal vacation pay up to a maximum of 44 days.

4. Participants will be permitted to receive cash withdrawals or annuitize up to 100 percent of their retirement accumulations. (TIAA provides transfer payout withdrawals over a ten-year period.) Participants will be considered as regular retirees for the purposes of selecting any retirement payout options.

PROCEDURES:

Individuals interested in pursuing options available under these programs should consult with their department head/dean to outline their plans for retirement. Personnel Services-Compensation and Benefits will assist participants with the initiation of any retirement benefits and ensure that full retirement contributions during any period of reduced employment comply with IRS requirements. All agreements must be in writing, defining the terms and duration of the arrangement and will require the prior approval of the appropriate Vice President, Chancellor, or Director of Intercollegiate Athletics. Participation cannot be guaranteed, as the work requirements for some positions may not permit part-time assignments.

Individuals who are considering participation in the Voluntary Early Retirement Program should contact Compensation and Benefits or their regional campus Personnel Office to determine, in advance, whether their proposed work arrangements and pay will result in the University having to make taxable payments to them in lieu of retirement contributions.