The University provides retirement plans in addition to coverage under Social Security for individuals in benefit-eligible positions.
Faculty, Administrative and Professional Staff
Individuals in faculty and administrative and professional positions (does not include operations/technical staff) participate in a combination of a 403(b) defined contribution plan and a 401(a) mandatory profit sharing plan, administered by Fidelity Investments. The University contributes 10 percent of budgeted salary (plus summer earnings if applicable) to the plan. Eligible employees are required to contribute 4 percent of budgeted pay (plus summer earnings) to a 401(a) mandatory profit sharing plan. Contributions to both plans are vested immediately and are fully accessible upon separation of service. The plans offer several investment options through which faculty and staff can allocate their retirement contributions.
For those in tenured, tenure-track, instructor or senior management positions, participation begins immediately upon employment.
Generally, administrative/professional and continuing lecturer positions begin participation after three years of continuous service. However, individuals who have fully vested, employer-funded contracts from another higher education institution still in force may be eligible to participate immediately. Requests for consideration to determine if an individual qualifies for immediate participation must be submitted to human resources. The form is available at /www.purdue.edu/hr/pdf/PreviousContracts.pdf.
Employees classified as postdoctoral research associate or postdoctoral research assistant are not eligible to participate.
For individuals hired on or after Jan. 1, 1996, contributions are capped based on the annual limits designated by the IRS.
Clerical, Service, Operations and Technical Positions
Individuals in these positions hired before September 9, 2013, participate in the Public Employees Retirement Fund (PERF), which is a defined benefit plan through the state of Indiana.
Participation begins immediately upon hire, and the University pays the full contribution. Contributions are made on base pay and earnings, including overtime. An employee must have at least 10 years of service under the PERF pension program in order to be vested and therefore eligible for the pension portion of the benefit.
The PERF plan is composed of two components:
a) Monthly pension component: this provides a monthly benefit upon retirement. The pension benefit is based on age, years of service and the individual's highest five years of salary.
b) Annuity savings account component (ASA): 3 percent of the contribution made by Purdue is contributed to the annuity savings account. The employee chooses how to allocate this portion of the contribution among funds offered by PERF. The funds in the annuity savings account will generally earn interest until the individual receives a retirement benefit or chooses to take a refund of the contributions and accumulated interest.
Individuals in these positions hired on or after September 9, 2013, participate in the Non-Exempt Defined Contribution Plan.
Immediately upon hire, the University contributes 4 percent of an employee's base pay and earnings, including overtime, to the 403(b) Defined Contribution Retirement Plan. Additionally, the University will match 100% of the employee's contributions to the 403(b) Voluntary Savings Plan up to 4 percent. Participants in the Non-Exempt Defined Contribution Plan are fully vested in University contributions after three years of service.
Employees will be automatically enrolled in the 403(b) Voluntary Savings Plan at a rate of 5 percent of pretax eligible earnings, effective 30 days after hire. Employees may change their contribution amount at any time; matching university contributions are calculated on a per pay period basis. Employee contributions are immediately vested at 100%.
Voluntary Retirement Savings
All employees have access to programs that allow the accumulation of additional retirement savings to supplement retirement benefits provided by the University and Social Security. Employees can make retirement contributions on a tax-deferred basis, meaning the contributions are not taxed until withdrawn and the earnings compound on a tax-deferred basis until withdrawn, allowing potentially greater accumulation.
All employees who receive regular paychecks are eligible to participate in a tax-deferred arrangement immediately upon employment, and contributions may be adjusted at any time. There are two programs to choose from: a 403(b) plan and a 457(b) plan. Employees may participate in one or both plans. Contributions to these programs reduce current taxable income, and, therefore, federal, state and county tax liability.
Although the programs are similar, there are differences between them with regard to withdrawal of funds. As part of the 403(b) plan, employees can choose to contribute on an after-tax basis.
IRS regulations dictate the amount an employee is entitled to save in a calendar year.
Federal Civil Service Retirement
Employees who hold federal cooperative appointments from the administrator of the Federal Extension Service, United States Department of Agriculture, participate in the Civil Service retirement program. For those who qualify for these benefits, the Federal Extension Service pays 8.25 percent of the total base salary, and the employee pays 7 percent of his or her total base salary. Contributions are paid to the Civil Service Commission. For more information regarding this program, contact the office of the director of the Cooperative Extension Service.