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Administrative Services Human Resource Service Center Employee and Management Services Staffing and Career Management Services Organization Development Work/Life Services
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UTSaver Deferred Compensation Plan, 457(b)All employees of the University of Texas at Austin are eligible to participate in the Deferred Compensation Plan. This program is subject to all provisions of section 457 of the U.S. Internal Revenue Code, as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001. What is the UTSaver Deferred Compensation Plan (DCP)?The UTSaver DCP is a supplemental retirement program that allows participants to tax-defer additional income for retirement, through pre-tax contributions. The program does not include an employer contribution. Participants reduce their taxable income by making pre-tax contributions from their paycheck to invest in an annuity, mutual fund or self-directed brokerage account with an authorized provider. As investments grow, the earnings are tax-deferred until the money is withdrawn, presumably at retirement when income tax rates are generally lower. How much can I contribute?Employees can get started for as little as $20.00 per month, with a maximum annual contribution limit of $15,500 for 2007. Participants need to designate a monthly contribution amount, for which there is a $20.00 minimum. There are two catch-up provisions that may allow participants to contribute more than $15,500 in 2007. Under the Age 50+ Catch-up, participants who are at least 50 years of age, or who will become 50 years of age during the calendar year, may contribute an additional $5,000 in 2007. Under the Special Catch-up, the annual contribution limit is doubled for the three years prior to normal retirement age, which is up to $31,000 in 2007. With this plan, both catch-ups may not be used simultaneously. What incentive do I have to participate in the plan?A nonrefundable tax credit applies to annual contributions of up to $2,000 made to supplemental retirement plans. The credit is based on adjusted gross income and reduces income taxes dollar for dollar. The table below illustrates the tax credit available to eligible incomes.
How do I enroll in the plan?Employees must log on to UTRetirement Manager to enroll in the plan. Information about UTRetirement Manager and a link to the Web site are available from the UTRetirement Manager information page. Enrollment completed by the 10th of any month is effective for the same month. It is possible to choose multiple providers, but the percentages allocated to each provider must total 100%. Participants must establish an account with each provider by completing account applications, available from UTRetirement Manager, and submitting the applications directly to the provider prior to the first contribution. Failure to establish an account will result in the loss of investment benefits. Can I change my contribution amount?Participants may increase or decrease their contribution amount on a monthly basis, as long as they stay within their annual contribution limit. Log on to UTRetirement Manager by the 10th of any month to make the change effective for the same month. Can I change my UTSaver DCP company?Participants may change their provider(s) monthly. Log on to UTRetirement Manager by the 10th of any month to make the change effective for the same month. Participants must establish an account with any new provider prior to the first contribution. Changing providers in UTRetirement Manager will redirect future contributions to the new provider. To make a full or partial transfer of existing funds to the new provider, participants must also submit a Transfer Verification Form to Benefit Services. Participants should contact the surrendering provider to understand any penalties they may incur as a result of transferring the account. The Transfer Verification Form is available in UTRetirement Manager. How do I change my investment choices?Participants need to contact their provider to make any changes to their account, other than changing the contribution amount. How do I cancel participation in the UTSaver DCP Program?Log on to UTRetirement Manager to cancel participation. If the cancellation is completed by the 10th of any month, participation will be cancelled effective for the same month. Participants should contact their provider prior to cancellation to understand the options available to them. What happens if my employment with the university ends?Participants who leave the University have the option to leave the funds in the existing accounts, or roll their account into a qualified plan, such as another governmental 457 plan, a 403(b) plan, a 401(a) plan, or an IRA. Distributions are available for participants who leave state employment (or due to financial hardship, attaining age 70.5 if still employed, or death). There is no tax penalty for distributions made at any age if participants leave state employment. However, income tax must be paid on the distribution amount. Participants should contact their provider to understand the options available to them. Where can I find additional information about retirement planning?Review the Benefit Services Retirement home page and the UT System Retirement Services home page. Also look for announcements about various financial and retirement series that Human Resource Services sponsors each year.
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