|
Administrative Services Human Resource Service Center Employee and Management Services Staffing and Career Management Services Organization Development Work/Life Services
|
Optional Retirement Program, 403(b)Certain employees of The University of Texas at Austin are eligible to participate in the Optional Retirement Program (ORP). This program is subject to all provisions of sections 403(b) and 415 of the U.S. Internal Revenue Code, as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001. What is the Optional Retirement Program?Optional Retirement Program (ORP) was created for new full-time faculty, professional librarians, researchers and certain administrators as an alternative to the Teacher Retirement System of Texas (TRS). ORP is a "defined contribution program." Participants manage their own investment account with an authorized ORP company and retirement benefits are based on the amounts contributed to the account and the performance of the investments selected by the participant. There are currently six approved ORP providers [UT System Web site]. Participants contribute 6.65% of their gross monthly salary on a pre-tax basis and the matching contribution amount is 7.5%. Because contributions are made on a pre-tax basis, participation in ORP reduces current taxable income. As investments grow, the earnings are tax-deferred until retirement. Federal tax law prohibits 403(b) plans from providing disability benefits similar to those provided by the TRS plan. The University is required to notify ORP participants of their responsibilities. An ORP participant is responsible for the selection and monitoring of ORP companies and investments. The University has no fiduciary responsibility for the market value of a participant’s ORP investments or for the financial stability of the ORP companies chosen by the participant. What State-mandated enrollment deadlines must an eligible employee adhere to?The option to enroll in ORP is a once-per-lifetime, irrevocable decision. Eligible employees have a 90-day enrollment period, beginning on their date of appointment. Eligible employees will temporarily default to the TRS plan until they make an election to participate in ORP within their 90-day enrollment period. If ORP is elected, employees will lose any UT matching contributions made to TRS prior to the effective date of ORP participation. If an eligible employee does not elect to participate in ORP during their 90-day enrollment period, the employee will be permanently enrolled in TRS for the duration of their career in Texas public higher education. Employees that have previously elected ORP at a public institution of higher education in Texas must immediately re-enroll in ORP as of their date of appointment. These employees should contact Benefit Services as soon as possible. What is the enrollment process?Enrollment in ORP is completed via UTRetirement Manager. Once you receive notice that you are eligible for ORP, you can visit the UTRetirement Manager Web site to complete the enrollment process. If you haven’t received notice, please contact Benefit Services as soon as possible to begin the enrollment process. Enrollment completed by the 10th of any month in UTRetirement Manager is effective beginning with the same month. While the election to participate in ORP and the selection of companies is made via UTRetirement Manager, participants must print and complete the TRS 28 Notice of Election to Participate in ORP form and submit it to Benefit Services. In addition, employees who have an account balance with TRS will also need to print and complete the TRS 29 Application for Refund form and submit it to Benefit Services. It is very important that participants complete account applications for the companies they have selected. Account applications are available in UTRetirement Manager and must be completed and mailed directly to the ORP company. Failure to establish an account will result in retirement funds being returned to the University and the loss of investment benefits. Can I contribute to more than one ORP company?Participants may contribute to multiple companies from the selection of six authorized companies. The percentages allocated to each company must total 100%. Participants may also choose to send their matching contribution to a different company or companies than their employee contribution. The selection of multiple companies can be made when initially enrolling in ORP via UTRetirement Manager. Can I change my ORP company or transfer funds to a new ORP company?Participants may change their company or companies as often as each month. Changes made by the 10 th of any month in UTRetirement Manager will be effective for the same month. It is important to establish accounts with any new company selected prior to the first contribution being sent. Changing companies in UTRetirement Manager will only redirect future contributions to the new company or companies. To make a full or partial transfer of existing funds to the new company, participants must also submit a Transfer Verification Form to Benefit Services. Participants should contact the surrendering company to understand any penalties they may incur as a result of transferring the account. The Transfer Verification Form is available in the UTRetirement Manager. When do I attain vested status?Vesting occurs after an employee has participated in ORP for "one year and one day." A vested participant has ownership rights to the matching contribution. It is important that a participant contact Benefit Services after "one year and one day" of participation or after 13 contributions have been made to the ORP account, to request a Vesting Status Form. Can I change the ORP contribution amounts?It is not possible to change the amounts contributed to an ORP account. If you would like to save additional income for retirement, and further reduce your taxable income, you can participate in one or both of the supplemental retirement plans offered by the University. The University offers the UT Saver TSA (403b) and the UT Saver DCP (457) to all employees. More information about the supplemental retirement plans is available from the HRS Benefit Services Retirement Web site. How do I change my investment choices?Participants must contact their ORP company or companies to make any investment changes to their account. When can I access my ORP funds?Per State law, participants only have access to their ORP funds upon attaining age 70 ½ or upon termination of participation. Termination of participation occurs in the case of death, retirement, or termination of employment in all Texas public institutions of higher education. What happens if my employment with the University ends?Participants who terminate employment with all Texas public institutions of higher education may leave their ORP funds in their ORP account, roll their funds into another qualified retirement plan, or take distributions from their account. A 10% tax penalty applies to distributions taken prior to age 59 ½. Income tax must also be paid on the distribution amount. ORP participants should contact their company to understand the options available to them. Where can I find additional information about ORP and retirement planning?An Overview of TRS and ORP [PDF; UT System Web site], created by the Texas Higher Education Coordinating Board, provides a comprehensive explanation of the two retirement programs. This document and more information regarding retirement plans are available from the HRS Benefit Services Retirement Web site, or the UT System Retirement Web site. Also look for announcements about various financial and retirement series that Human Resource Services sponsors each year.
|
| Updated |
 |