R-MC Human Resources: Staff Handbook

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SECTION 8 - RETIREMENT PLANS

For most College employees, there are two very important retirement plans. One plan is administered by the U.S. government and is generally referred to as “Social Security.” We will refer to the other plan as the “College Retirement Plan.”

8.1 Social Security

The Social Security program is supported by taxes paid by the College and each employee. All employees are required by federal law to participate in the Social Security program. The Social Security program includes not only “retirement” benefits but medical and disability benefits as well which are referred to as “Medicare.” For each pay period, the College identifies the taxes that must be withheld from your pay. Along with federal and state income taxes, you will see a “Social Security tax” and a “Medicare tax.” The Social Security tax supports the retirement benefits you qualify for at certain ages, currently beginning at age 62 for partial benefits and age 65 or higher (depending on your birth year- see section 8.4 below) for full benefits. Medicare taxes support the Medicare program, which consists of two types of health insurance (referred to as Part A and Part B), which are available to all individuals who reach age 65. Medicare Part A primarily provides insurance for inpatient hospital stays and related services. Currently there is no charge for Part A. Medicare Part B primarily covers doctor’s fees and outpatient hospital services and is optional. There is a monthly charge for Part B which is paid by the individual to the Social Security Administration. For most College employees, Social Security will serve as an important supplement to retirement income and health insurance coverage.

8.2 The College Retirement Plan

The College Retirement Plan has been adopted to provide you with the opportunity to save for retirement on a tax-advantaged basis and to provide additional income for retirement. The Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA CREF) is currently approved to provide retirement investment options for the College Retirement Plan. The Retirement Benefits Coordinator has detailed information on TIAA-CREF investment options and appropriate application forms. It is important to plan ahead for retirement. You are encouraged to attend any retirement planning seminars sponsored by the College and to consult with the Retirement Benefits Coordinator on a regular basis concerning your options.

The College offers two types of programs:

College Retirement Plan with Employer Match: Employees are eligible for this program after one year of service with a minimum of 1000 hours of service. The year waiting period is waived for employees who have been enrolled in an employer sponsored retirement plan within the 12-month period immediately prior to the date of employment. The College will apply a 180% match to salary deferrals of up to 5% of the employee’s base compensation.

Although the money contributed to the plan is under the control of the employee, there are significant tax penalties and mandatory tax withholdings imposed by the Internal Revenue Service if the funds are accessed prior to age 59 1/2. Furthermore, there are no options for employees to withdraw funds from the Plan while currently employed by the College as a full-time employee (faculty or staff) and there are no loan options on any monies that have been contributed to the Plan.

College Retirement Plan – Supplemental Retirement Annuities: In addition to the College Retirement Plan with Employer Match, all employees are immediately eligible upon hire to defer a portion of their regular compensation into an investment option called Supplemental Retirement Annuities (SRAs). Two companies, TIAA CREF, and The Vanguard Group, provide supplemental retirement investment options, and any or both of these companies may be used. SRAs are established between each employee and one of the two companies listed. The College does not contribute to these SRAs. SRAs are similar in nature to the regular retirement funds described previously in that they offer a tax-deferred means to save for retirement. However, some SRAs have a “loan provision” which permits loans against funds that have accumulated in the SRA. Current IRS law places limits on the amount of money that can be tax deferred. Details concerning the supplemental retirement option can be obtained from the Retirement Benefits Coordinator.

8.3 Retiree Status

In order to have “retiree status” from the College, an employee must meet both a minimum age of 55 years and have a minimum service of 10 years of continuous service as an Employee, and the sum of such Employee’s age and years of service is at least 70.

Employees who meet this qualification and retire are eligible for the College’s health/dental insurance plans if they are a participant in the health/dental plans during the 3-month period immediately prior to retirement and are Actively at Work on the day prior to retirement. An employee’s spouse/same-sex domestic partner/dependents are eligible as well provided they too are participants in the health/dental plans during the 3-month period immediately prior to the employee’s retirement. Employees who retire and were hired prior to January 1, 2001, are eligible for the College’s cost sharing of premiums in the College’s group health and dental insurance plans. Those hired after January 1, 2001 may participate in the College’s group health and dental insurance plans, but the employee must pay the entire cost of the insurance premium.

If the retired employee chooses not to continue in the College’s health and/or dental plans upon retirement, then the retired employee and his/her enrolled spouse/same-sex domestic partner/ dependents will not be eligible to enroll in the College group plans at a later date. If the retired employee’s spouse/same-sex domestic partner/dependents choose not to continue in the College’s health and/or dental plans upon the employee’s retirement, then they will not be eligible to enroll in the College’s group plans at a later date.

Once enrolled, if a retired employee and their insured spouse/same-sex domestic partner/ dependents, if applicable, drop the College’s health and/or dental group plans, they will not be eligible to enroll in the College group plans at a later date.

If you are under age 65 when you retiree, the College’s health insurance plan will serve as the primary carrier until you reach age 65. Once you turn 65, at which time you will be eligible for Medicare, the College offers retirees a retiree medical benefit. Details regarding this benefit are available in Human Resources.

In addition, retiree status provides access to a group term life insurance policy at the retiree’s expense in the amount of $5,000 of coverage.

dditional information concerning retiree status can be obtained from the Office of Human Resources.

8.4 Early Retirement

At this time, the College does not offer an early retirement option other than what has been described thus far. However, the Social Security administration provides “reduced” retirement benefits as early as age 62. Full retirement benefits from Social Security currently begin at age 65 for individuals born before 1938. The “normal retirement age” for Social Security gradually increases for those born after 1938 until it eventually reaches age 67 for those born after 1960. The Retirement Benefits Coordinator will be happy to discuss your retirement options utilizing the College’s Retirement Plan and the Social Security program.

8.5 Retirement Functions

The College holds an annual retirement function to recognize all of the employees who have retired during the previous 12 months. In addition to this campus-wide function, the College will fund a departmental event up to $250 to honor a retiring employee. The wishes of the retiree should be taken into account when the department is making the arrangements for the retirement function.

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