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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 8.5 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 consists of two types of programs. The primary program is a mandatory contribution plan while the other is optional. The mandatory contribution plan requires (as a condition of employment) that each employee who is 30 years of age or older and who works 1,000 hours or more in a consecutive 12-month period must join the retirement plan following one year of service. The one year of service is waived if the employee has participated and contributed to an employer sponsored 403b or 401k plan during the previous 12 months prior to the date that their employment at the college begins. Participation for employees under the age of 30 is voluntary. Each employee must contribute at least 5% of his/her gross annual wages (not including overtime or other additional income) to the plan. The College then makes a contribution equal to 9% of the annual gross wages to the plan for a total contribution of 14%. 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.
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. In addition, the College Retirement Plan stipulates that the College's contributions to the retirement plan can not be accessed until an individual reaches age 55. Furthermore, in the mandatory portion of the Retirement Plan, 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.
A significant feature of the College Retirement Plan is that employee contributions to the plan can be made on a before-tax basis, thus deferring federal and state taxes until those funds are used in retirement. This option, along with many others, will be discussed in detail with the Retirement Benefits Coordinator. 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.
8.3 Supplemental Retirement Plan
In addition to the mandatory portion of the College Retirement Plan, there is a voluntary portion which we refer to as the Supplemental Retirement Plan. Two companies, TIAA-CREF, and The Vanguard Group, provide supplemental retirement investment options, and any or both of these companies may be used. These investment options are referred to generally as Supplemental Retirement Annuities (SRAs). 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. This feature does not exist for the funds in the mandatory retirement plan. Furthermore, any employee of the college can participate in the supplemental retirement program regardless of age, length of service, or hours worked. Current IRS law places limits on the amount of money that can be tax deferred. Details concerning the supplemental retirement program can be obtained from the Retirement Benefits Coordinator.
8.4 Retiree Status
In order to have retiree status from the College, you must be at least age 60 and have completed at least 10 years of full-time service. Employee's 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 plan, but the employee must pay the entire cost of the insurance premium.
Retired employees and their spouse/dependents will have a one-time option to join the college’s group health and dental plans if they or their spouse/dependents are not currently enrolled in the group plan(s) upon retirement. This one-time option will be the College’s next open enrollment period following the employee’s retirement date. If the retired employee chooses not to enroll in the College’s health and/or dental plans during this one-time open enrollment period, then the retired employee and his/her spouse/dependents will not be eligible to enroll in the College group plans at a later date. If the retired employee’s spouse/dependents choose not to enroll in the College’s health and/or dental plans during this one-time open enrollment period, 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/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 and are eligible for Medicare, the College offers retirees a medical Medicare supplement insurance plan that coordinates with Medicare Parts A & B. Prescription drug coverage is available through independent Medicare Part D plans and the College will assist retirees in selecting a cost effective plan that meets their specific needs.
In addition, retiree status provides access to a group term life insurance policy in the amount of $5,000 of coverage after attainment of age 60.
Additional information concerning retiree status can be obtained from the Office of Human Resources.
8.5 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.
8.6 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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