Voluntary Retirement Plans
I. Tax Deferred Annuities Plan 403(b)
University personnel have a means of deferring federal and state income tax that is unique to colleges, universities and other nonprofit organizations. Under Section 403(b) of the Internal Revenue Code, tax deferred annuity plans offer individuals tax and retirement benefit advantages. These plans reduce the employee's gross wages before federal and state taxes are computed. Theoretically, when these funds are withdrawn later in life, the employee is in a lower income tax bracket.
An eligible employee may enroll in a tax deferred annuity plan at any time during the year by completing forms at the Auburn University Payroll & Employee Benefits Office located at 212 Ingram Hall. For employees at AUM, forms can be obtained at the AUM Human Resources Office located at 705 Library Tower. Generally, an employee is allowed to invest $15,500 of his/her includable compensation. If you are considering contributing the maximum allowable, please contact one of the approved companies listed in Section (1)C and request a maximum calculation. An employee is not permitted to exceed the statutory exclusion allowance limitations of Section 403(b).
A. Eligibility
Active full-time non-student employees are eligible if the most recent appointment period is continuous for a minimum of one year (nine or twelve months as appropriate to the appointment).
B. University's Contribution
Auburn University will match up to $1,650 per year of a qualifying employee's contribution. This equates to 5% of gross salary with a maximum of $33,000 of covered salary per year. The maximum the University will match each pay period for which there is an employee contribution is as follows:
| |
Amount per Pay Period |
12-Month Employees
January - December |
$137.50
|
9-Month Employees
August 15th - May 15th |
$ 91.67
|
Biweekly Employees
January - December |
$ 63.47
|
This match will be applied against base pay and overtime pay. It will not be applicable for terminal leave or for a 9-month employee's summer salary.
Employees' and the University's contributions may begin upon initial employment but the employee will not vest in the University's matching portion until he/she has completed five years of full-time continuous service. At that time, the University's matching contribution and interest earned will be credited (or vested) to the participant's account. Nonparticipating employees with full-time continuous service will be given credit toward the five-year vesting requirement upon joining the tax-deferred annuity program.
C. Investment Options Available
There are several investment options available, giving the investor a wide spectrum of opportunities ranging from fixed and variable annuities to mutual funds. Detailed information may be obtained by contacting the approved companies listed below:
II. Deferred Compensation Plan(457) (b)
Deferred Compensation plans are another investment vehicle to defer current income from federal and state income taxation. Generally an employee may defer $15,500 in addition to the amount contributed to the Tax Deferred Annuity 403(b) Plan. This plan ONLY allows employee contributions. For details contact the approved companies listed below: Enrollment forms for this plan are also located at the Auburn University Payroll & Employee Benefits Office and the AUM Human Resources Office.
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