Voluntary Retirement Plans - 403(b) and 457(b)

Voluntary Retirement Plans - 403(b) and 457(b)

In addition to the mandatory retirement plans to which you contribute, you may also choose to participate in the voluntary retirement plans offered by Auburn University. IMPORTANT: Beginning April 1, 2021, Auburn University is offering a post-tax Roth account.

There are several plan options from which to choose: the 403(b) Tax Deferred Annuity Plan (or Roth) or the 457(b) Deferred Compensation Plan (or Roth). Visit the Side by Side Comparison of 403(b) Tax Deferred Annuity Plan and 457(b) Deferred Compensation Plan along with the Summary of Plan Services and Cost to learn more about the two plan options. Read below for additional plan details. 

Tax Deferred Annuities Plan 403(b) (or Roth)

Pre-Tax Account

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 Theoretically, when these funds are withdrawn later in life, the employee is in a lower income tax bracket.  A Summary Explanation of the Plan can be downloaded by selecting: 403(b) Plan Summary Explanation.

Roth Post-Tax Account

The Roth 403(b) is an additional way to save in your plan where you contribute after-tax dollars from your paycheck. Unlike a traditional pre-tax 403(b), when you contribute to a Roth 403(b), at retirement you can then withdraw tax-free dollars from your account

Eligibility

Employees are divided into the following two classes:

  • Class A - Class A includes employees whose most recent and applicable appointment period is continuous and are employed and designated in a full-time employment class. Class A employees are eligible to make elective deferrals out of their own compensation and receive an employer matching contribution.

  • Class B - Class B includes employees designated as part-time or temporary. Class B employees are eligible to make elective deferrals out of their own compensation; however, they are not entitled to receive employer matching contributions.

Excluded employees are not eligible to contribute to the plan. An excluded employee is a former employee, an independent contractor or a student-employee who is enrolled and regularly attending classes at Auburn University.

How much can I contribute?

Federal law limits the amount you may elect to defer under this plan during the 2021 calendar year to $19,500. If you are over age 50 or turn age 50 during the 2021 calendar year, you may defer an additional amount up to $6,500. These dollar limits may change each year with cost-of-living adjustments issued by the IRS in October. If you contribute to both pre-tax and after-tax Roth 403(b) accounts during the same year, all contributions to both accounts are combined to apply to the annual maximum.

Please note that the amount you defer must be made in a whole percentage and sent to one vendor at a time. You can increase, decrease or stop your deferral contribution at any time. After completing the appropriate forms, requests shall become effective on the first day of the month following receipt of such change, or as soon thereafter as administratively practicable.

Participants who wish to elect to defer 50 percent or more of his or her includible compensation must first contact Auburn University Human Resources to confirm adequate remaining includible compensation to pay for all other benefits for each pay period.

Will I receive an employer contribution from Auburn University?

Employer matching contributions will be made for eligible employees in amounts equal to 100 percent; of elective deferral contributions up to 5 percent of your plan compensation. The matching contribution cannot exceed $1,650 for any Plan Year (calendar year). If you contribute to both a pre-tax and after-tax Roth account during the same year, the Auburn University match is combined to reach the $1,650 annual maximum match.

When am I vested?

Employee Deferrals are always 100 percent vested. The Employer Matching contribution is subject to the following vesting schedule:

  • Fewer than five years: 0 percent
  • Five+ years: 100 percent

Investment options available

You have several investment options. These options give a wide spectrum of investment options ranging from fixed and variable annuities to mutual funds. Detailed information may be obtained by contacting the approved companies listed below:

Company Name(s) Phone/Website
Fidelity Investment John Schultz

(678) 928-1442

www.netbenefits.com/auburn

Lincoln Financial Group Carey Beaven

(404) 625-8402

www.auburnlincoln.com

TIAA Jared Gilbert or Brad Propst

Service and Scheduling Group – (800) 732-8353

www.tiaa.org/schedulenow

VALIC/AIG (Auburn) Cindy Haynes, Brian Ledbetter or Jessica Mask

(334) 734-0823 (Cindy), (334) 201-4861 (Brian), or (334) 740-7835/(334) 703-5657 (Jessica)

www.valic.com/auburn

VALIC/AIG (AUM) Michael Probst

(334) 235-0654

www.valic.com/auburn

For more information

Retirement plan advisers are available by appointment to help you review and better understand the University's voluntary retirement plans. You can contact any of the advisers listed above.

Deferred Compensation Plan 457(b) (or Roth)

Deferred Compensation plans are another investment vehicle to defer current income from federal and state income taxation. A Summary Explanation of the Plan can be downloaded by selecting: 457(b) Plan Summary Explanation. IMPORTANT: Beginning April 1, 2021, Auburn University will offer either a pre-tax account type or a post-tax Roth account type.

Who is eligible?

If you are a full-time, part-time, or temporary employee, you are eligible to make elective deferrals under the plan out of your own compensation.

Excluded employees are not eligible to contribute to the plan. Under the plan, an excluded employee is a former employee, an independent contractor or a student-employee who is enrolled and regularly attending classes at Auburn University.

How much can I contribute?

In addition to contributions made to the 403(b) Plan, Federal law limits the amount you may elect to defer under this plan during the 2021 calendar year to $19,500. If you are over age 50 or turn age 50 during the 2021 calendar year, you may defer an additional amount up to $6,500. These dollar limits may change each year with cost-of-living adjustments issued by the IRS in October.

If you contribute to both pre-tax and after-tax Roth 457(b) accounts during the same year, all contributions to both accounts are combined to apply to the annual maximum.

Please note that the amount you defer must be made in a whole percentage and sent to one vendor at a time. You can increase, decrease or stop your deferral contribution at any time. After completing the appropriate forms, requests shall become effective on the first day of the month following receipt of such change, or as soon thereafter as administratively practicable. Participants who wish to elect to defer 50 percent or more of his or her includible compensation must first contact Auburn University Human Resources to confirm adequate remaining includible compensation to pay for all other benefits for each pay period.

Will I receive an employer contribution from Auburn University?

You will not receive an employer contribution under the 457(b) Plan.

When am I vested?

Employee deferrals are always 100 percent vested. No employer contribution is made to the 457(b) plan.

What are the available investment options?

You have numerous investment options available with three vendors. These options give a wide spectrum of investment options ranging from fixed and variable annuities to mutual funds. Detailed information may be obtained by contacting the approved companies listed below:

Company Name(s) Phone/Website
Fidelity Investment John Schultz

(678) 928-1442

www.netbenefits.com/auburn

TIAA Jared Gilbert or Brad Propst

(205) 582-6908 (Jared) or (205) 582-6922 (Brad)

www.tiaa.org/schedulenow

VALIC/AIG (Auburn) Cindy Haynes, Brian Ledbetter or Jessica Mask

(334) 734-0823 (Cindy), (334) 201-4861 (Brian), or (334) 740-7835/(334) 703-5657 (Jessica)

www.valic.com/auburn

VALIC/AIG (AUM) Michael Probst

(334) 235-0654

www.valic.com/auburn

For more information

If you are an employee of Auburn University and eligible, you may also participate in the 457(b) plan offered by the Retirement System of Alabama, the RSA-1. (Pre-tax deferral only)

Additional information may be obtained by contacting RSA at (877) 517-0020 or www.rsa-al.gov.

To enroll in the 403(b) or 457(b) Plan

If you are eligible, you may enroll in the voluntary retirement plans at any time during the year. Enrolling requires completion of a Salary Deferral Agreement as well as new account forms with the provider of your choice.

An online calculator is available to assist you with determining your contribution percentages and completing the Salary Deferral Agreement form. To access the online calculator, visit How To Complete New Salary Deferral Agreements, or access blank forms for 403(b) and 457(b) here.

Salary Deferral Agreements and new account forms are also available at Auburn University Human Resources located at 1550 E. Glenn Ave. Please use the Secure Document website to upload the forms, or you can return them to 1550 E. Glenn Ave.

For employees at AUM, forms can be obtained at the AUM Human Resources Office located at 705 Library Tower.

Retirement Information Video (from the 2020 Virtual Benefits Fair)

"How the Auburn University Retirement Plans Work"
Presented by Lee Busby, Johnson+Sterling

(Note: This was filmed in November 2020, before AU began to offer the Roth option.)

Last updated: 10/13/2021