Wayne State University

Aim Higher

403(b) Retirement Savings Plan

Plan Benefits

Key Plan Tools

Forms

Plan Document

Enrollment Guidelines

Investment Carrier Contact Information

1. Value:  WSU offers this retirement savings plan as part of an excellent benefits package. Why? Because our University success depends on the talent of our faculty and staff.

2. Tax Savings: You can save before-tax (i.e., the amount you contribute is deducted from your pay before income taxes are taken out) which reduces your taxable income. For every dollar you save, your paycheck doesn’t drop by exactly that amount. Why? Because you save on taxes!

3. University Contributions: WSU provides a University matching contribution of 10% of gross salary when you make Employee Contributions of at least 5%. What is typical? The company average match in the private sector is 3% to 4% of gross salary.

4. Investment Choices : The WSU plan offers 2 premium investment carriers – TIAA-CREF and Fidelity Investments. You may elect one or both investment carriers.

Frequently Asked Questions


What are the key Plan features?

Who is Eligible to make Employee Contributions to the Plan? 

  • You may start your Employee Contributions any time after your date of hire in an eligible classification.

  • An eligible employee classification includes employees who normally work 20 hours per week OR have an appointment of at least 50% OR  union employees whose bargaining contract permits participation.

  • Student assistants AND Graduate assistants AND members of Building Trades Union (Eclass SK) are NOT eligible to participate.

What is the Maximum amount of Employee Contributions?

For calendar year 2014 the amount is limited to $17,500/$23,000 (under age 50/over 50). This maximum includes any Employee Contributions made to plans sponsored by other employers. For any one pay date, WSU does not permit you to make Employee Contributions of more than 80% of your gross pay (to both the base plus supplemental plans).

What is the Maximum amount of University Contributions?

For calendar year 2014, if you are making Employee contributions of 5% (or more), then the University maximum matching contributions will be 10% of your eligible gross salary (up to a maximum salary of $255,000). Internal Revenue Code Section 401(a)(17) prohibits employers from making retirement plan contributions on the amount of annual salary in excess of $260,000 (2014). If you are in this category, you may see your 403(b) University contributions reduced and/or stopped within a calendar year. This limit may be indexed for inflation in $5,000 increments, in future years.

When am I Eligible for University Contributions?

The University Contributions begin after you are age 26 and agree to make employee contributions of at least 1%.

There is NO waiting period for University Contributions (except age 26) and the Plan provides for MATCHING contributions beginning at 1% on a 2-for-1 basis: (see schedule below).  

The University Contribution maximum is 10%, once you contribute 5%. Vesting in University Contributions will occur after 2 years of service

Employee Contributions

University Matching Contributions

1%

2%

2%

4%

3%

6%

4%

8%

5% or more

10%

The Employee contributions are fully vested at all times. Fully vested means the amounts cannot be forfeited, even if you terminate your employment with WSU.

Your accumulated University Contributions and related earnings revert back to the University if you terminate from WSU before you have 2 Years of Service.

How do I submit a Waiver of Service letter?

To meet the 2 Years of Service vesting requirement of the plan, WSU will consider service from another employer that is:

  • an institution of higher learning (e.g., college, university),
  • a non-profit educational organization (e.g., K-12  school district),
  • a tax-exempt organization affiliated with an institution of higher learning (e.g., teaching hospital)

Documentation Required. You must submit the following to TCW:

A letter from your previous employer (on letter stationary and signed by a representative of the employer), which includes

  1. A description of the institution,
  2. your job title,
  3. your dates of employment (beginning and end dates), and
  4. your percentage of time worked (at least 50%).

How do I enroll?

STEP 1 – Review PLAN HIGHLIGHTS

STEP 2 -  Complete a SALARY REDUCTION AGREEMENT
You must submit this paper form to authorize payroll deduction. The FAX number and email address is on the bottom of the form. Click here for forms.

STEP 3 -  Enroll with an INVESTMENT CARRIER (see below)
You must enroll in the WSU plan, even if you have an account from another employer with TIAA-CREF or Fidelity. When you set up your account you will also be selecting your investment funds and your beneficiary.

Investment Carriers

TIAA-CREF 

http://www.tiaa-cref.org/wayne

PW = wsubase
Base plan – Defined Contribution plan
Supplemental plan – TDA plan
 
 

Telephone: 1-800-842-2776

FIDELITY

 http://plan.fidelity.com/waynestateuniversity

 Plan Number = 52864
 Base plan
– only




Telephone: 1-800-343-0860

What are the Investment Options?

You may select one or both of the following 2 investment carriers:

TIAA-CREF
Offers variable and a fixed annuity (called the guaranteed option, or TIAA Traditional account) as well as 5 mutual funds and 10 lifecycle funds.

 

 

The Base Plan (DC Plan, No 103167)
This plan provides matching University Contributions equal to $2 for every $1 for the first 5% of Employee Contributions.

If you elect the Traditional Account (guarantee fund), you may NOT withdraw or transfer your balance in a single lump sum -- Distributions or transfers must be spread over 10 annual installments (RA issued prior to 8/8/10) or 5 annual installments (GRA issued on or after 8/1/10).

The exception is that if you request a withdrawal or transfer within 120 days after your termination of employment – you MAY take a lump sum, but you will pay a 2.5% surrender charge.

Supplemental Plan (TDA Plan, No 103168)
This plan has NO matching University Contributions

If you elect the Traditional Account (guarantee fund), there are no liquidity constraints

FIDELITY Investments
Offers 150+ mutual funds, including money market, stock and bond funds.

 

Base Plan (Plan No 52864)
This plan provides matching University Contributions equal to $2 for every $1 for the first 5% of Employee Contributions.

There are no liquidity constraints

What if I am uncertain about how to invest?
You may want to consider the “target date funds” that are designed to provide a single diversified portfolio, managed based on the target date when you will turn age 65 – called Lifecycle funds at TIAA-CREF and Freedom funds at Fidelity.

  • The fund is managed for you, so this option is an alternative to building your own portfolio of assets.

  • The fund automatically resets the asset mix (stocks, bonds, cash equivalents) in its portfolio that is age appropriate (i.e., becomes more conservative as you get closer to the end date of age 65).

 

How can I access my savings in the Plan?

Plan Loan Information

You may borrow from the Plan, subject to the following rules:

  • The maximum loan amount is the lesser of (a)  50% (45% at TIAA-CREF) of the vested account value in the Plan minus current outstanding loan balances in the Plan or (b)  $50,000 (reduced by the higher of the outstanding balance on all loans or the highest outstanding balance on all loans during a one-year look back period).
  • The maximum loan repayment period is 5 years, unless the loan is used to buy your primary residence (10 year limit).
  • The loan repayments must be repaid directly to the Investment Carrier.
  • Fidelity Investments charges fees for loans ($35 set-up plus $3.75 per quarter processing fee). The interest rate is the prime rate per Reuters, as adjusted at the 1st of each quarter, and remains fixed over the term of your loan. Repayment is monthly.
  • TIAA-CREF charges no fees for loans. The interest rate is based on Moody’s corporate bond rate, as adjusted at the first of each calendar quarter. For the first 6 months of your loan, the rate is fixed and after that the loan rate on your loan adjusts. Repayment is monthly or quarterly.
  • Beginning on and after January 1, 2011, an employee may have no more than five (5) loans outstanding at any time per Investment Carrier. Any loan outstanding on December 31, 2010 does not count toward the loan limit, but an employee who has one or more defaulted loans may not take another loan until all defaulted loans have been repaid.
  • When you receive the Plan loan proceeds, the Federal Tax Withholding (20%) and Early Withdrawal Penalty (10%) will not apply.
  • If you fail to make repayments, as required by the terms of the loan, your loan will be “defaulted” which will result in taxable income to you and an Early Withdrawal Penalty of 10%  if you are under age 59-1/2.

Loan Highlights

Minimum

$1000
Maximum 45-50% of your vested account balance
Interest Rate Reset each quarter for new loans
Repayment At least monthly
Default If you fail to make repayments, as required by the
terms of the loan, your loan will be "defaulted" which
will result in taxable income to you and an Early
Withdrawal Penalty of 10% (if you are under age 59-1/2)

Hardship Withdrawal Information

You may take a Hardship Withdrawal, subject to the following rules:

  • You may withdraw from the Plan for an “immediate and heavy financial need” for which you lack other available resources. This distribution is different from a loan because when you make a hardship cash withdrawal, you do not need to pay it back to the Plan.
  • The approved expenditures that meet the Plan criteria are:
  1. Unreimbursed Medical Expenses  for the employee, spouse or the employee's dependents
  2. Purchase of your principal residence
  3. Prevent home eviction or foreclosure
  4. Post-secondary education expenses for the next semester or quarter post-secondary education for the employee, spouse or dependents (expenses for books or room and board do not qualify)
  5. Repair casualty loss damage to principal residence
  6. Payment for funeral or burial expenses
  • Only Employee contributions may be withdrawn due to hardship (not University Contributions or any accumulated investment earnings).
  • You must utilize all available Plan loans before you can apply for a Hardship Withdrawal.
  • You are prohibited from making Employee Contributions under the Plan for a 6-month period, beginning on the date you receive the Hardship Withdrawal.
  • The Federal Tax Withholding (20%) does not apply, but the Early Withdrawal Penalty (10%) does apply when you take a Hardship Withdrawal.

Hardship Highlights

What funds

Only Employee Contributions (without investment earnings)
Loans first You must utilize all available Plan loans before you can apply
for a Hardship Withdrawal
Stop Employee
Contributions
WSU will stop all Employee Contributions under the Plan
for a 6-month period.

Cash Withdrawal Information

You may withdraw your funds from the plan, subject to the following rules:

  • Your Employee Contributions and University Contributions are made on a pre-tax basis. Thus, Federal and state income taxes are deferred until you withdraw your vested account balance as cash.
  • Any investment return on your contributions are tax-deferred, and also subject to tax upon cash withdrawal

Events that permit Cash Withdrawals

 

Early Withdrawal Penalty
before Age 59-1/2

20% Federal Tax
Withholding

Termination of employment at any age

Yes1

Yes

Attainment of age 59-1/2

No

Yes

Disability

No

No

Plan loan

No

No

Hardship Withdrawal

No

Yes

  • 20% Federal Tax Withholding - Generally cash withdrawals are subject to a 20% Federal income tax withholding.
  • Early Withdrawal Penalty -  A 10% IRS early withdrawal penalty will assessed if you receive a cash withdrawal before you are age 59 ½, except for death, Disability, Loan or Hardship Withdrawal.
  • 1 If you separate from service before age 55 and elect Substantially Equal Periodic Payments (SEPP) and these payments  continue for 5 years or until you reach 59-1/2 ( whichever is later), you will not be subject to the Early Withdrawal Penalty.
  • Once you terminate your employment from Wayne State University, you make elect any of the following distribution options:
    • RETAIN YOUR WSU ACCOUNT - Leave your vested account balance with your current Investment Carrier (inside the WSU 403(b) Retirement Plan) until some later date. Later you can take cash withdrawals or arrange to annuitize your vested balance.
    • ROLLOVER TO YOUR NEXT EMPLOYER’S PLAN  - Roll your vested account balance into another qualified plan of your new employer.
    • ROLLOVER TO AN IRA - Roll your vested account balance into an IRA
    • CASH WITHDRAWAL - Elect a cash income option (subject to 20% Federal income tax withholding and 10% Early Withdrawal Penalty if you are age 59-1/2 or less).
    • ANNUITY OPTION -  Elect an annuity option from TIAA-CREF. When you “annuitize” your account balance, you may select regular cash payments in the form of a single life annuity, joint and survivor annuity, fixed period certain annuity. There is no requirement that you elect an annuity as an option if your funds are invested with TIAA-CREF, unless you have savings in the TIAA Traditional Account.