Your Retirement Benefits

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Your Retirement Benefits
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Why save for retirement?

• Will social security benefits be enough?
• How many years might you live once you retire?
• Of all the retirement plans offered by colleges
  and universities, the U of A plan is one of the
  very best. Take advantage!
• Start now. Dont wait until youre close to
  retirement to begin saving. Generally, you
  should work 2 years to fund 1 year of your
  retirement.

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You are required to be in a retirement plan

• State law requires that UAMS contribute to a plan
  on your behalf if you are in a regular staff or
  faculty position.
• Not eligible for UAMS contributions if you are
• Temp
• Resident/Housestaff
• Student
• Part-time less than 50
• But ineligible employees can still make
  unmatched Tax Deferred Annuity contributions.

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Your Retirement Plan OptionsYou must choose one

• UAORPThe University of Arkansas Optional
  Retirement Plan is the primary, default plan for
  UA employees.
• APERSThe Arkansas Public Employee Retirement
  System is the plan for State employees. APERS
  may not be an option if youve ever been in ATRS.
  
• ATRSThe Arkansas Teacher Retirement System is
  the plan for public school teachers. ATRS is not
  an option unless you previously participated in
  ATRS for at least 5 years.

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What is the UAORP?

• Defined contribution plan (Benefits are defined
  by the actual contributions made to the plan by
  you and your employer, plus earnings/interest.)
• Combo 403(b) and 457(b) plan
• 2 fund sponsors to choose from
• TIAA-CREF
• Fidelity Investments
• Many options for benefit payout, including
  annuities, lump sum, periodic payment
• Refer to UA Retirement Plan booklet for more
  details

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How much does UAMS contribute to the UAORP?

• An amount equal to 5 of your monthly wages.
• But if you make personal contributions over 5,
  UAMS will match up to 10 (up to maximum
  allowable by IRS).
• You do 0, UAMS does 5
• You do 1-5, UAMS does 5
• You do 6, UAMS does 6
• You do 10, UAMS does 10
• You do 20, UAMS does 10

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How much can I contribute?

• As little as 1, perhaps as much as 99 from each
  paycheck.
• Try to do 10 if you can. Right away you double
  your retirement savings because of the match.
• Your contributions can be made on an after-tax
  basis or before-tax basis. Most employees do
  before-tax, also known as deferred. This
  reduces your Federal State taxable income now.
  
• The IRS limits how much you and UAMS can
  contribute for the calendar year.

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What are the IRS limits?

• Your before-tax limits are actually double
  because the UA plan is a combo 403(b) and 457(b)
  plan.
• 2007 limits
• 15,500 in the 403(b) 15,500 in the 457(b)
  31,000 before-tax you can do if you are under
  age 50.
• Add 5,000 more for each plan (10,000 total) if
  youre over age 50 41,000 total before-tax.
• You can contribute an additional 7,000, perhaps
  more, on an after-tax basis.

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More on before-tax

• If your retirement contributions are made
  before-tax, those go directly to your fund
  sponsor before you pay taxes. Reduces your
  Federal and State taxable income thats reported
  on your W-2. Sorry, it cant reduce your FICA
  taxes.
• To illustrate
• If you're in a 28 income tax bracket, and
• you contribute 15,500 before-tax,
• Your actual cost would be 11,160, netting you
  tax savings of 4,340.
• You would be taxed on your contributions and
  earnings at the time you retire (or otherwise
  begin withdrawals).

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Before-tax retirement contributions elsewhere?

• Let us know if you
• Made before-tax contributions this year through a
  previous employers plan before coming to UAMS
• Or will make contributions this year to another
  employers plan (such as VA Thrift Savings Plan)
• Some IRS limits apply to your combined
  contributions. We can assist you in avoiding an
  excess deferral but the responsibility is yours
  to monitor this.
• Ask for Form to Report Before-Tax Contributions
  to Another Employer Sponsored Retirement Plan.

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When can I begin?

• Now! You can change or stop your UAORP
  contribution at any time, generally to take
  effect the following pay period.
• Start contributing as early in your career as you
  can to benefit from the power of compounding
  returns.

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How compounding works (using average annual
return of 6.5 your return could be different or
higher)

• You start contributing 7,500 per year at age 40,
  matched by UAMS. After 22 years, you retire at
  age 62.
• Contributions made by you and UAMS 330,000
• But accumulation (including interest/return)
  would be 671,850.
• Same as above, but you start contributing at age
  32 (30 years total).
• Contributions made by you and UAMS 450,000
• But accumulation 1,224,000.An extra 8 years
  of contributions almost doubled your account!
• You started even earlier, age 25, but you and
  UAMS each contribute half as much, 3,750 each,
  for 37 years.
• Contributions made by you and UAMS 277,500
• Accumulation at age 62 985,000. Almost 1
  million !

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Vesting in the UAORP

• Vesting ownership
• Your personal contributions are always vested.
• You must be vested before owning UAMS
  contributions.
• Classified Employees 3 years from hire date OR
  after 6 full, consecutive months of contributing
  at least 5 from your paycheck.
• Non-Classified Employees Vest Immediately.
  Nurses and other degreed hospital staff are
  usually non-classified. Faculty and most
  administrators are non-classified.
• Once vested in the UAORP, always vested.

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UAORP Distribution Options

• When are you eligible to receive benefits or
  draw out the money in your account that both UAMS
  and you have contributed? (subject to change by
  IRS)
• UAMS contributions
• Only if you are vested
• Once vested, anytime after you stop working at
  UAMS
• If you leave UAMS before you are vested, UAMS
  contributions are forfeited.
• Your contributions
• At age 59 ½ if you are still working
• Or at any time after you stop working at UAMS

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More on Distribution Options

• Again, you must be vested and no longer working
  at UAMS to receive UAMS contributions.
• Youre not required to take action on your
  account when you leave UAMS. You can (and
  should) leave the money there to collect interest
  until you truly retire.
• Payments to you are based on how much is in the
  plan (contributions returns) and the
  distribution option you select.
• Youll pay a 10 IRS penalty for early withdrawal
  before age 59 ½.
• Youll pay an automatic 20 tax withholding on
  all lump sum distributions.
• Other limitations may apply based on the fund
  allocation you selected. (Some TIAA and Met
  Life funds are long term investments and can only
  be paid out over long periods of time.)

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Retirement Savings Video

• Shown at weekly New Employee Orientation

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UAORP Fund Sponsors

• You pick your retirement fund sponsor
• TIAA-CREF
• Fidelity Investments, Inc.
• Once your account is set up, this is where your
  contributions and UAMS contributions will go.

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TIAA-CREFTeachers Insurance and Annuity
Association College Retirement Equities Fund

• UAORP fund sponsor since 1923
• Retirement saving is their primary business.
• 28 individual funds 7 Lifecycle funds
• Benefits can be paid as annuity (with survivor
  benefits), lump sum, systematic withdrawal,
  minimum distribution option or fixed period
  payments.

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Fidelity

• UAORP fund sponsor since 1994
• Investments, mutual funds are their primary
  business.
• Over 80 mutual funds
• Benefits can be paid as periodic payments,
  partial distribution or lump sum. Annuities are
  available only upon transfer of your account to
  MetLife or TIAA-CREF.

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Fund Sponsor Choices

• You must pick either TIAA-CREF and/or Fidelity.
• You can change at any time.
• OK to choose both but be aware
• Double the paperwork youll need to fill out and
  double the mail youll receive at home.
• Will have to add 2 balances together to get a
  picture of your total retirement savings.
• FYI, 71 of employees are invested only in
  TIAA-CREF, 22 only in Fidelity, 7 in both.

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Investment Choices

• After you choose your fund sponsor (TIAA-CREF
  and/or Fidelity), choose how you want to
  allocate the contributions.
• What does allocate mean?
• Where do you want to invest the money? What
  accounts?

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Investment Choice 1 Simplified

• Pick a TIAA-CREF Lifecycle Fund or a Fidelity
  Freedom Fund. Fund number (for example, 2030)
  should correspond with your planned retirement
  year.
• This is the exception to dont put all your eggs
  into one basket. Each fund is already
  diversified.
• Let your fund sponsors investment managers do
  the work for you.
• Your investment allocation will automatically be
  adjusted as your fund retirement date draws
  nearer. The younger you are, the more aggressive
  your investment portfolio. The older you are
  and closer to retirement, investments become more
  conservative.

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Investment Choice 2 Build your own portfolio

• Choose from the many accounts offered by your
  fund sponsor, TIAA-CREF or Fidelity.
• Indicate the you want to go into each fund on
  your application.

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Changing your Investments

• You may make changes to your investment
  allocations at anytime by calling your fund
  sponsor (TIAA-CREF or Fidelity) or by logging
  into their web sites.
• You can transfer between TIAA-CREF and Fidelity
  at any time. Fund restrictions may apply if you
  are invested in long-term, guaranteed accounts
  (TIAA accounts and Fidelity Met Life).

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More on Investment Choices

• If you dont indicate your investment allocation
  today, it will default to a Lifecycle Fund at
  TIAA-CREF or in a Freedom Fund at Fidelity.
• But take time later to review your choices.
  Your decision now will impact your retirement
  benefits later.
• Today you must submit an application so we know
  where to send the money TIAA-CREF or Fidelity.
• You also must complete the Salary
  Reduction/Deduction Agreement form today.

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Back to Alternative State Plans

• Arkansas Public Employees Retirement System,
  APERS
• Arkansas Teacher Retirement System, ATRS, if you
  have 5 years of participation in that plan (let
  us know if youre interested, otherwise not
  discussed further in this presentation).
• Notify HR immediately if you think you might want
  to participate in an Alternative State Plan. The
  deadline is the earlier of your first 30 days
  and/or your first payroll. Otherwise, the UAORP
  is the default plan.

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What is APERS?

• Defined Benefit Plan (traditional pension plan --
  money goes into a pool, not into an individual
  account. Benefit paid out is by a specific
  formula, usually based on years of service and
  average salary.)
• Vesting Requirement 5 years
• Contributions Employee will make a mandatory 5
  pre-tax contribution. UAMS will contribute a of
  your salary as required by APERS (currently
  12.54).
• Current APERS members who separate from State
  service for less than 6 months can remain
  non-contributory.
• 95 employees currently participate in APERS.

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Retirement Benefit Options under APERS

• Must be vested AND reach retirement eligibility
  criteria (e.g. 55 30 years service)
• Monthly payment is formula driven, based on
  number of years worked, retirement age, and
  salary during your highest paid 5 years.
• Example
• For an employee with a Final Average Salary of
  20,000 and 30 years of service, the current
  estimated monthly benefit would be 825.00 per
  month or 9,900.00 annually, which is
  approximately 50 of their exiting income level.

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APERS

• APERS plan booklets are available in Human
  Resources and at www.apers.org.
• Your election to participate in APERS is
  irrevocable. You cannot change to the UAORP
  later. However, if you elect APERS, you may
  still elect to contribute on a pre-tax, unmatched
  basis to the UAORP through a tax deferred
  annuity.

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Back to your 1st decisionWhich retirement plan?

• APERS UAORP 403(b) 457(b)
• Pension Annuity other benefit options
• You plan to work for the State You
  may change jobs in the future.
• all or most of your life.
• You make a mandatory You have the option to
  make
• 5 pre-tax contribution. contributions and
  enjoy the double
• pre-tax IRS limit.

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Effective Date of Your Contributions

• Once you sign your retirement forms, UAMS
  contributions, and if applicable your
  contributions, will begin no later than the
  following pay period.
• In the UAORP, no deduction will be made from your
  paycheck unless you make an election to
  personally contribute.
• If you elect APERS and you are a first-time APERS
  member, there will be a mandatory 5 pre-tax
  deduction from your paycheck.

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Unsure how your deductions are made from your
paycheck?

• If you are going to contribute more than 15,500
  in 2007, ask for the bucket illustration (also
  available on Human Resources web site).
• It shows the IRS limits for retirement
  contributions --yours and UAMS -- and how your
  contributions flow from one bucket to the next.
• It also shows the order of your retirement
  contributions.
• First to the 403(b) plan as pre-tax
• Then to the 457(b) plan as pre-tax
• Then back to the 403(b) plan as after-tax (unless
  you opted to stop when you hit your pre-tax
  limits)

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Forms to Turn In Today

• Application for a Retirement Plan, including
  beneficiary designation
• TIAA/CREF or
• Fidelity Investments or
• APERS (ask for this form, not in your packet)

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UAORP Forms to Turn In Today

• Salary Reduction/Deduction Agreement
• Check I elect not to contribute if you dont
  wish to make any contributions at this timeOR
• Enter the you wish to contribute from your
  paycheck.
• Investment Election Agreement
• Only if you want to participate in both TIAA-CREF
  and Fidelity. Otherwise do not fill out.
• Enter the split between the two fund sponsors.
• Remember, enrollment in a retirement plan is a
  condition of your UAMS employment.

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Retirement Questions Later?

• Call Human Resources at 686-5650, 800 - 430
• Visit HR Employee Services in the Barton Research
  Building, 730 - 430
• Visit these websites
• www.uams.edu/ohr www.apers.org
• www.tiaa-cref.org/uams www.fidelity.com

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1st UAORP Required Form
Everyone must complete the University of Arkansas
Optional Retirement Plan Salary Reduction/
Deduction Agreement.
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How to fill out the form
If you DO NOT want to personally contribute to
your retirement plan at this time, check the NO
box. But try to contribute at least 5 if you
can. You can even do as little as 1.
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If you wish to contribute
Put the you want to contribute from each
paycheck here (assuming you want to pre-tax your
deduction as most employees do).
If you can do 10, great! You will enjoy the
full 10 match if you contribute 10 from each
paycheck.
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Be cautious in putting too high of a here.
If you hit your pre-tax limit mid-year (before
your December paycheck) and your contribution
stops, the UAMS match drops to 5. To get the
maximum match, you have to contribute at least
10 from every paycheck.
Check with Human Resources before checking these
boxes so we can clarify your intent.
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2 required form is a fund sponsor application
or
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If you are selecting Fidelity, complete the
Fidelity application.
1st page of Fidelity Application
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Page 2 of Fidelity application
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Page 3 of Fidelity application
Include one primary and at least one contingent
beneficiary
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Signature page of Fidelity application
Please be sure to sign your completed form.
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If you are selecting TIAA-CREF, complete the
TIAA-CREF application.This is the 1st
page.The 2nd page lists your investment
choices.
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Page 3 of TIAA-CREF application
or
TIAA accounts are long term investments. You
cannot transfer or withdraw balances over 2,000
in a lump sum. Can only be distributed over a 10
year period.
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Pages 4 5 of TIAA-CREF application
List at least one primary one contingent
beneficiary.
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Pages 6 7 of TIAA-CREF application
Please make sure that you have signed both pages
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• Please be sure to turn in your forms today to
  Human Resources.
• The sooner you submit your form, the sooner UAMS
  can begin contributing toward your retirement
  benefit.