Support Staff Policies & Procedures
Support Staff Policy & Procedure for Supplemental Retirement Plan
(Revised 01/11)
Policy
The University provides a voluntary Supplemental Retirement Program operated under section 403(b) and 403(b)(7) of the Internal Revenue Service (IRS) Code for eligible employees. This plan is funded entirely by employee contributions on a pretax basis.
Eligibility: An eligible employee working 50% time or more and for nine months or longer.
Effective date of benefit: Eligible employees may elect participation upon employment or any time during employment.
Summary of benefits:
- The benefit provides income during retirement and benefit payments to a beneficiary in the event of death prior to retirement.
- Contributions from the employee are paid into an individual contract between the employee and the investment sponsor:
- AIG VALIC
- AXA Equitable
- Fidelity Investments
- Lord Abbett & Co
- TIAA-CREF
- Withdrawals are allowed on or after retirement, termination or resignation, regardless of age or length of service.
- In-service withdrawals are subject to IRS guidelines and are permitted under the following situations:
- age 59 ½,
- death, or
- disability
- Loan options may be available with a particular investment sponsor. Please visit the Retirement section of the Human Resources website for specific information on loan options.
- The employee assumes sole responsibility for the selection of the investment sponsor and any investment results/tax consequences.
Premium contribution:
- The employee designates the amount of salary to be deferred.
- The maximum contribution level by the employee must be in accordance with Sections 402(g) and 415, as amended, of the IRS Code.
- Contributions are made on a tax-deferred basis. The deferred portion is not reported as earned income on the Employer's Statement of Earnings form (W-2) to the Internal Revenue Service.
- Supplemental contributions may be remitted to only one investment sponsor at any given time.
- Salary reduction amounts may be changed as often as once a month.
Distribution options:
If separated from service, employees may choose one or several of the following distribution options:
- Lump sum distribution - If you have separated from employment at the University (i.e., resigned, terminated or retired), you may withdraw up to and including 100 percent of your accumulations, subject to fund sponsor limitations. The amount you withdraw will be taxed as ordinary income in the year in which it is distributed, and you may also be subject to early withdrawal penalties.
- Rollover - Rollover means to transfer accumulations from one retirement plan to another while maintaining the accumulations' tax-deferred status. Rolling over your accumulations will continue the tax deferred status and you will not have to pay income tax or early withdrawal penalties.
- Annuity distribution - An annuity is a stream of payments for life from a retirement plan and can provide income for the life of one person (single-life annuity), or two people (joint-life annuity). Joint-life annuities provide income ranging from full payment in the event of the death of either person, to payment of two-thirds or even one-half in the event of either person's death. Investment sponsors can provide information about available annuity options.
- Fixed-period distribution - In addition to the various annuity options, you may elect to receive distributions for a fixed time period. Under this option, regular payments are dispersed over the number of years selected. When the fixed period is complete, payments stop.
- Interest/dividend only distribution - This option allows you to draw only the interest or dividends generated from your accumulations. Contact the investment sponsor to inquire as to which funds have this option.
- Systematic/installment withdrawal distribution - This option allows you to specify a dollar amount you would like to withdraw at specific intervals, such as monthly or quarterly.
- Minimum distribution - This option allows you to receive the smallest amount that meets the federal minimum distribution rules.
- Do nothing - You can maintain your Supplemental Retirement Plan account balance for continued growth. In general, however, your distributions must begin minimum required distribution at age 70 1/2.
For a more detailed description of these and other distribution options available, contact the investment sponsor.
Termination date of benefit:
- The employee's contribution ceases with the last day of paid employment, change to an ineligible employment status, or designation by the employee to stop future contributions, whichever occurs first.
- Employees on an unpaid leave of absence may not continue tax-deferred supplemental contributions. Upon return from an unpaid leave of absence, the employee will automatically be reinstated in the program.
- Employees receiving benefits under the University's Long-Term Disability plan may not continue tax-deferred supplemental contributions.
Procedure
Application for enrollment:
- Employees may enroll at any time after becoming eligible. Enroll online at the EBS Portal. Review the Enrollment Instructions for more detail.
- The enrollment process will be effective either the current pay period or the next pay period, depending on the payroll processing date.
Changes in coverage or personal information:
Refer questions to:
MSU Human Resources (telephone 517-353-4434 or e-mail solutionscenter@hr.msu.edu)
Back to Support Staff Policies and Procedures