Retirement Plans - C&T
Clerical & Technical (C&T) employees in benefit eligible positions have several retirement plan options:
Yale University Retirement Plan for Staff Employees
A "Defined Benefit Plan" (the amount of pension payment is determined for each participant by a formula that gives weight to salary, length of service and age at retirement.)
A "Non-Contributory Plan" (Eligible employees are enrolled at hire date without any action on their part or any requirement to contribute).
Employees are eligible for "normal retirement" at age 65 or hereafter with 5 years of service. They may retire at any time after age 55 when the sum of age and years of service equals or exceeds 75. Such "early retirement" may require a 4% "discount" of payment for each year before age 65 (to offset the actuarially extended life expectancy during which benefits will be paid). Pensions for employees who retire with at least 30 years of service are discounted 2% per year. Pensions for employees who retire at age 60 or later with at least 25 years of service are not discounted for early retirement.
Participants in the Plan "vest" after five years of service. Vesting gives a participant the right to a pension at age 65 (or when the sum of age and service equal 75) even if he or she leaves Yale employment.
Effective January 2012, the formula for calculating pension payments is as follows: Determine the highest annual rate of pay during the final five years of employment. Multiply such rate by 1.5% for up to $41,000 by 1.4% for $41,001 to $75,000, by 1.3% for over $75,000. Multiply the sum of these factors by the number of years (whole and fractional) of Yale service. Divide the product by 12 to establish monthly pension.
The costs to Yale for the Plan are determined by an annual actuarial review (the "valuation") which considers such factors as number of participants, salary levels and their probable growth, earnings on Plan assets, probable ages at retirement and mortality expectations for retirees.
Yale's Plan has at least three highly unusual features: (1) The highest annual rate of pay in the computation, is at the rate of pay on the date of retirement. (2) Because salary increments below $41,000 are weighted a higher multipliers than increments above $41,000, the Plan provides a kind of "safety net" for retirees at lower salary levels. (3) Terminated vested employees are eligible to "cash out" their pension benefit if the present value of their account balance is less than $19,000.
Yale University Matching Retirement Plan
In a 403(b) Defined Contribution Plan, both employer and employee know how much will be contributed to the Plan. Eligibility for the plan is to be a benefit level employee of Yale University for two consecutive years. There are many advantages to participating in the Plan: employee contributions are tax-sheltered from federal and state taxes, earnings are not taxed until withdrawn and there is a loan option available from TIAA-CREF.
For employees with at least two years of service at benefit level, a dollar for dollar match of employee contributions will be made up to 2% of the base annual salary.
For employees age 45 or older with at least 5 years of continuous service at benefit level, there will be a dollar for dollar match by the University of the employee contributions up to 4% of the base annual salary.
Participants in the Plan are immediately vested with respect to both their own contributions and University contributions. In this case, vesting means that the total accumulation follows the participant despite employment termination.
Withdrawals from your retirement account, however, must meet Federal Regulations, such as: age 59-1/2, termination from employment, death, disability, financial hardship as determined by the IRS.
Additional Design Features
- TIAA-CREF participants will be eligible to take a loan on employee contributions only. There is not a loan feature available for Vanguard at this time.
- The number of loans is limited to three general purpose loans.
Full distribution rights at termination and retirement
- The University will allow you to take your retirement account balance with you upon termination or retirement.
In-service distributions at age 59½
- During active employment at age 59½, you will be able to take a distribution from the Plan. This is limited to employee contributions only.
Yale University Tax-Deferred 403 (b) Savings Plan
In addition to the retirement plan options, eligible employees may choose to contribute to the Yale University 403(b) Tax-deferred Savings Plan.
Yale University 403(b) tax-sheltered savings plan allows you to invest contributions from your pay in a wide range of investment options. The monthly contributions and earnings are sheltered from state and federal income taxes until withdrawn at or before retirement.
Employees may enroll in the Savings Plan at any time during the year and make up to four changes in the dollar amount or percentage deducted from their paycheck each calendar year. There is no waiting period for new hires.
Additional benefits of the plan:
- Low monthly investment minimum of $25/month
- Earnings are tax deferred until withdrawn
- Flexibility of investment options
- Decreases your taxable income
The University currently offers two different companies through which you may invest your tax-sheltered contributions:
- TIAA-CREF (Teachers' Insurance Annuity Association/
College Retirement Equities Fund)
- The VANGUARD Group
Both vendors have customized websites designed specifically for Yale staff. These sites offer detailed fund information, retirement planning calculators and all the necessary forms to enroll.
You have three options available to you when deciding on the amount to contribute:
- You can elect a specific percentage.
- You can check off the maximum box and this will allow you to contribute the IRS maximum of $17,000 ($17,500 in 2013).
- If you are age 50 or older, you can choose to contribute an additional $5,500 at
any time during or after the calendar year in which you reach the age of 50.
Select any of the options that apply to you specifically during the tax year.
You can enroll in a retirement plan online via the My Benefits website by logging into the University portal (www.yale.edu/portal) and clicking "My Benefits." The My Benefits website also enables you to estimate your retirement savings to reach your goals. If you have any questions, contact Employee Services at 203-432-5552.