Retirement Plans - PDA

An eligible employee is an individual who has a faculty or senior research appointment of at least half-time or greater.

• Faculty & M&P Retirement Documents - 1993

In a 403(b) Defined Contribution Plan both employer and participant know how much will be contributed to the Plan, but cannot know precisely the retirement benefit. Such benefit will be affected by the amount of accumulation at the point of retirement, the age of the participant at that time and the payout option elected. The most important basis for the payout will be the accumulation, and the most important factor in the accumulation will be the investment return on assets over the accumulation period.

Eligibility to participate in the plan

To participate, faculty members must meet one of the following requirements:

1. have an appointment with tenure (participation required)
2. have a faculty appointment to a ladder position
3. be age 35 or over with a term appointment of one year or more
4. be under age 35 with a term appointment of one year or more and have completed two years of continuous service.

Both the faculty member and employer contributions to the plan are immediately vested, meaning that the total accumulation belongs to the participant even if the employee terminates employment. Investment may be made with either one of the following Plan vendors: TIAA-CREF or The Vanguard Group.

Non-tenured faculty members with an appointment of more than one year who do not participate in the Yale University Retirement Annuity Program will be enrolled in the supplemental compensation plan and receive an additional 5% of regular monthly earnings.

Yale University Retirement Annuity Plan (YURAP)

The YURAP is a contributory plan and eligible employees who elect to enroll must contribute at the following rate.

	Employee	Yale Under 35	Yale Over 35
On salary below plan base:	2.5%	5.0%	7.5%
On salary above plan base:	5.0%	10.0%	12.5%

The monthly contribution is based on the employee fiscal base salary. The plan base for fiscal year 2008-2009 is $54,200.

Contribution by the participant or the University may not exceed the limitations imposed by the Internal Revenue Code and applicable Treasury Regulations. The FY2008/ 2009 salary limitation is $230,000.

Employee and University contributions may be invested with either one of the following companies: TIAA-CREF or The Vanguard Group.

Faculty members must have a one year appointment to be eligible to participate.

Retirement and Distribution Benefits

Participants who leave Yale may start receiving annuity payments at almost any age. Under present tax rules participants may be required to begin receiving annuity payments at approximately age 70 and 1/2.

After termination or retirement, cash withdrawals from the plan are allowed under the following conditions:

• Less than five years of participation
• Account value of less than $50,000
• At least ten years of separation regardless of service
• Age 55 and separated from service at Yale

Group Supplemental Retirement Annuity (GSRA)

In addition to the retirement plan options, eligible faculty members may choose to contribute to the Yale University 403(b) tax-sheltered savings plan.

Faculty appointed at least 50% time may enroll in the GSRA 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 appointments.

Yale University 403 (b) tax-sheltered savings plan or Group Supplemental Retirement Annuity (GSRA) 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.

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 employees.  These sites offer detailed fund information, retirement planning calculators and all the forms you need to enroll.

• TIAA-CREF: www.tiaa-cref.org/yale
• VANGUARD: http://yale.vanguard-education.com

You have four options available to you when deciding on the amount to contribute:

1. You can either elect a specific percentage or dollar amount.
   
2. You can check off the maximum box and this will allow you to contribute the IRS maximum of $15,500.
3. If you are or will be over the age of 50 during 2008, you can also check off the box to do an additional $5,000 catch up.
   
4. If you have been employed by Yale University for greater than 15 years then you have the opportunity if you have not already done so to contribute up to an additional amount of $3,000 annually to a lifetime maximum of $15,000.

Select any of the options that apply to you specifically during the tax year 2008.

If you are interested in participating in either of these programs, please call the Benefits Office at 432-5550 to obtain information on the plans or to meet with a Benefits Counselor. The election form can be found online here. Once completed, mail or fax the form to the Benefits Office. Fax number: 2-7575 Mail: 155 Whitney Ave., Rm 130

Early Retirement Subsidy Plan

In order to make early retirement financially feasible and attractive to tenured faculty who choose that option, the University has adopted an Early Retirement Subsidy Plan for Tenured Faculty. Under this plan, faculty with tenure (and in the School of Medicine, professors in the clinical track with continuing appointments) who retire at age 62 or over with at least 15 years of University service and before the Normal Retirement Age of 70, will be eligible to receive a cash benefit. The benefit supplements the reduced retirement annuity under the YURAP which an individual who retires early would receive if his or her retirement income commenced at that time rather than at normal retirement. The benefit equals 60% of the participant's three-year final average salary plus 2% for each year of service with the University over 15, or, if less, the amount that would be required to purchase an annuity that would bridge the difference between the annuity which could be purchased with the participant's YURAP account balance at the date of early retirement and the annuity which could be purchased with that account balance projected (at 4%) to Normal Retirement Age*. For purposes of the foregoing, amounts in the account balance in excess of six times salary will be excluded from the calculations.

Benefits will be paid in annual installments over a period of three years. Under the Internal Revenue Service's interpretation of applicable tax law, the present value of the entire benefit will be taxable in the year of first receipt of any portion of the benefit. Therefore, in order to accommodate the tax burden on participants, one-half of the total benefit will be paid in the first year, and one quarter in each of the second and third years.

Early in the period of eligibility for an Early Retirement Subsidy Plan benefit, an individual's benefit typically will increase as a result of salary increases and additional service. However, as the individual approaches Normal Retirement Age, the amount that would be required to supplement the early retirement annuity as described above to bridge the difference between the early and normal retirement annuity decreases and at Normal Retirement Age becomes zero. Thus, while the Early Retirement Subsidy Plan benefit will reflect each individual profile, for most people the combination of these two factors will produce the greatest level of subsidy benefit toward the late sixties.

*Specifically, the annuity limitation is calculated as follows: The annuity that could be purchased with the account balance at the chosen early retirement age is first calculated, using the CREF 4% annuity purchase rate table. The account balance is then projected at 4% growth to age 70, and a similar calculation of amount of annuity that could be purchased at age 70 is made. The difference between these two annuities is taken, and the amount of premium required to purchase an annuity to cover the difference commencing at the chosen retirement age is figured by multiplying the difference by the annuity purchase rate at early retirement.

• To view example graphs, click here

The Early Retirement Subsidy Plan is not a funded plan (that is, it does not require assets to be set aside in a trust or other funding vehicle), and all benefits will be paid from the general assets of the University, which will administer the plan.

Planned Retirement Program

In many departments effective planning may be considerably enhanced if the retirement date of individual faculty is known in advance (e.g., planning for coverage of specific sub-disciplines and for changes in the availability of and need for research space in the laboratory sciences). The University therefore has designed a Planned Retirement Program for tenured faculty to encourage individuals to fix a retirement date in advance.

The Planned Retirement Program is available to tenured faculty in FAS and to certain ranks in the professional schools (as designated by their respective Deans and the Provost) beginning at age 59 or over, without upper age limit. To be eligible, a faculty member must have 15 years of service with the University at the time of entry into the Planned Retirement Program. An individual faculty member who chooses to enter the program will be required to set irrevocably a specific date within 1 to 3 years by which he or she will fully retire.

The Planned Retirement Program permits an orderly reduction in certain responsibilities of participants, with appropriate approval. These may include dissertation supervision and major departmental administrative responsibilities which require multi-year commitments, as mutually agreed by the faculty member and the departmental chair and approved, where appropriate, by the professional school dean and by the Provost. (These arrangements must take due regard for the potential burden on other faculty, especially in small departments. Reduced classroom teaching responsibilities will not be offered to individuals electing Planned Retirement)

In addition, participants in the Planned Retirement Program may elect to start receiving their YURAP retirement annuities and to cash out a portion of their retirement accumulation as provided by the revised YURAP, as described below.

Finally, participants in the Planned Retirement Program may elect to accelerate the receipt of any Early Retirement Subsidy Plan benefit to which they will become entitled upon full retirement up to three years before actual retirement, beginning July 1, 1994. For purposes of determining the initial benefit amount, the accumulation at retirement will be calculated by projecting forward the acculmulation balance at the time early retirement benefits begin, with a 4% growth rate, to a date of planned retirement. The three-year average salary at the time benefit payments begin will be used as a basis for determining that initial amount Upon actual retirement, the benefit will be recalculated based on actual salary for the three final pre-retirement years, and a corresponding adjustment to the benefit will be made.

Phased Retirement Program

The new Phased Retirement Program available to tenured faculty in FAS and to certain ranks in the professional schools (as designated by their respective Deans and the Provost), replaces the current Phased Retirement Program in order to increase its attractiveness to faculty. It provides for half-time rather than quarter-time appointment and salary, links to the new Early Retirement Subsidy Plan and Planned Retirement Program, and enhances certain other features of the program.

The revised Phased Retirement Program can be elected by tenured faculty (and those in certain other designated ranks in the professional schools) with 15 years of University service, beginning at age 59 or over, without upper age limit. Phased Retirement may continue for a maximum of 3 years. An individual on Planned Retirement may convert to Phased Retirement during the Planned Retirement interval.

During Phased Retirement, the faculty member's appointment is half-time, and he or she draws half of normal salary. University TIAA/CREF retirement contributions for individuals on Phased Retirement are half of the amount contributed on full-time equivalent salary. Health benefits for individuals on Phased Retirement are those provided to full-time faculty.

In the School of Medicine, certain special rules will apply. Variable percentages of Phased Retirement between 10% and 80% will be permitted in that school, as determined by the Dean, according to the sources of funding that contribute to the individual's salary. Salary for participants in Phased Retirement in the School of Medicine will be scaled in proportion to the percentage of their appointments. Retirement plan contributions will be scaled based upon same percentage. Finally, a period of Phased Retirement longer than 3 years may be permitted in the School of Medicine when it allows Phased Retirement to be coterminous with a grant that pays the individual's salary.

In addition, participants in the Phased Retirement Program may elect to start receiving their YURAP retirement annuities and to cash out a portion of their retirement accumulation as provided by the revised YURAP as described below.

Upon entry into the Phased Retirement Program, a faculty member may elect to receive one-half of the amount of any Early Retirement Subsidy Plan benefit to which he or she would be entitled if he or she then retired fully, or, alternatively if the value is greater, may elect to receive, on an accelerated basis if requested, the Early Retirement Subsidy benefit, if any, calculated on the basis of age and full?time equivalent salary as of the date of full retirement, in accordance with the Planned Retirement Program. (In the School of Medicine, the foregoing will pertain to any appointment on Phased Retirement of half-time or less. Appointments of more than half-time will be eligible only for an accelerated Early Retirement Subsidy benefit based on the date of full retirement as provided in the Planned Retirement Program) To the extent permitted by law, the individual may contribute all or part of the benefit to a tax-deferred retirement annuity account.

A faculty member on Phased Retirement may accept outside support for up to the remaining portion of full salary, subject to the policies of his or her school that may require the use of external funding to support a portion of regular salary. Any outside academic activities undertaken by a participant in Phased Retirement must acknowledge Yale as the primary academic appointment. A Phased Retirement appointment cannot be combined with either a full-time or tenured part-time appointment at another university. A faculty member on half-time Phased Retirement retains the voting privileges of a full-time faculty member.

The space occupied by the faculty member on Phased Retirement, particularly in the laboratory sciences, must be reduced, in an orderly manner as agreed to by the department chair, to about half or less of the amount occupied when the individual was full-time.

Individuals who are currently on Phased Retirement will be permitted to continue in the existing plan or may choose to complete their time (up to three years) under the revised Plan, without eligibility for any Early Retirement Subsidy Plan benefit.