403(b) Retirement Savings Plan

The Plan is established under Section 403(b) of the Internal Revenue Code. The Plan offers several KEY ADVANTAGES:

Value: Wayne State University offers an excellent retirement savings plan as part of our strong benefits package to attract and retain the best employees, because our University success depends on the talent of our faculty and staff.

Tax Savings: You can save before-tax(i.e., the amount you contribute is deducted from your pay before income taxes are taken out). This before-tax feature reduces your taxable income. The plan also permits tax deferral on investment earnings for both your Employee Contributions and University Contributions.

Additional Savings: WSU provides a 10% University Contribution to the 403(b) plan for eligible participants who are making contributions of at least 5%. The University “matches” your Employee Contributions on a $2 for every $1 basis (200% match rate), to a maximum contribution of 10%. This compares favorably to the typical company contribution in the private sector of 3% to 4% of base salary.

Superior Investment Options : The WSU 403(b) plan offers 2 investment options, both of which are the premier investment providers in the retirement plan arena – TIAA-CREF and Fidelity Investments. You may elect one or both Investment Carriers, each of which offer multiple investment options to help you professionally manage your savings.

Eligibility

Who is Eligible to make Contributions to the Plan? You must be employed by WSU in an eligible employee classification in order to participate in the Plan. Eligible employees are employees who normally work 20 hrs per wk OR have at least 50% appointment OR union employees whose bargaining contract permits participation.

The following groups are not eligible to make Employee contributions: Student assistants, Graduate assistants, and members of Building Trades Union (Eclass SK).

Part-Time Faculty represented by AFT Local 477, AFL-CIO are eligible to make Employee Contributions, but are not eligible for University Contributions.

When am I 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.

Are their Limits on Employee Contributions?

For any one calendar year, Employee Contributions are limited to $17,000 (2012). Additional contributions can be made if you attain age 50 by the end of the calendar year, then the additional amount of $5,500 (2012) is available, for a total of $22,500. These limits are indexed each year by the Internal Revenue Service.

Wayne State University also limits the percentage amount you can contribute for any one paycheck to 80% of gross pay (considering both 403(b) and 457(b) plan contributions). This is necessary to ensure that you have compensation remaining to cover other employee benefits costs.

Plan Features

Overview of the Traditional Plan

Covers all Others. The minimum Employee Contribution is 1%. You must have 2 Years of Service and be age 26 and make Employee Contributions of at least 5% before University Contributions will begin. The University Contribution is 10% of salary. University Contributions are Fully Vested.(See below for definition of Fully Vested and Years of Service).

Start Date for Employee Contributions	Any time after date of hire
Employee Contribution Amount	1% minimum, in increments of 1%, to a maximum under IRS rules. Fully vested at all times.
Start Date for University Contributions	After 2 Years of Service and attainment of age 26 and provided you are making Employee Contributions of at least 5%.
University Contribution Amount	University Contributions of 10%, if Employee Contribution is at least 5%. Fully vested.

Overview of the Modified Plan

Covers Non-Represented employees, P&A union, Staff Association, Housing HERE union, HERE union, Operating Engineers union, Public Safety Officers union, and Local 517-M of SEIU Union. The minimum Employee Contribution is 1%. You must be age 26 and make Employee Contributions of at least 1% before University Contributions will begin. The University Contribution match is $2 for every $1 to a maximum of 10% of salary. University Contributions are Fully Vested after 2 Years of Service. (See below for definition of Fully Vested and Years of Service).

Start Date for Employee Contributions	Any time after date of hire
Employee Contribution Amount	1% minimum, in increments of 1%, to a maximum under IRS rules. Fully vested at all times.
Start Date for University Contributions	Once you begin your Employee Contributions and have attained age 26.
University Contribution Amount	$2 match for every $1 of Employee Contributions, to a maximum of 10%. You are vested after 2 Years of Service.

Fully vested means these amounts cannot be forfeited, even if you terminate your employment with WSU. Forfeiture means your accumulated University contributions and related earnings revert back to the University before you become Fully Vested.

The Years of Service requirement may also be met if the employee had service with an institution of higher learning (e.g., college, university), an educational organization eligible to purchase annuity contracts under IRC Section 403(b) (e.g., school district), or a tax-exempt organization affiliated with an institution of higher learning (e.g., teaching hospital), but NOT including service as a graduate student, graduate assistant, part-time faculty, or volunteer faculty.

Investment Options

TIAA-CREF

This investment carrier offers variable and fixed annuities (called the guaranteed option, or TIAA Traditional account) as well as 5 mutual funds and 10 lifecycle funds

	Pre 8/1/2010	8/1/2010 and after
Base Plan (Plan No 103167)	Retirement Annuity (RA)	Group Retirement Annuity (GRA)
Supplemental Plan (Plan No 103168)	Group Supplemental Retirement Annuity (GRSA)

Base Plan (No 103167)

You should put your Employee Contributions into this Plan option first, in order to receive the University Contlributions.

Prior to August 1, 2010, this plan was underwritten via a Retirement Annuity (RA, individual basis). After that date, for new participants only, this plan is underwritten via a Group Retirement Annuity (GRA, group basis).
Under the RA, the TIAA Traditional Account does not permit lump sum cash withdrawals and transfers out must be spread over 10 annual installments. There are no surrender charges and the guaranteed interest rate is 3.0%
Under the GRA, your savings in the TIAA Traditional Account does permit a lump sum cash withdrawals, but only within 120 days after termination of employment and also subject to a 2.5% surrender charge. After the 120 days, the participant can access their funds from the GRA contract through the establishment of a 5-year fixed-period annuity (not subject to the 2.5% surrender charge). The guaranteed interest rate is 3.0%.

Supplemental Plan (No 103168)

You may put any amount of Employee Contributions into this plan or you may elect to put Employee Contributions over 5% into the Base Plan.

This plan is underwritten via a Group Supplemental Retirement Annuity (GSRA, group basis)
Under the GSRA, only Employee Contributions (no University Contributions) are permitted.
The GSRA is fully liquid (i.e., no minimum payout period, no constraints on cash withdrawals, no surrender charges) and the TIAA Traditional Account guaranteed interest rate is 3.0%.

FIDELITY INVESTMENTS

This investment carrier offers mutual funds, including money market, stock and bond funds and an array of pre-mixed Freedom Funds.

Base Plan
(Plan No 52864)

150+ mutual fund options

Uncertain about How to Invest?
You may want to consider the pre-mixed funds that are designed to provide a single diversified portfolio, managed based on the target date you want to retire:

TIAA-CREF Lifecycle Funds
Fidelity Freedom Funds

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 1^st 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.

NEW LOAN LIMITS

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.

Tax Impacts

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

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:

Unreimbursed Medical Expenses for the employee, spouse or the employee's dependents
Purchase of your principal residence
Prevent home eviction or foreclosure
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)
Repair casualty loss damage to principal residence
Payment for funeral or burial expenses

Key Conditions

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.

Tax Impacts

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 Withdrawals

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, as shown on the chart below.

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. ¹If 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.

Forms of Payment

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.

For more information please contact benefits@wayne.edu

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