What happens if I am already enrolled?
Since you are already participating, no action is required of you.

What happens if I’m not enrolled?
You will be enrolled in the Reduced Benefit Option (RBO), under which you contribute nothing and the University provides a 5% contribution.  You will be enrolled in a TIAA-CREF Lifecycle fund based on your age and your beneficiary will be defaulted to your estate.  Contact TIAA-CREF to change your investment fund or beneficiary. You will receive notification once you have been enrolled in the Reduced Benefit Option and you will receive a welcome kit from TIAA-CREF.

Can I change between the Reduced Benefit Option and full participation?
Yes. If you are participating at the Reduced Benefit Option and wish to contribute 5% and receive the 10% U-M match, simply complete and return the Salary or Annuity Option Plan Agreement (PDF).  

How will my pay stub change?
As a voluntary participant, you may be accustomed to viewing two contributions on your pay stub: your 5% contribution and a 10% U-M match.  Your pay stub will display three contributions once you become a compulsory participant.  You will continue to see your 5% “Retirement” contribution displayed under “Before-Tax Deductions.”  However, you will now see two “Retirement” contributions under the “Employer Paid Benefits” section of your pay stub.  The first is a 5% University contribution because you are a compulsory participant.  The second is another 5% University contribution (for a total of 10%) that matches your 5% contribution you voluntarily make.

Does compulsory participation affect my SRA contribution limit?
Compulsory participation impacts your SRA contribution limit. The 5% you contribute under the Basic Retirement Plan counts against the Internal Revenue Code (IRC) limit. However, only part of your 5% contribution is subject to the limit once you become a compulsory participant.

The IRC provides a special feature for plans that have a compulsory participation feature. The 5% you contribute on your earnings in excess of the Social Security wage base does not count against your limit for making SRA contributions because you are required to participate in the plan. The result is that you can contribute more to an SRA as a compulsory participant since only part of your 5% contribution counts against the limit.

In addition, the 5% you contribute on earnings in excess of the Social Security wage base is no longer classified as a 403(b) contribution. Those contributions are classified instead as 401(a) compulsory contributions. Since 401(a) contributions are not subject to the IRC limit you can actually contribute more to the plan as a compulsory participant.

IF YOUR U-M PAY IS $102,000 OR MORE Certain features of the retirement plan provide additional tax advantages for compulsory participants whose U-M earnings exceed the Social Security (FICA) taxable wage base. The wage base is the point at which you no longer pay the 6.2% Social Security tax ($102,000 in 2008). If you are already participating If you are already enrolled in the retirement plan at the time you meet the compulsory criteria, the 5% you contribute on your U-M pay over the FICA wage base no longer counts against the 403(b) elective deferral limit (see below).  This allows you to contribute more to an SRA. Additional tax-deferring advantages Your elective deferrals or voluntary contributions to the U-M Retirement Plan are tax-coded as 403(b). Because you are required to contribute 5% on your U-M pay over the FICA wage base, the tax coding of these contributions change from 403(b) to 401(a). These 401(a) contributions are still tax-deferred, but no longer count against your 403(b) limit. This unique tax advantage allows you to contribute more to the SRA. For more comprehensive information on the IRS contribution limits, view the IRS/SRA Max Limit Handbook. Reduced Benefit Option If you are in the Reduced Benefit Option, you contribute nothing and the University provides a 5% contribution on eligible salary up to the wage base. On eligible earnings exceeding the wage base, you contribute 5% and the U-M contribution increases to 10% for the rest of the calendar year. Your TIAA-CREF and Fidelity statements will change Your 5% contribution will appear under two plan types on your quarterly statements and online over the course of the calendar year as a compulsory participant.  Your 5% contribution made on your U-M pay under the FICA wage base ($102,000 in 2008) will be listed under the University of Michigan 403(b) Retirement Plan at TIAA-CREF and Fidelity. Once your U-M pay exceeds the FICA wage base, your 5% contribution is no longer classified as a 403(b) contribution but as a 401(a) contribution.  As a result, the deposits of your 5% payroll contribution for the rest of the year will no longer appear under the U-M 403(b) Plan on the quarterly statements and online.  Instead, they will appear under the University of Michigan 401(a) Retirement Plan at TIAA-CREF and Fidelity.  The 401(a) Plan is also where the 10% U-M match is reported.