The University of Michigan Basic Retirement Plan is a tax-deferred defined contribution retirement savings plan. It is a combination 403(b) plan for employee contributions and a 401(a) plan for University contributions.

What do the numbers 403(b) and 401(a) mean?
These numbers refer to the Internal Revenue Code (IRC) sections that designate different types of employer tax-deferred retirement savings plans. Structuring the UM plan under both IRC sections enables the University to meet various Federal requirements and regulations pertaining to plan benefits, reporting, and administration. It also allows the University to provide a generous matching contribution and offer features unique to the UM plan.

Participation and Eligibility
Regular faculty and staff can participate with as little as a 1% appointment lasting for at least four continuous months funded by the University. Supplemental Instructional staff with a 50% or greater appointment funded for at least four continuous months are also eligible. House Officers, Research Fellows, Graduate Students, Professional Specialists, and Temporary Staff are not eligible to enroll in the Basic Retirement Plan but may contribute to an SRA. Stipends, scholarships, and fellowships are not eligible to be contributed to the plan (see Eligible Compensation).

Employees with dual appointments are eligible for the Basic Retirement Plan provided that effort and funding is present in the appropriate combination.

Immediate Vesting
All retirement savings plan contributions and earnings are vested immediately. This means that your contribution and the University contribution and earnings are yours for retirement or to be paid to your designated beneficiary(ies) in the event of death.

Two Investment Companies
You may invest your funds with two investment companies — TIAA-CREF and Fidelity. Contributions may be allocated to either or both, and contributions may be distributed among the approved investment funds offered.

Effective Date of the Plan
There is no deadline to enroll in the Basic Retirement Plan; you may sign up at any time; however, in order to have your request processed in time for a given paycheck, the Benefits Office must receive your paperwork by specific dates. See Retirement Savings Plan Deadlines for more information.

Your participation in the plan begins after:

1. The Benefits Office receives your completed TIAA-CREF and/or Fidelity account applications plus your Salary or Annuity Option Plan Agreement,
   and
2. Your elections for other benefits plans (medical, dental, etc.) as a new hire or newly eligible employee have been submitted and processed. Your initial payroll deduction for the Basic Retirement Plan may be delayed if you have not submitted your other benefit choices.

Forms are available for download from the Retirement Savings Plan Forms page.

Retroactive Contributions
While there is no deadline to enroll, as a new hire or newly eligible faculty or staff member you may request and receive contributions retroactive to your date of hire or eligibility. Your applications for enrollment must be received in the Benefits Office within 60 days of (1) the date you were hired, or (2) the date you became eligible. To receive retroactive contributions, you must request them on your Salary or Annuity Option Plan Agreement form by checking the “Retroactive Contributions” box.

Special Note on Retroactive Contributions
If you begin work or become newly eligible at the University in November or December, in order to be eligible for retroactive contributions, you must return all application materials as well as make your other benefit plan elections by December 1. Otherwise, the effective date will be January 1 of the following year and you will lose the ability to receive the retroactive contributions. Federal regulations do not permit retroactive contributions to cross a calendar tax year; you must enroll before the end of the year to receive contributions for your November and December pay.

How to Enroll in the Retirement Savings Plan
Complete and submit the Salary or Annuity Option Plan Agreement to the Benefits Office. Use this form to authorize the payroll contribution, your choice of investment company (TIAA-CREF and/or Fidelity), and to indicate if you wish to make an additional, non-matching contribution to the plan. Forms are available in the Retirement Enrollment Kit, or you can download the form here (PDF).

University of Michigan
Benefits Office
Attn: Retirement Plan
Wolverine Tower – Low Rise G405
3003 South State Street
Ann Arbor, MI 48109-1278

What forms do I complete to open my account with TIAA-CREF and/or Fidelity?
There are no paper forms to complete to open your account with TIAA-CREF and/or Fidelity.

How is my account established?
The Benefits Office will send an enrollment notice to your chosen investment company to create your account once your properly completed and signed Salary or Annuity Option Plan Agreement has been received.  Notifications are sent to Fidelity on a weekly basis.  Notifications to TIAA-CREF are sent with your first contribution; this is the first business day of the month after your first deduction.

What should I do next?

1) Designate Your Beneficiary
The investment company you selected will send you a welcome packet with information on how to how to designate your beneficiary.

• Fidelity will include a beneficiary designation form in the packet. 
• Contact TIAA-CREF at 800-842-2776 to request a beneficiary designation form or update it online at: www.tiaa-cref.org

Complete the form and return it to the investment company as soon as possible.

2) Choose Your Investment Funds
The investment fund will automatically be an age-appropriate Lifecycle Fund if you select TIAA-CREF or a Freedom Fund if you select Fidelity. You may change this by contacting TIAA-CREF or Fidelity.

What is a Lifecycle or Freedom Fund?
A TIAA-CREF Lifecycle or Fidelity Freedom Fund is a mutual fund that is a diversified portfolio of other mutual funds offered by that company.  This includes domestic and international stock funds, bond funds, and money market funds.

Each Lifecycle or Freedom fund automatically selects the allocation of stock, bond, and money market funds that are appropriate for a target retirement date of approximately age 65.  The fund will adjusts its holdings periodically to maintain an asset allocation appropriate for its target retirement date to maximize returns and minimize risks. 

Your date of birth will be included in the enrollment notice sent to your chosen investment company.  This will determine into which specific Lifecycle or Freedom Fund you will be enrolled.

Lifecycle and Freedom Funds provide a simple solution if you lack the time, confidence, or investment knowledge to create and manage a well-diversified portfolio.  Each fund is professionally managed and provides you with a simple, single investment fund.

What are my other investment choices?
Both TIAA-CREF and Fidelity offer a wide selection of stock, bond, money market, and real estate funds.  If you do not want your investment fund to be a Lifecycle or Freedom Fund, contact TIAA-CREF or Fidelity to designate a different fund.

Fidelity: 1-800-343-0860

TIAA-CREF: 1-800-842-2776

You may also create your account online at www.tiaa-cref.org/enroll by entering in all caps UMBASIC to enroll in the Basic Plan, UMSRA to enroll in the SRA, and BASICSRA to enroll in both.

Contribution Limits
The IRC limit on 403(b) contributions for 2008 is $15,500, plus an additional $5,000 if you are age 50 or older. Your limit may be increased by an additional $3,000 once you have 15 or more years of service at the University. The 5% you contribute under the Basic Retirement Plan counts against this limit, with the remainder being the additional amount you can tax-defer to an SRA.

New Hire SRA Calculator (PDF)
Use this calculator to determine how much you can contribute to an SRA.

Contact the HR/Payroll Service Center if you have questions on how much you can contribute.

Are You Tax-Deferring Elsewhere?
The IRC limit on elective deferrals to a 403(b) plan applies no matter how many employers and 403(b) plans you have. In addition, elective deferrals to a 401(k) plan must also be taken into account when determining how much you can contribute to the UM plan. If you are making tax-deferred contributions through another employer’s retirement savings plan, it is wise to consult a qualified tax adviser to make sure that your combined contributions do not exceed Internal Revenue Code limits. This can be especially important if you are new to the University and contributed to another plan this year before coming to UM. See Your Tax Deferring Limit for more information.

Compulsory Participation
New faculty or staff members may voluntarily join the Basic Retirement Plan at any time. However, participation becomes compulsory when:

• you reach age 35;
• you work full-time at the University; and
• you complete two years of continuous eligible employment at the University.

Supplemental staff members are not required to participate but may do so with a 50% or greater appointment. For more information, see Compulsory Participation.

Basic Plan Cash Withdrawals and Rollovers
You may elect a cash withdrawal or choose to rollover part or all of your accumulations to another employer's plan or to an IRA when you become eligible. Consult with your tax adviser before taking a cash withdrawal, because you may incur heavy tax penalties.

• You may cash out or rollover your 5% employee contribution and earnings to the Basic Retirement Plan at any age when you have terminated your employment with the University.
• The University contribution and earnings are available at age 55 or older once you have terminated your employment with the University.
• Cash withdrawals and rollovers are not available to active faculty and staff members.

For more information, see Cash Withdrawals and Rollovers and Transfers.

Receiving Income from the Basic Retirement Plan
Partial or full annuities may begin at any time after retirement, phased retirement, or termination regardless of your age or length of service. Generally, IRS guidelines mandate that you can wait no later than April after the year in which you reach age 70 1/2 to begin receiving a minimum amount of income if you have retired or terminated your employment with the University.

You have several options for receiving the income, including a joint life survivor option, which will provide a lifetime income to both you and your spouse or other qualified adult.

There is no requirement that you draw an annuity from these accounts. You may withdraw the funds in a lump sum, periodically draw interest only, or receive distributions necessary to meet IRS minimum distribution guidelines if you qualify for these forms of payment based on your employment status and age.