All University employees are eligible to participate in the plan; except that students of the University whose employment is incidental to their education at the institution are not eligible.
Federal and Massachusetts income taxes on your 403(b) contributions are deferred until you draw benefits from your account. You benefit from the tax savings each payday. For example, someone earning $25,000 per year and saving 5% ($1,250 per year) of salary, would pay Federal income taxes on only $23,750.
Yes. The IRS limits the amount of your tax-deferred contribution each year. In 2018 the general limit is $18,500.
You are responsible for making certain that all of your tax-favored retirement contributions do not exceed the IRS's limits. Your failure to comply with the prescribed limits can result in taxes, penalties, and interest charges from the IRS.
Employees who are age 50 by December 31, 2018 may also contribute up to an additional $6,000 in 2018.
Employees may contribute to the State's Deferred Compensation Plan in addition to their 403(b) contributions.
Yes, if certain conditions are met, the IRS allows for the deferral of some types of post-severance compensation, including accumulated vacation and sick pay. Please see the Deferral of Accrued Sick and Vacation Pay document for more information.
No, the IRS does not allow for deferral of severance payments made after termination of employment.
You may stop or restart the amount of your contributions anytime during the year by logging in to www.netbenefits.com/umass. Enter your Username and Password at the top of the website and click Log in. On the NetBenefits® home page, choose Contribution Amounts in the Quick Links menu for the Plan in which you wish to make a contribution election. Please note that all contribution election changes will go into effect in the next payroll processed, and you cannot choose a future effective date.
In an effort to improve our programs, from both the perspective of the participant and the administrator, the University’s Supplemental Retirement Plan Investment Committee (the “Committee”) launched a competitive procurement process to select a single vendor as the primary plan provider for the University’s supplemental retirement plans. Assisted by Cammack Retirement Group, an independent, registered investment advisor, the Committee selected Fidelity Investments as its primary retirement plan provider. The Committee also selected TIAA-CREF as a secondary provider in order to maintain access to some of TIAA-CREF’s proprietary investment options.
The 403(b) carriers offer different "funding vehicles." These vehicles may be Fixed Annuities, Mutual Funds, or Variable Annuities. Please see the Fundamentals about Investment Options, which will help you understand their differences.
Each provider may offer several investment funds for your choice. For example, a provider may offer Money Market, Stock, and Bond investments under their funding vehicle. You allocate your 403(b) contributions among the funds provided by your carrier. This wide variety of investments means that you can select those investments, either variable or guaranteed, that best meet your personal financial goals.
Review the section on Before You Invest for basic investment concepts. The information will help you understand each carrier's funds to determine your investment choices and how to allocate your contributions. You may contact each carrier for assistance in helping you understand their funds and determining your allocation.
In general, distributions from the plan cannot be made until one of the following “triggering events” occurs:
You terminate employment with the University;
You attain age 59 ½;
You become disabled;
You encounter a financial hardship; or
Upon your death.
The University uses the IRS Safe Harbor method in administering financial hardship withdrawals. Prior to taking a hardship distribution, you must first obtain all loans and any other distributions that may be available under the plan. In addition, you must meet an eligible reason, as defined by the IRS under the Safe Harbor method, for requesting a hardship withdrawal. You must provide documentation to the University to confirm the financial need; and except for allowing for taxes, the amount of the hardship withdrawal cannot exceed the amount of the documented need. Lastly, you may draw only on your contributions from the plan for purposes of a hardship. The investment earnings must remain in your account until the occurrence of one of the other triggering events referenced above.
Each 403(b) plan provider offers a variety of distribution methods under our plan. The most common methods available are:
installment or fixed-period payments;
income payable for either your lifetime or life expectancy;
"interest only" payments; and
Each carrier may offer more or fewer payment methods than these. You will need to carefully check each firm's features to be sure it offers the methods you expect to utilize. There may also be differences in withdrawal restrictions and fees imposed by each carrier.
Yes. The minimum loan amount under the University's 403(b) plan is $1,000 and you may maintain only two (2) loans with unpaid balances under the plan at any time. If you default on your loan payments, then your loan will be considered a taxable distribution to you from the Plan. A loan currently in default precludes you from taking another loan under the Plan.
Please contact the provider directly to obtain information on how the loan provision operates, as well as current interest rates and repayment schedules.
Since Federal and Massachusetts* income taxes have been deferred on your contributions and the investment earnings in your 403(b) account, you should expect to pay this tax on your benefits.
While tax withholding is voluntary on benefit payments made over ten or more years, the IRS requires 20% withholding on any payments made to you for periods of less than ten years. For example, lifetime annuity income paid to you by the Plan is not subject to the mandatory withholding, but a lump-sum payment to you is subject to the mandatory withholding.
In general, the IRS also imposes a 10% Early Withdrawal Penalty on most distributions that are paid to participants who are younger than age 59 1/2. This also includes hardship withdrawals.
Although we have tried to identify the key tax issues most employees must consider, there can be other tax implications of drawing your benefits at a certain time and in a certain way. You should discuss this issue carefully with representatives of your carrier as well as qualified counsel.
*Note: Contributions made prior to 1998 were only deferred from Federal income taxes. Therefore employees have already paid Massachusetts state taxes on such contributions. Contributions made after January 1, 1998 are tax deferred for both Federal and Massachusetts income tax purposes.
Any death benefits under the Plan are payable to the beneficiaries you have named. The death benefit payable before you begin drawing benefits from the 403(b) plan will vary from carrier to carrier. Generally, your current account balance will be your "pre-retirement" death benefit.
The death benefit payable after you have begun drawing benefits from the plan also depends on your carrier's provisions, as well as the payment method you have chosen to receive benefits. Death benefits are often called "Survivor Benefits." Your 403(b) carrier representative can answer your questions about the Survivor Benefits payable from your account.
Yes. The University's 403(b) Plan accepts rollovers (certain restrictions may apply). You should carefully check with your prior carrier to identify any withdrawal restrictions and fees that may be applied to your rollover to this, or any other, 403(b) program.