Franklin & Marshall College (the “College” or “Employer”) has prepared this Summary Plan Description (SPD) to describe the provisions of the Franklin & Marshall College Retirement Plan as in effect from January 1, 2013. The original predecessor of the Franklin & Marshall College Retirement Plan, known as the TIAA Retirement Plan for Employees of Franklin & Marshall College and TIAA Tax Sheltered Annuity Plan for Employees of Franklin & Marshall College (the “TIAA Plan”), was established by the Board of Trustees of the College on July 1, 1943. College and Participant contributions under this defined contribution plan were made under Section 403(b) of the Internal Revenue Code (the “Code”) and invested in annuities that were issued to each Participant by the Teachers Insurance and Annuity Association (TIAA) and/or the College Retirement Equities Fund (CREF). The Franklin & Marshall College Custodial Account Retirement Plan (the “Custodial Account Retirement Plan”) was established by the Board of Trustees of the College on November 1, 1982, as a second Code Section 403(b) defined contribution plan to be maintained in conjunction with the TIAA Plan and to give participants the alternative of nvesting College and Participant contributions in shares of mutual fund companies rather than annuities.
Effective as of January 1, 2009, both the TIAA Plan and the Custodial Account Retirement Plan were amended and restated in their entireties primarily for the purpose of bringing them into compliance with final Treasury regulations promulgated under Section 403(b) of the Code that became effective on that date, and effective as of September 30, 2009, the two plans were merged into a single plan, with the merged plan re-named the Franklin & Marshall College Retirement Plan (here in after referred to as the “Plan”). Under the merged Plan, Participants continue to have the option of annuity investments and mutual fund investments.
This SPD provides each Participant in the Plan with a description of the main features of the Plan as of January 1, 2013. The SPD includes only general information about the terms of the official Plan document. While every effort has been made to make this SPD as accurate as possible, in the event of a discrepancy between the SPD and the Plan documents, the Plan documents shall control. The benefits and other principal provisions described in this SPD are effective with respect to you only if you are eligible for benefits in accordance with the provisions of the Plan.
Facts About the Plan
Plan Name: Franklin & Marshall College Retirement Plan
Employer Identification Number: 23-1352635
Plan Number: 001
Type of Plan: Code Section 403(b) Defined Contribution Plan
Name, Address, and Telephone Number of Employer: Franklin & Marshall College, Lancaster, PA 17604-3003, (717) 291-3995. Employer shall also include the James Street Improvement District.
Type of Administration: Self-administered
Plan Administrator: Franklin & Marshall College, P.O. Box 3003, Lancaster, PA, 17604-3003, (717) 291-3995
Annuity Provider and Recordkeeper— Teachers Insurance and Annuity Association (“TIAA”)
1835 Market Street
Philadelphia, PA 19103-3272
Custodian— JPMorgan Chase Bank N.A.
270 Park Avenue
New York, NY 10017
Plan Year: January 1 through December 31
Plan Year Ends: December 31
College Fiscal Year Ends: June 30
Agent for Service of Legal Process: Franklin & Marshall College. Service of legal process may be made upon the Plan Administrator.
Eligibility and Requirements for Participation
The Plan provides for two types of participation with separate eligibility requirements applicable to each. An “Active Participant” is an employee who becomes eligible to receive an Employer, or College-funded, contribution under the Plan. A “Salary Reduction Participant” is an employee who becomes eligible to make Salary Reduction Contributions on a pre-tax basis under the Plan.
Active Participant— All employees of the College, other than adjunct faculty and student employees, are eligible to become Active Participants upon completion of two (2) “Years of Service”. You become an Active Participant beginning on the January 1 or July 1 coinciding with or next following the date you satisfy the eligibility requirements (completion of two Years of Service). Employees of the James Street Improvement District are eligible to become Active Participants without regard to the two Years of Service eligibility requirement, effective upon appointment to a full-time position. A Year of Service will be credited to you if you complete 12 months of employment with the College in which you are credited with at least one thousand (1,000) Hours of Service, with the 12 month measurement period commencing on your date of hire and on each subsequent anniversary of your date of hire.
Prior Employment in Higher Education — You may additionally be credited with a Year of Service for each four (4) consecutive year period, or 500 Hours of Service for each two (2) consecutive year period, of full-time employment completed with a Qualified Employer. "Qualified Employer" means:
(a) if you were hired by the College prior to January 1, 1991, any organization described in Section 501(c)(3) of the Code which is exempt from tax under Section 501(a) of the Code, or any educational organization described in Section 170(b)(A)(ii) of the Code which is an institution of higher learning and which is a State, a political subdivision of a State, or an agency or instrumentality of either of the foregoing;
(b) if you were hired by the College after December 31, 1990, and before January 1, 2012, any institution of higher education which is either an organization described in Section 501(c)(3) of the Code which is exempt from tax under Section 501(a) of the Code, or a State, a political subdivision of a State, or an agency or instrumentality of either of the foregoing; and
(c) if you were hired by the College after December 31, 2011, any college or university, but not including a research or other non-teaching affiliate of a college or university, is either an organization described in Section 501(c)(3) of the Code which is exempt from tax under Section 501(a) of the Code, or a State, a political subdivision of a State, or an agency or instrumentality of either of the foregoing. A "Qualified Employer" may also include an institution of higher education of the type described in (c) above which is located in any foreign country and which, if it were located in the United States, would, in the reasonable judgment of the College, be an organization described in (c) above.
Salary Reduction Participant— All employees of the College and the James Street Improvement District who are expected to work 20 hours per week or more for wages are eligible to become Salary Reduction Participants at any time after commencement of employment. You become a Salary Reduction Participant by entering into a written salary reduction agreement with the College electing an annual dollar amount reduction in your base earnings of at least $200, which amount is then contributed to the Plan as a pre-tax Salary Reduction Contribution.
Salary Reduction Contributions are deducted from a Participant's pay before his/her Federal income tax obligation is calculated. No Federal income tax is paid by the Participant on the portion of salary contributed to his/her Account, or the earnings on such contributions, until withdrawn by the Participant upon retirement or separation from service. Salary Reduction Participants are required to pay FICA, state, and local taxes on their contributions. Elective Salary Reduction Contributions are immediately and fully vested.
Independent contractors, contracted employees, individuals who volunteer their services without compensation, adjunct members of the faculty, students, and student employees are not eligible to participate through the Plan. Retired College employees are not eligible for Employer Contributions or to make Salary Reduction Contributions through the Plan.
Changes in Employment Status
Under existing service rules, a “Break in Service” occurs when you fail to complete at least 500 hours of service in a twelve (12) month Plan Year. If you are re-employed by the College after a Break in Service, the service you earned before your termination will be restored only if you were already credited with at least two (2) “Years of Service” on the date your employment terminated and were eligible for an Employer Contribution to the Plan (were an Active Participant as of or prior to your employment termination date). You do not earn any service for the period of time you were not employed by the College.
Upon rehire to a full-time position, if an employee was an Active Participant (credited with two Years of Service and receiving an Employer Contribution to the Plan) before a Break in Service, the employee will again become an Active Participant after completion of at least one Hour of Service.
Leave of Absence— If you are approved for paid or unpaid leave under the Family & Medical Leave Act (FMLA), you will not experience a Break in Service during that leave, as long as you return within two years of your last work day. Sabbatical leaves, military leave, faculty research leaves, and other leaves of absence approved by the College are not considered Breaks in Service as long as an employee returns to work for the College following such a leave.
During an approved unpaid leave of absence, including those under the FMLA, all College and Salary Reduction Contributions are suspended for the duration of the unpaid leave. Faculty members who are Active Participants and who experience a reduction in salary during an approved paid leave will receive a College retirement contribution based on their reduced salary.
Full-time to Part-time Change in Status— An Active Participant will cease to be eligible to receive an Employer Contribution to the Retirement Plan upon termination of full-time employment status or termination of employment in a position authorized and scheduled for 1,000 or more work hours for wages per year. However, an Active Participant who transfers from such a position to a position classified by the College as “part-time” (authorized and scheduled for less than 1,000 work hours for wages per year) will remain an Active Participant and receive an Employer Contribution if each of the following conditions are met:
1. The employee is not classified as an adjunct member of the faculty,
2. The employee completes a total of 1,000 or more work hours for wages with Franklin & Marshall during the calendar year, and
3. The employee is employed by the Franklin & Marshall on the last day of the calendar year (December 31).
An Employer Contribution will be made on behalf of the employee following the last day of the Plan Year (calendar year) if each of the conditions above have been met. Employees appointed as adjunct faculty members are not eligible for an Employer Contribution to the Retirement Plan. For purposes of an Employer Contribution when the conditions above have been met, Compensation for the Plan Year in which the employee worked 1,000 hours or more will include wages the employee earned while employed by Franklin & Marshall in a part-time position.
Phased Retirement Program and Pre-retirement Leave of Absence Program for Faculty
For full-time, tenured Faculty members who participate in the College’s Phased Retirement Program or the Pre-retirement Leave of Absence Program (“Programs”), the College will make normal contributions to the Plan based on the actual, reduced base monthly salary received during any such Program period. In addition, the Faculty members participating in the Programs will be eligible to make elective Salary Reduction Contributions. Any such Program participant, who is age 60 or older, may begin receiving distributions from his/her Account.
Contributions by the Employer for Active Participants
For Active Participants who were appointed to a full time position with the College on or before July 1, 2006, the College shall make Employer Contributions in cash to the Plan each year equal to fifteen percent (15%) of Compensation. For Active Participants appointed to a full time position with the College after July 1, 2006, and former employees rehired after July 1, 2006, the College shall make Employer Contributions in cash to the Plan each year equal to twelve percent (12%) of Compensation. However, former Active Participants who previously received a 15% Employer Contribution and are rehired in a full-time position within five (5) years of their termination date shall be eligible to receive an Employer Contribution in an amount equal to fifteen percent (15%) of such Participant's Compensation upon completion of one Hour of Service. Notwithstanding the foregoing, Active Participants employed by the James Street Improvement District shall be eligible to receive an Employer Contribution in an amount equal to five percent (5%) of such Active Participant’s Compensation.
For Employer Contribution purposes, your Compensation for a Plan Year means your base wages paid to you on a payday that falls within the Plan Year, including any Salary Reduction Contributions made by the College on your behalf under the Plan and any cafeteria plan contributions under Section 125 of the Code. If a payday falls within a given Plan Year, the amount paid to you on that payday is part of that Plan Year’s Compensation, without regard to when that payday amount was earned or accrued.
For purposes of the Plan, Compensation does not include:
1) Employer Contributions (other than Salary Reduction Contributions) under the Plan or any other qualified plan of the College;
2) the amount or value of any other employee benefits (whether or not taxable) provided by the Employer to you;
3) Compensation paid to you prior to your date of entry into the Plan as an Active Participant;
4) bonuses or awards, overtime premium/pay, “on-call” pay, shift differential pay, additional pay for “essential personnel”, additional pay for special assignments or training, reimbursements, and other forms of additional remuneration;
5) faculty summer pay, pay for teaching additional classes, and additional pay for acting as chair of a department;
7) payments or salary funded through a grant; grant-funded stipends;
8) the value of any housing and/or meals provided by the Employer;
9) business expense reimbursements, payment or stipends for the usage of automobiles or cell phones, mileage allowances;
10) pay for conducting a summer sports, recreation, and/or educational camp
11) the value of any accrued vacation benefit that, under Employer policies, is paid to an eligible employee upon employment termination;
12) any amount that would otherwise be base earnings that is not paid due to an Active Participant taking unpaid time off during a pay period; and
13) any other amount paid to an Active Participant that is over and above base earnings.
Compensation is subject to a Code-imposed maximum annual amount that can be taken into account in any Plan Year (for 2013, this annual maximum is $255,000, which limit is adjusted as warranted for inflation).
All contributions made for each Active Participant who is employed on a full-time basis by an Employer will be made as soon as practicable after the end of each pay period for which the Participant has received base wages, regardless of whether the Participant has completed a Year of Service or is employed by the Employer on the last day of the Plan Year. A contribution will not be made on behalf of a Participant during an unpaid leave of absence or other period during which no Compensation is earned or issued.
All contributions made by the Employer for each Active Participant who is not employed on a full-time basis by the Employer will be made only if the Participant completes a Year of Service and is employed by the Employer on the last day of the Plan Year.
All Employer Contributions and other amounts held for you in the Plan are fully vested and non-forfeitable at all times.
Requirements for Salary Reduction Participation
Each employee of the College or the James Street Improvement District eligible to become a Salary Reduction Participant may become a Salary Reduction Participant at any time after his/her employment commencement date by entering into a written salary reduction agreement, and agreeing to a salary reduction of at least $200 per year under the Plan.
The salary reduction agreement specifies the amount by which your taxable Compensation is reduced, with the result that such Compensation reduction amount will not be included in your income for Federal income tax purposes and will be contributed to your Plan account as a Salary Reduction Contribution. All Salary Reduction Contributions you elect will be paid into the Plan as soon as practicable after the end of each pay period, with no requirement that you have completed a Year of Service or are employed by the Employer on the last day of the Plan Year, and such contributions will be fully vested and non-forfeitable at all times. Appendix A explains the Plan procedures for making changes, if you so desire, to your salary reduction agreement.
A salary reduction contribution will not be deducted from your pay, or submitted on your behalf by the Employer to the Annuity Provider and Recordkeeper, during any pay period in which you have no wages or insufficient wages to allow a full salary reduction contribution per your elections.
Limitations on Salary Reduction Contributions and on Total Contributions
The Internal Revenue Code imposes a maximum amount on Salary Reduction Contributions (pre-tax elective contributions) that any Participant may make in any calendar year under all Code Section 403(b) and 401(k) plans in which the Participant may participate. For 2013, this aggregate annual maximum is $18,000, which limit will be adjusted by the Internal Revenue Service as warranted for inflation.
Catch-up Contributions— In addition, if a Participant is age 50 or older on the last day of the calendar year, the Participant is allowed to make a further pre-tax, elective “Catch-up Contribution” up to a maximum permitted Catch-up Contribution amount. For 2013, this maximum annual Catch-up Contribution is $5,500, which limit will be adjusted by the Internal Revenue Service as warranted for inflation. The Employer will monitor these maximums and not permit Salary Reduction Contributions under the Plan in any calendar year in excess of these amounts. However, since the Employer has no knowledge of or control over other plans in which a Participant may participate, each Salary Reduction Participant is ultimately responsible for computing the maximum Salary Reduction Contribution he/she is permitted to make to the Plan for each tax year, and to notify the Employer promptly at year end of any excess Salary Reduction Contribution made to the Plan for the year then ended that is to be distributed back to the Participant. Upon request, the Plan Administrator or the Record keeper, TIAA, will provide you with a salary reduction worksheet which allows you to calculate the applicable limitations. However, if you need further information or guidance regarding applicable limitations, in particular if you participate in plans of other employers, you should consult your tax adviser.
The Internal Revenue Code also imposes an annual limit on the total contributions that may be allocated by an Employer to any one Participant’s accounts under all of the Employer’s tax-qualified defined contribution retirement plans; this aggregate limit caps the total Employer and Salary Reduction Contributions that may be allocated to one Participant in any one year. For 2013, this aggregate limit is $51,000, which is adjusted periodically for inflation.
Commencement of Participation
Each Employee who is eligible to become an Active Participant or a Salary Reduction Participant must complete the necessary forms and provide such information as required by the Plan Administrator as a precondition to participation. Each eligible Employee who applies to become a Salary Reduction Participant must complete a salary reduction agreement in the form provided by the Plan Administrator in order to commence Salary Reduction Contributions. Pursuant to and subject to procedures established by the Plan Administrator, Participants shall also specify the manner in which their Employer and Salary Reduction Contributions shall be invested and re-invested between and among the available annuity and mutual fund investment alternatives available under the Plan. See Appendix A for procedures relating to changing your salary reduction agreement.
Participants control the investment and reinvestment of all Plan contributions allocated to their Plan Account between and among various available investment alternatives. All Employer Contributions for any Participant under this Plan shall be invested at the Participant’s direction in the annuities listed in Appendix B to this SPD, or in one or more of the custodial account mutual funds listed in Appendix C to this SPD, and all Salary Reduction Contributions of any Participant shall be invested at the Participant’s direction in the annuities listed in Appendix B or in one or more of the custodial account mutual funds listed in Appendix C. All annuities and custodial accounts under the Plan shall be established and maintained in the name of the Participant, and the aggregation of a Participant’s annuity and custodial account investments under the Plan constitute the Participant’s Plan “Account”.
Failure to Designate— If a Participant fails to designate an available fund or funds for the investment of his/her Employer and/or Salary Reduction Contributions, the Plan Administrator shall allocate contributions on the Participant’s behalf to one of the available funds designated by the College on Appendix C as the default investment fund for such purpose.
A Participant is permitted to change the investment of his/her Account under the Plan between and among the available annuity investments and mutual fund investments, subject to such reasonable and non-discretionary rules and procedures that may be adopted from time to time by the Plan Administrator, TIAA, and the Custodian, which are summarized on Appendix A. Account investments or exchanges with investment vendors other than those identified and approved in Appendix B or Appendix C are not permitted. The College may, in its discretion, add new annuities and mutual funds to Appendix B and/or Appendix C, or discontinue the use of one or more such annuities or funds, provided that Participants whose Accounts are invested in any discontinued fund shall be given an opportunity to transfer the portion of their Accounts invested in any such fund to another available fund. In the event the Plan Administrator makes a change in the available annuity investments or custodial account investments, a new Appendix B or a new Appendix C, as applicable, shall be prepared and appended to the SPD by the Plan Administrator to replace the existing Appendix, and any such revised Appendix B or C prepared to reflect a change in investment choices implemented by the Plan Administrator shall be distributed to Participants as a modification of this SPD.
Each Account under the Plan shall be valued by TIAA and the Custodian on the last day of each Plan Year, and on each other valuation date in each Plan Year, with statements showing the value of the Account made available to Participants no less frequently than quarterly. Such valuations shall be made on the basis of the fair market value of all property held in the Account.
All dividends or other distributions received by the Custodian on shares of an available fund held by the Custodian shall be invested in additional shares of the fund. If the Custodian is given an election of receiving a distribution in additional shares or in cash, the Custodian shall elect to receive the distribution in shares.
Your investments are not insured by the Federal Deposit Insurance Corporation, any other government agency, the Annuity Provider and Record keeper, TIAA, the Custodian, or by the College. When investing through the Plan, it is possible to lose money. Diversifying your investments – allocating contributions across various annuities and mutual funds – may help reduce the risk of investment loss.
Transfers Between Annuities and Mutual Funds
If you are either an Active Participant or a Salary Reduction Participant, you may elect to make transfers from the custodial account mutual funds to the TIAA annuities, or transfers of all or part of your annuities to the custodial account mutual funds, subject to any restrictions under the annuities and mutual funds and to the following:
a. Transfers must be made in the form of cash.
b. Transfers will not be made or accepted if the Plan Administrator determines
that any such transfer may jeopardize the tax exempt status of the Plan.
c. Transfers will not be treated as an annual addition or as a Salary Reduction
Contribution for purposes of annual limits on Plan contributions.
d. Amounts you transfer will remain fully vested and non-forfeitable at all
Some annuities and funds limit the number of transfers you can make in a given period of time. Please consult the prospectus for details, or contact the Annuity Provider and Record keeper (TIAA).
If you are either an Active Participant or a Salary Reduction Participant, you may elect to make, or cause to be made, lump sum Rollover Contributions to the College’s Retirement Plan. A Rollover Contribution means an amount distributed or transferred to the Annuity Provider and Record keeper (TIAA) or to the Custodian by the Participant or at the Participant’s direction that meet’s the definition of “eligible rollover distribution” in Code Section 402(c)(4). This definition, in general, includes amounts the Participant had accumulated under an Individual Retirement Account described in Code Section 408 (or a Retirement Bond described in Code Section 409), another employer's (or the Participant's own) tax-sheltered annuity contract (or custodial account) described in Code Section 403(b), or another employer’s tax qualified retirement plan as described in Code Section 401(a), but various limitations apply, such as a prohibition on the rollover of Roth accounts. Participants who want to initiate a Rollover Contribution are to contact the Annuity Provider and Record keeper (TIAA).
Any Rollover Contribution to the Plan is subject to the following:
a) Rollover Contributions must be made in the form of cash.
b) Rollover Contributions will not be accepted if the plan account or contract from which amounts are to be transferred does not permit such transfer, or if the Plan Administrator determines that such transfer may jeopardize the tax exempt status of the College’s Plan.
c) Rollover Contributions will be allocated to a Participant's Account and will not be treated as an annual addition or as a Salary Reduction Contribution for purposes of annual limits on Plan contributions.
d) In the event a Rollover Contribution is accepted and the Plan Administrator subsequently determines that your Rollover Contribution did not meet the requirements set forth in the Plan or the Code, the Plan Administrator may, in its discretion (but subject to any restrictions under the annuities or custodial accounts), elect to return to the Participant such Rollover Contribution, together with all income earned.
You may apply to the Plan Administrator for a distribution from the "Restricted Portion" of your Supplemental Retirement Annuities and/or custodial account mutual fund investments (up to the "Maximum Available Amount" described below) in the event of immediate and heavy financial need, providing that if you are married, your spouse consents in writing to the distribution and agrees to waive the life annuity form of payment. The Restricted Portion of your Supplemental Retirement Annuities and/or mutual fund investments is an amount equal to the sum of (1) all Salary Reduction (your elective) Contributions made to your Account, and (2) all earnings credited to such contributions prior to January 1, 1989, less any prior distributions from this Restricted Portion. You may not take a Hardship Withdrawal from Employer Contributions made on your behalf. A Hardship Withdrawal is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement.
A Hardship Withdrawal will be authorized only if the distribution is to be used for one of the following purposes:
a. The payment of medical expenses (described in Section 213(d) of the Internal Revenue Code) incurred or to be incurred by you, your spouse, dependent or primary beneficiary;
b. The purchase (excluding mortgage payments) of your principal residence;
c. The payment of tuition for the next year, semester, or quarter of postsecondary education for yourself, your spouse, dependent, or primary beneficiary;
d. The need to prevent your eviction from your principal residence or foreclosure on the mortgage of your principal residence;
e. The payment of funeral or burial expenses for your deceased parents, spouse, child, dependent or primary beneficiary,
f. The need to repair damage to your principal residence that would qualify for a casualty loss deduction under Code Section 165 (without regard to whether it exceeds 10% of adjusted gross income), and
g. Any other reason deemed by the Internal Revenue Service (through the publication of revenue rulings, notices and other documents of general applicability) to constitute an immediate and heavy financial need.
A Hardship Withdrawal will be made from the Restricted Portion of your Supplemental Retirement Annuities and/or custodial account mutual fund investments, but only if you certify and agree that all of the following conditions are satisfied:
a. The distribution is not in excess of the amount of your immediate and heavy financial need;
b. You have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the College; and
c. That your Salary Reduction Contributions (and similar compensation deferrals and/or employee contributions under any other retirement plans maintained by the College) will be suspended for at least six (6) months after your receipt of the hardship distribution.
You may not roll over hardship distributions and thus any portion of the hardship distribution attributable to your elective Salary Reduction Contributions will be exempt from the 20% mandatory withholding rules. However, hardship withdrawals are subject to Federal income taxes and may also be subject to a 10% penalty tax unless one of the exceptions apply. It is recommended that you consult your tax advisor prior to applying for a Hardship Withdrawal.
While the primary purpose of the Plan is to help you save for retirement, the College recognizes that you may need to access your Account while employed. If you are an active employee of the College, you may request a loan from both your Salary Reduction Contributions and/or Employer Contributions, subject to certain restrictions and maximums. Interest and an administrative fee are charged on all loans. Loans are repaid by the Participant directly to the Annuity Provider and Record keeper (TIAA). A Participant taking out a loan may continue his/her Salary Reduction Contributions while repaying the loan, and the College continues to make its contribution for eligible Active Participants throughout the loan repayment period. Participants are to contact TIAA for further information about the loan option, including the minimum and maximum amount which may be borrowed, interest rates, and collateral requirements. To apply for a loan, a Participant must contact TIAA directly.
Normal and Early Retirement Ages
For purposes of the Plan, Normal Retirement Age means age 65 and Early Retirement Age means age 60.
Subject to any limitations under the annuities, Participant Accounts may be distributed upon:
• termination of employment,
• change in status from full-time employment to part-time employment if the Participant is at least age 60,
• disability, or
Additionally, you may withdraw your Salary Reduction Contributions (your elective contributions) and the earnings thereon while you are still employed, if you are age 59 or older.
Employer Contributions made on behalf of an Active Participant may not be withdrawn while actively employed, unless the Participant is at least age 60 and transfers from fulltime to part-time employment status. However, a Participant may be able to take a loan from his/her Account, as described above.
If you opt to leave your investments in the Plan after termination of your employment, they will remain invested in the Plan, subject to your investment control, until such time you elect to have your Account distributed to you or rolled over to another available retirement investment plan or account.
When you retire after reaching Normal or Early Retirement Age or when you reach Normal or Early Retirement Age and your employment changes from full-time to parttime status, you may elect to commence payment of benefits. You may also elect to commence payment of benefits if your employment terminates before reaching Normal or Early Retirement Age. The method of distribution of your benefits should be selected within 60 days of your eligibility to receive benefits.
Income Taxes— You will be required to pay Federal income tax on distributions from your Account at the time you receive a distribution. If you separate from service and receive a distribution prior to age 59, the distribution may be subject to a penalty tax in addition to normal Federal income tax withholdings. You should consult the Plan’s Annuity Provider and Record keeper (TIAA) and a tax advisor for further information.
Minimum Required Distributions— You may elect to delay the receipt of your benefits following employment termination. However, once you have retired or otherwise terminated your employment, there are Federal income tax rules that require minimum annual distributions to begin no later than the April 1st following the year in which you reach age 70. These minimum required age 70 distribution rules impose fairly significant tax penalties on individuals in the event of non-compliance with annual minimum distributions. You should consult the Plan’s Annuity Provider and Record keeper (TIAA) and a tax advisor for further information.
In the event of your death, regardless of the method of distribution selected, your entire death benefit must generally be paid to your beneficiaries within five years. However, if your designated beneficiary is a person (instead of your estate or most trusts), then you or your beneficiary may elect to have minimum distributions begin within one year of your death and benefits may be paid over the designated beneficiary's life expectancy. If your spouse is the beneficiary, then under the one year rule, the start of payments may be delayed until the year in which you would have attained age 70ó. Additional rules regarding death benefits for married Participants are also noted below.
If you are entitled to receive a distribution which is an “eligible rollover distribution,” you may roll over all or a portion of it either directly or within 60 days after receipt into another Code Section 403(b) or Code Section 401(a) retirement plan or into an Individual Retirement Account (IRA). An eligible rollover distribution, in general, is any cash distribution other than an annuity payment, a minimum distribution payment or a payment which is part of a fixed period payment over ten or more years. The distribution will be subject to a 20% Federal withholding tax unless it is rolled over directly into another retirement plan or into an IRA; this process is called a “direct” rollover.
If you have the distribution paid to you, then 20% of the distribution must be withheld even if you intend to roll over the money into another retirement plan or into an IRA within 60 days. To avoid withholding, instruct the Plan to directly roll over the money for you.
Please note that, in addition to income taxes, you may be subject to a 10% penalty tax on distributions not directly rolled over to another plan or IRA. If you have any questions about taxes, please consult your tax advisor.
Domestic Relations Order— Plan benefits are payable to you as described above, are not subject to the claims of your creditors, and are not otherwise subject to attachment, garnishment, or other legal or equitable process. Further, you have no right to assign, alienate, anticipate, pledge or encumber your Plan benefit for the benefit of a third party. Not withstanding these restrictions, however, if the Plan receives a Domestic Relations Order issued under state domestic relations law assigning a portion of your Plan benefit to a spouse, former spouse, child or other “alternate payee”, and the Plan Administrator determines the order is a “qualified” order as defined in Code Section 414(p), your Plan benefit will be payable to the alternate payee as directed by the order. You can obtain from the Plan Administrator, without charge, a copy of the Plan’s procedures used to determine the qualified status of Domestic Relations Orders.
Methods of Distribution
There are various methods by which benefits may be distributed to you from the Plan. Distributions of benefits will be made under any one or combination of the forms provided in the Plan. The method depends on your marital status, as well as the elections you and your spouse make. All methods of distribution, however, have equivalent values.
If you are married at the time benefit payments are to commence, distribution will be in the form of a Qualified Joint and Survivor Annuity or a Qualified Optional Survivor Annuity unless you and your spouse elect a different form of payment. A Qualified Joint and Survivor Annuity is a monthly annuity paid for your lifetime with a lifetime annuity payable to your spouse upon your death equal to fifty percent (50%) of the annuity income amount paid during your lifetime. A Qualified Optional Survivor Annuity is a monthly annuity paid for your lifetime with a lifetime annuity payable to your spouse upon your death equal to seventy-five (75%) of the annuity income amount paid during your lifetime.
If you are not married on the date your benefits are to begin, you will automatically receive a life annuity, which means you will receive payments for as long as you live, unless you elect a different form of payment.
Waivers these automatic forms of payment are subject to the following rules. When you are about to receive any distribution, the Record keeper, TIAA, will provide you with a written explanation of the Qualified Joint and Survivor Annuity, the Qualified Optional Survivor Annuity, and/or the life annuity. You will be given the option of waiving the Qualified Joint and Survivor Annuity, the Qualified Optional Survivor Annuity, or the life annuity form of payment during the 180 day period before the annuity is to begin. If you are married, your spouse must consent in writing to the waiver in the presence of a notary or a plan representative. You may revoke any waiver. A revocation of a prior waiver may be made by you without consent of your spouse at any time before the annuity is to begin. The number of revocations is unlimited. If you waive the automatic forms of benefit and your Account is invested in an annuity, TIAA will inform you about the alternative forms of benefit payment available under the annuity. If you waive the automatic forms of benefit and your Account is invested in custodial account mutual funds, available forms of payment you may select are (1) a lump sum payment, (2) installments over a period certain; (3) payment through purchase of a nontransferable life annuity issued by an insurance company on the life of the Participant, spouse or other Beneficiary; and (4) systematic regular monthly, quarterly or annual cash withdrawals (“on demand payments”).
If your Account does not, and never did, exceed $1,000, it may be distributed to you automatically in a single lump sum payment, but only if the TIAA distribution procedures would so allow.
If you are married and you die prior to the commencement of benefits, fifty percent (50%) of the full current value of any annuity accumulation will be used to purchase for your spouse a lifetime annuity (called a "Preretirement Survivor Annuity") or other form of benefit elected by your spouse, and 50% will be paid to your designated beneficiary. If you are married and age 35 or over, you may waive the Preretirement Survivor Annuity coverage and name a beneficiary other than your spouse if your spouse consents in writing. The Plan’s Record keeper, TIAA, will provide you with a written explanation of the Preretirement Survivor Annuity. This explanation must be given to you during the period of time beginning on the first day of the Plan Year in which you will reach age 32 and ending on the first day of the Plan Year in which you reach age 35. If you choose to waive the Preretirement Survivor Annuity before age 35, the waiver becomes invalid in the Plan Year in which you turn age 35. If you enter the Plan after the first day of the Plan Year in which you attain age 32, TIAA will provide the written explanation to you no later than the close of the second Plan Year following your entry into the Plan.
Administrator, Annuity Provider, and Custodian
The Plan Administrator is Franklin & Marshall College, located in Lancaster, Pennsylvania. The Franklin & Marshall College Human Resources office is responsible for enrolling participants and for performing other duties required for the operation of the Plan. The College may designate in writing other persons to carry out duties under the Plan.
TIAA is responsible for carrying out its duties with respect to the annuities and serves as Record keeper for all Participants’ Accounts. TIAA will determine the amount, manner, and time of payment of the benefits under the Plan and will prescribe procedures to be followed by Participants or Beneficiaries for filing applications for benefits under the Plan.
The Custodian is responsible for carrying out its duties per the Custodial Account Agreement with respect to the Plan.
Participant Incurred Fees
The Plan’s Annuity Provider and Record keeper, TIAA, reflects administrative expenses in return rates, meaning expenses are deducted from the investment earnings of each of the various annuities and custodial account mutual funds in which a Participant has investments. The investment earnings of Participants are reduced by such fees. Additional information regarding fees is available in each fund's prospectus and the TIAA annual report.
Requests for Information and Other Claims Procedures
All claims with respect to the annuities, including their terms, conditions, and interpretation, should be made to the Plan’s Annuity Provider and Record keeper, TIAA, which will follow its own claim review procedures and timetables. Requests for information, and all other claims or service of legal process concerning eligibility, participation, contributions, or other aspects of the operation of the Plan should be in writing and directed to the Plan Administrator of the Plan (via the Franklin & Marshall College Human Resources office). If such a written request or claim is denied, the Plan Administrator shall, within a reasonable time, provide a written denial to the Participant. It will include the specific reasons for denial, the provisions of the Plan upon which the denial is based, a description of any material needed to complete the claim (if appropriate) and why it is necessary, and instructions on how to apply for a review of the claim.
A Participant may request in writing a review of a denied claim, and may review pertinent documents and submit issues and comments in writing to the Plan Administrator. The Plan Administrator shall provide in writing to the Participant a decision upon such request for review of a denied claim within sixty (60) days of receipt of the request. When special circumstances require additional time, an extension of 120 days may be obtained, and the Plan Administrator may obtain such extension by notifying the Participant (within the 60 day period) that the decision on the review of the denied claim will be delayed, the reason why and when a decision can be expected. The Plan Administrator shall have the discretionary authority to determine eligibility for plan benefits and to construe the terms of the Plan, including the making of factual determinations.
While it is expected that the Plan will continue indefinitely, the Board of Trustees of the College reserves the right to modify or discontinue the Plan at any time. No consent of any Participant or beneficiary is needed to modify or terminate the Plan. The Board may also delegate any of its powers and duties with respect to the Plan, or amendments, to one or more Officers or other employees of the College. Any such delegation shall be set forth in writing. Any discontinuance or modification of the Plan cannot adversely affect the benefits accrued by Participants prior to the date of discontinuance or modification.
Franklin & Marshall College is the named fiduciary under the Plan and is responsible for the management, operation, and administration of the Plan. Advisors outside of the College may be engaged by the College to assist in properly carrying out the fiduciary duties under the Plan.
Statement of ERISA Rights
Participants in the Plan are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan Participants shall be entitled to:
(1) Examine, without charge, at the Plan Administrator's office, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual report and Plan descriptions.
(2) Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for the copies.
(3) Receive a summary of the Plan’s annual ERISA report to the Department of Labor. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report.
(4) Obtain a statement telling you whether you have a right to receive a pension at Normal Retirement Age and if so, what your benefits would be at Normal Retirement Age if you stop working under the Plan now. Each quarter TIAA sends participants a statement of annuity premiums paid during the previous quarter. Each year, TIAA sends an illustration of the annuity income at retirement under certain stated assumptions. Participants may also request additional benefit illustrations from TIAA at any time.
ERISA sets forth the duties of the people who are responsible for the operation of the Plan. The people who operate the Plan, as described in Section XIX of this SPD, have a duty to do so prudently and in the interest of the Plan’s Participants and Beneficiaries. No one, including the College, may discharge or otherwise discriminate against Participants in any way to prevent them from obtaining benefits to which they are entitled under the Plan or exercising their rights under ERISA. If an application for benefits under the Plan is denied in whole or in part the Participant or Beneficiary must receive a written explanation of the reasons for the denial. Participants have the right to have the Plan Administrator review and reconsider denied claims on eligibility, participation, contributions or other aspects of the Plan and to have TIAA review and reconsider denied claims under TIAA annuity contracts or the Custodian for those claims pertaining to the mutual fund custodial accounts. Under ERISA, Participants may take steps to enforce these rights. For example, if a Participant requests materials from the Plan and does not receive them within 30 days, he/she may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay the Participant up to $110 a day until he/she receives the materials, unless the materials were not sent due to reasons beyond the control of the Plan Administrator. If a claim for benefits is denied or ignored, in whole or in part, the Participant may file suit in a state or Federal court. In addition, if you disagree with the Plan’s decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court. If the Plan Administrator's responsibility to compute and remit the Plan’s contributions are not discharged according to the terms of the Plan or if a Participant is discriminated against for asserting ERISA rights, he/she may seek assistance from the U.S. Department of Labor, or may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If the Participant is successful, the court may order the person sued to pay these costs and fees. If the Participant loses, the court may order him or her to pay these costs and fees, for example, if it finds the claim is frivolous. Contact the Plan Administrator if you have any questions about this plan. If a Participant has any questions about this statement or about rights under ERISA, he/she should contact the nearest Area Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
However, in no case will you, or anyone acting on your behalf, be entitled to challenge a decision of the Plan Administrator, TIAA and/or the Custodian in court or in any other administrative proceeding unless and until the claim and appeal procedures described in this SPD have been complied with and exhausted.
Pension Benefit Guaranty Corporation
Because benefits depend solely on the value of a Participant's Account, and not on a Plan-defined level of periodic retirement benefits that will be payable at and after retirement, the law provides that the Plan cannot be insured by the Pension Benefit Guaranty Corporation under Title IV of the Employee Retirement Income Security Act of 1974, as amended.
Contribution and Investment Procedures
I. Salary Reduction Contribution Procedures
• If you wish to make a prospective change to your Salary Reduction Contribution agreement, you need to complete and sign a new agreement, which can be obtained from the Franklin & Marshall College Human Resources office.
• Such changes are permitted up to 12 times per year.
• Any such change will become effective the 1st day of the month after a proper agreement is completed and returned to the College’s Human Resources office.
II. Investment Directions
• If you wish to make a change to the way your Employer and/or Salary Reduction Contributions will be invested among the available investment options, or you wish to transfer funds among the investment options available through the Plan, you may initiate such a change by calling TIAA, (800) 842-2776. You may also log in to your Account via the TIAA web site (www.tiaa.org) to initiate changes.
• The number of transfers that can be initiated to and from some investment options may be limited. Participants should contact TIAA for details.
Annuity Funding Vehicles as of January 1, 2010
• TIAA Traditional Annuity
• TIAA Real Estate Account
• CREF Bond Market Account
• CREF Equity Index Account
• CREF Global Equities Account
• CREF Growth Account
• CREF Inflation-Linked Bond Account
• CREF Money Market Account
• CREF Social Choice Account
• CREF Stock Account
Effective on and after June 30, 2010, the following annuity investment options will no longer be available under the Plan:
• CREF Bond Market Account
• CREF Global Equities Account
• CREF Growth Account
Custodial Account Funding Vehicles as of January 1, 2010
CUSTODIAN - J. P. Morgan Chase Bank, N.A.
• American Funds Bond Fund of America
• American Funds EuroPacific Growth Fund (REREX)
• American Funds Growth Fund of America (RGAEX)
• American Funds Money Market Fund
• American Funds Washington Mutual Fund (RWMEX)
• Dodge & Cox Income Fund (DODIX)
• Franklin Mutual Global Discovery Fund (MDISX)
• Oakmark Equity & Income Fund (OAKBX) - designated as the Default Investment Fund
• Russell Life Points Balance Strategy
• Russell Life Points Growth Strategy
• Sentinel Small Company Fund (SAGWX)
• Sequoia Fund (SEQUX)
• T. Rowe Price Small-Cap Stock Fund (OTCFX)
• Templeton Global Bond Fund (TPINX)
• Vanguard Short-term Investment Grade Bond Fund (VFSUX)
Effective on and after June 30, 2010, the following investment options will no longer be available under the Plan:
• American Funds Bond Fund of America
• American Funds Money Market Fund
• Russell Life Points Balance Strategy
• Russell Life Points Growth Strategy
Overview: Through the College's Retirement Plan, eligible faculty and professional staff may make contributions via salary reduction (i.e., on a pre-tax, payroll deduction basis) to their retirement accounts. The College also makes contributions on behalf of eligible full-time employees, and these contributions are invested in annuities and/or mutual funds as selected by the individual. Elective and College contributions, and earnings, are not subject to federal income tax until the participant receives them as income.
Please note, this document is not a “Summary Plan Description”. Faculty, professional staff, and retired employees should carefully read the Retirement Plan Summary Plan Description, available from www.fandm.edu/humanresources/benefits and from the Human Resources office, for important details about the Retirement Plan. The Summary Plan Description should be read prior to enrollment.
Elective Deferrals— Immediately upon hire, Franklin & Marshall faculty and professional staff who are expected to work at least 20 hours per week may make contributions to the Retirement Plan through voluntary salary reduction. Students performing work for the College on a part-time basis are not eligible to participate.
The College's Contribution— Employees who have completed two "Years of Service" at Franklin & Marshall College are eligible for the College's contribution to the Retirement Plan. A Year of Service is defined as 12 months and 1,000 or more hours of work for which the employee receives wages. The College's contribution on an employee's behalf begins on the January 1 or July 1 coinciding with, or following, completion of two Years of Service. Adjunct faculty members are not eligible.
It is the College’s practice to waive a portion or all of the waiting period for employees with prior full-time employment with a tax-exempt college or university. Six months of the normal waiting period will be waived for every two continuous / consecutive full years (calendar year or academic year) of prior full-time employment with a tax-exempt college or university.
An employee with prior full-time service at a tax-exempt college or university must provide written verification from his/her prior employer(s) to Human Resources within 90 calendar days of his/her hire date. Such written verification must include the dates of full-time employment. If satisfactory written verification is received by Human Resources no later than 90 calendar days from the date of hire, a new eligibility date will be calculated and the College's contribution will begin on the January 1 or July 1 coinciding with or following that date.
Upon enrollment in the Retirement Plan, an employee will be asked to designate the beneficiary(ies) of his/her death benefits. A married employee who elects a beneficiary other than his/her spouse must obtain the spouse's signature, and this signature must be witnessed by a notary. If an employee is under age 35 at the time his/her beneficiary is designated, and the beneficiary is someone other than the employee's spouse, this beneficiary designation will become null and void at the beginning of the Plan Year (calendar year) in which the employee turns age 35-1/2. Therefore, the employee must complete another beneficiary election form during the Plan Year in which he/she will reach age 35-1/2, with the spouse's written consent.
An employee may elect to contribute to the Retirement Plan through "salary reduction". Elective contributions are deducted from the participant's pay before his/her federal income tax obligation is calculated. Contributions made through salary reduction are an important part of retirement savings and are designed to supplement contributions made by the College and social security income. Elective contributions also reduce the participant’s current federal income tax withholding; taxes are deferred until contributions are withdrawn.
No federal income tax is paid by the participant on the portion of salary contributed to his/her retirement account, or the earnings on such contributions, until withdrawn by the participant upon retirement or separation from service. Plan participants are required to pay FICA, state, and local taxes on their contributions. Elective contributions are immediately vested (fully owned by the employee). The employee chooses the amount of salary to be deducted from each paycheck and contributed to his/her retirement account, based on individual retirement needs and goals, up to federally allowed maximums. The minimum salary reduction election is $200 per Plan Year (calendar year).
Contributions may be invested in various annuities and mutual funds. Each Plan participant must decide how to invest his/her contributions, based on retirement needs and goals. TIAA (the administrative services provider and record keeper for the College’s Retirement Plan) will provide guidance to participants, upon request, to help them develop an individualized retirement savings strategy. Representatives from TIAA visit campus several times per year to meet with interested participants; individuals may contact TIAA, (800) 732-8353, to schedule an appointment.
The form needed to initiate, or change, a salary reduction election is available in the Human Resources office and through the Human Resources web site. To initiate or change an elective contribution, the appropriate form must be completed and submitted to Human Resources, CSQ, prior to the first calendar day of the month in which the elective contribution is to be effective.
The College's Contribution
On the January 1 or July 1 coinciding with, or following, completion of two Years of Service with Franklin & Marshall (as defined above), an employee is eligible for the College's Retirement Plan contribution, which is equivalent to 12% of the employee's actual base monthly salary (15% for faculty and professional staff appointed to a full-time position on or prior to July 1, 2006 *). Franklin & Marshall College contributions are always fully owned by the employee (fully vested); the employee, or beneficiary, receives the account upon retirement, termination of employment, total disability, or death.
Plan participants are responsible for determining how to invest the College's contribution made on their behalf. College contributions may be invested in various annuities and mutual funds administered by TIAA.
Human Resources will provide enrollment forms and informational materials when an employee becomes eligible for College contributions. Enrollment forms must be completed by the employee and returned to Human Resources before the employee's eligibility date. If forms are not completed, the College's contribution made on behalf of the employee will be invested 100% in the Oakmark Equity and Income Fund until the employee makes investment elections. Eligible individuals may also complete online forms through www.tiaa.org/fandm.
Elective contributions and the College's contributions made on behalf of eligible employees are submitted to TIAA following each pay period, and are credited to employees' accounts within a few business days after TIAA receives and reconciles files.
* A former full-time College employee who is rehired to a full-time position after July 1, 2006, will be immediately eligible for a College contribution equal to 15% of base salary if: (a) he/she is rehired and appointed to a full-time position within 5 calendar years of his/her prior termination date, and (b) he/she was previously receiving a 15% College contribution to the Retirement Plan. All other former employees will receive a College contribution to the Retirement Plan equal to 12% of base salary, if eligible for a contribution when rehired.
Annual Contribution Limits
Calendar year elective (employee) contributions to the Retirement Plan, and the sum of elective contributions and the College's contribution made on an employee's behalf, may not exceed federally mandated maximums:
Elective Deferrals, IRC Section 402(g)-- The maximum elective contribution (salary reduction election) is $18,500 for calendar year 2018.
Elective Plus College Contributions, IRC Section 415-- The calendar year 2018 contribution limit for employee elective deferrals and College contributions combined is $55,000 or 100% of annual compensation.
"Catch-up" Contributions, IRC Section 414(v)-- Employees who will be at least age 50 by the end of a Plan Year (December 31) may make "catch-up" elective deferrals during the Plan Year in excess of the 402(g) and 415 limit. The year 2018 maximum "catch-up" contribution is $6,000.
The calendar year contribution limit for employee elective deferrals, "catch-up" contributions, and College contributions combined is no more than 100% of an employee's annual compensation.
These limits apply to the sum of all contributions to the Retirement Plan. Each participant who makes elective contributions to the Retirement Plan must assure he/she does not exceed his/her contribution limits during a calendar year.
Annuities and several mutual fund options are available, from conservative funds to more aggressive funds, to allow each Retirement Plan participant to create a portfolio to meet his/her needs. Detailed information about each investment option, including rates of return and expense ratios / fees, is available through the TIAA web site (www.tiaa.org/fandm). Human Resources will provide investment election forms upon enrollment in the Retirement Plan, or employees may make their investment elections through www.tiaa.org/fandm.
Both employee and College contributions may be designated to a single fund, or to more than one fund in multiples of one percent (1%).
Participants’ investments are not insured by the Federal Deposit Insurance Corporation, any other government agency, TIAA, or the College. When investing through the Retirement Plan, it is possible to lose money. Diversifying your investments – allocating contributions to the Retirement Plan across various fund classes – can help reduce the risk of investment losses.
Representatives from TIAA typically visit campus several times per year to meet, individually, with interested Retirement Plan participants. TIAA representatives will help participants create an appropriate retirement savings and investment strategy based on their needs and goals.
Faculty, professional staff, and retirees are strongly encouraged to read each fund's prospectus before investing. A current prospectus for each fund available through the College’s Retirement Plan may be downloaded from www.tiaa.org/fandm.
There are no administrative fees deducted directly from employees’ or retirees’ accounts with TIAA. TIAA reflects expenses in participants’ return rates; expenses are deducted from the investment earnings of each of the various accounts. Retirement Plan participants do not pay fees such as sales charges or "loads". Additional information is available in each fund's prospectus, TIAA's annual report, and from the TIAA website (www.tiaa.org/fandm).
Designation of New Investments
If an employee wishes to change the way his/her future contributions will be allocated among the various annuities and mutual funds available through the Retirement Plan, the individual may call TIAA's Counseling Center at (800) 842-2776, the TIAA automated telephone service at (800) 842-2252, or visit the TIAA website (www.tiaa.org/fandm).
Transfers Among Investment Options
Plan participants may transfer existing account accumulations between the various annuities and funds offered through the College’s Plan. Certain transfer restrictions may apply to some funds. Transfers between Plan funds may be initiated by calling TIAA's Counseling Center at (800) 842-2776, the TIAA automated telephone service at (800) 842-2252, or through the TIAA website( www.tiaa.org/fandm).
Transfers or withdrawals from the TIAA Traditional Annuity (RA) take place over a 10 year period, in substantially equal annual installments (the 10 year requirement does not apply to the TIAA Group Supplemental Retirement Annuity). Each installment will include principal and interest, plus dividends as declared each year by TIAA. Transfer restrictions may apply to other funds; please contact TIAA for details.
College and elective contributions to the Retirement Plan are made on a tax-deferred basis, therefore, federal regulations and Plan restrictions limit withdrawal options. Generally, a distribution from the Plan may not be made unless one or more of the following occurs:
· the participant reaches age 59-1/2 (only elective / voluntary contributions may be withdrawn if still employed by the College)
· the participant separates from service
· the participant changes from full-time to part-time status and is at least age 60 (including faculty members participating in the Phased Retirement Program or Pre-retirement Leave of Absence Program)
· the participant dies (a death benefit is paid to the beneficiary)
· employment terminates due to the total disability of the participant
Separation from Service
If an employee separates from service, he/she may choose to: 1) receive a distribution from the Plan, 2) rollover all or a portion of his/her retirement account into another qualified plan or IRA, or 3) maintain his/her current account balance with TIAA (new contributions to the Plan are not permitted following termination of employment). When a participant receives a distribution from his/her account, normal income tax will be due. If a participant receives a distribution from his/her retirement account prior to age 59-1/2, a 10% penalty tax on the taxable portion of the distribution may be due, in addition to normal federal income tax. This penalty tax may be avoided and all taxes deferred if the participant rolls over the taxable portion of the distribution into another plan or an IRA within 60 calendar days. Rollovers are subject to federal regulation. An individual who is at least age 55 upon separation from service may avoid the tax penalty on withdrawals. TIAA may be contacted for rollover forms and additional information, or to request a "Special Tax Notice" regarding retirement plan distributions. Individuals are strongly advised to consult with TIAA or a tax specialist before withdrawing funds.
Distributions Upon Retirement
Based on current IRS regulations, individuals who separate from service during or after the year in which they attain age 59-1/2 may withdraw funds from their retirement account without a tax penalty. Normal federal income tax is due when retirement income is received. It may be possible to withdraw funds prior to age 59-1/2 without a tax penalty, if the individual is at least age 55 when employment ends. As noted above, individuals are encouraged to consult with TIAA or a tax specialist.
There are several options for receiving retirement income, including lifetime variable annuities* which provide regular income for the participant's lifetime; joint and survivor variable annuities* which provide regular income for the participant's lifetime, and, following the participant's death, provide regular income during his/her beneficiary's lifetime; fixed-period annuities; rollover of funds to an IRA; systematic cash withdrawals; lump sum withdrawal; minimum distributions; or a combination of these options. Please note, money invested in the TIAA Traditional Annuity (RA) must be withdrawn over a 10 year period. The forms and explanatory materials needed to make choices and initiate distributions are available directly from TIAA.
* Lifetime and joint and survivor annuities are irrevocable. Monthly annuity income will vary from year to year based on the previous year's investment performance.
For participants who are married at the time benefit payments commence, distribution will be in the form of a "Qualified Joint and Survivor Annuity", unless an optional form of payment is selected, with the spouse's written (and notarized) consent. A Qualified Joint and Survivor Annuity is a monthly annuity paid for the retiree's lifetime, with a lifetime annuity payable to his/her spouse, upon the retiree's death, equal to 50% of the annuity income amount paid during the retiree's lifetime. If a participant is not married on the date benefits are to begin, the participant will automatically receive a life annuity (regular payments for as long as the retiree lives), unless a different option is selected.
Participants may waive the Qualified Joint and Survivor Annuity or the life annuity and select a different retirement income option during the 90 day period before the annuity is to begin.Employees planning to retire may contact TIAA for a "Joint and Survivor Annuity Notice," information, and applicable forms.
Minimum Distributions— At retirement, individuals may leave funds invested through the Retirement Plan. However, current regulations generally require that individuals begin receiving distributions from tax-sheltered retirement plans no later than the April 1st following the year in which the individual reaches age 70-1/2 or upon separation from employment, whichever occurs later. If the minimum distribution is not withdrawn, a significant tax penalty, in addition to normal federal tax, may be assessed. The required minimum distribution amount will vary by individual, and is based on factors such as age, life expectancy, and retirement account balance. TIAA will calculate the minimum distribution amount for any participant who is required to begin receiving minimum distributions. Any contributions and earnings credited to an account prior to 1987 need not be withdrawn until the end of the year in which the participant attains age 75.
Taxation Upon Distribution— Elective contributions, College contributions, and all interest and investment earnings accumulate tax-free while in the Retirement Plan. When they are paid out, they are subject to federal income tax. Ordinarily, retirement income is taxable in the year it is received. As described above, tax penalties may be assessed for early distributions. Tax laws are complex and continually changing.
Participants are strongly encouraged to request a tax notice from TIAA prior to any rollovers or withdrawals. Participants are also advised to consult a tax specialist. The information above provides only a brief summary of federal regulations.
Distributions while Employed
Loans— Employees participating in the Retirement Plan may take a loan from their own retirement account accumulations – both employer and elective contributions - subject to certain restrictions. The minimum loan is $1,000. The maximum amount that may be borrowed is the lesser of: (a) $50,000, (b) 45% of the participant’s total account balance, or (c) 90% of the participant’s balance available for loans. Participants must immediately begin paying themselves back; loans are repaid directly to TIAA on a monthly or quarterly basis and payments are credited to the participant’s account. A participant taking out a loan may continue his/her voluntary pre-tax contributions while repaying the loan, and the College continues to make its contribution for eligible participants throughout the loan repayment period. The repayment period is generally 1 to 5 years, but may be longer if the loan is used to purchase a primary residence. Spousal consent is needed to take out a loan. If employment terminates before a loan is repaid in full, the outstanding loan balance must be paid in full or it will be considered a taxable distribution and a penalty may apply. Participants should contact TIAA directly for current information, including interest rates, administrative fees, collateral requirements, and a loan application - (800) 842-2733.
Hardship Withdrawals— Withdrawals of employee (elective) contributions may be permitted due to immediate financial hardship, subject to federal regulations. Generally, an employee may qualify for a Hardship Withdrawal if money is needed to purchase a primary residence, to pay for certain medical services, to prevent foreclosure or eviction from the primary residence, or to pay college tuition (see the Retirement Plan Summary Plan Description, available from www.fandm.edu/humanresources/benefits and from the Human Resources office, for more information). Hardship Withdrawals are only permitted after any available loans are taken, and are only permitted from an employee’s elective, not College, contributions. The amount which can be withdrawn is limited to that which is needed to relieve the immediate financial need. Hardship Withdrawals may be subject to a 10% penalty tax in addition to normal federal income tax. Pre-tax elective contributions to the Retirement Plan are suspended for 6 months following a Hardship Withdrawal. In addition, future elective contributions may be limited so that elective contributions made during the taxable year following the taxable year of receipt of the Hardship Withdrawal do not exceed the applicable contribution limits for the next taxable year, less the amount of elective contributions for the taxable year of receipt of the Hardship Withdrawal. Participants may contact TIAA for detailed information about Hardship Withdrawals or to initiate a Hardship Withdrawal. It is also recommended that a tax advisor be consulted due to the possible tax penalty.
Withdrawals During Employment— The College's contributions made on an employee's behalf are meant to provide retirement income and are not available for withdrawal while employed full-time. Active employees age 59-1/2 or older may withdraw their electivecontributions, without penalty.
Full-time employees who are at least age 60 and transfer to a part-time position, or who participate in the Phased Retirement Program or Pre-retirement Leave Program for faculty may begin receiving distributions from their retirement account (both College and elective contributions). Forms required to withdraw money are available directly from TIAA.
Rollovers— Rollovers from the College's Retirement Plan to another plan or Individual Retirement Account (IRA) are not permitted while actively employed, unless an employee is at least 59-1/2 years of age.
The Franklin & Marshall Retirement Plan will accept rollovers, per IRS regulations, from another qualified plan or IRA. To initiate a rollover into the Franklin & Marshall Retirement Plan, the participant should contact his/her prior employer or retirement account administrator and TIAA for the proper forms.
If a married Plan participant dies prior to the commencement of benefits, typically 50% of the value of his/her retirement account will be used to purchase a lifetime annuity for the spouse, called a "Qualified Pre-retirement Survivor Annuity" (QPSA), or other form of benefit elected by the spouse, and 50% will be paid to the participant's designated beneficiary(ies). If a participant is married and age 35 or over, he/she may waive the Pre-retirement Survivor Annuity coverage and name a beneficiary(ies) other than the spouse, provided the spouse consents in writing.
Upon an employee or retiree's death, his/her beneficiary becomes the account holder and has all options for receiving retirement income available under the Plan.