Joseph Jameson, chair of the Benefits Subcommittee of the Civil Service Committee, takes advantage of the Optional Retirement Plan.
Civil Service Committee update, January 2005
Easy investment options for retirement, public hearings on rule changes, call for CSBU staff award nominations, and more
By Joseph Jameson
From Brief, January 12, 2005
Retirement--what are you doing to prepare? With all the talk about possible changes to social security, there's never been a better time to review your retirement savings plans.
How MSRS worksAs a civil service employee, you are probably well aware that you are covered by the Minnesota State Retirement System (MSRS). Participation is mandatory and begins from the first day of your employment at the University.
MORE CSC NEWS
Civil Service Rules
Jan. 12, 2:30-4 p.m.
The Civil Service Committee (CSC) is holding public hearings about proposed rule changes. The first was Jan. 10. For a detailed list of proposed changes, see the Civil Service Rules Web site.
215 Donhowe Building, Minneapolis
Crookston: 106 Sahlstrom Conference Center
Duluth: 173 Kirby Student Center
Morris: 7 Humanities and Fine Arts
Rochester: GL133 (Jan. 10 only)
St. Paul: 145 Peters Hall
January CSC meeting
The next CSC meeting will be held Jan. 27, 9 a.m. to noon, 101 Walter Library, Minneapolis. At 11 a.m., Job Center director Miriam Ward will talk about changes at the center.
See the CSC calendar to view subcommittee meeting schedules.
Senate restructuring and elections
The CSC is still awaiting the Board of Regents final approval for Senate reorganization to include civil service and academic professional and administrative staff. The next regents meeting is Feb. 10-11. The CSC will start to prepare information and language on the election process, and after approval, information will be sent to civil service staff immediately.
Twin Cities CSBU staff award: call for nominations
The Office for University Women (OUW) seeks nominations for the Civil Service and Bargaining Unit (CSBU) staff award. The annual award recognizes Twin Cities CSBU staff who have made outstanding contributions to improve the work environment for all CSBU employees; the honorarium is $1,000. Deadline: Feb. 15. For more information, see CSBU Staff Awards on the OUW Web site.
Retirement deductions from your earnings are 4 percent of your total salary and are paid into the MSRS general plan. This amount is credited to your individual MSRS account and is federal and state income tax-deferred. The employer contribution is also 4 percent of your total salary, but this amount is not credited to your individual account--it's used to help pay monthly annuities and benefits received from the general plan. MSRS deduction rates are subject to change by the state legislature.
For each month that retirement deductions are withheld from your salary, you earn service credit. Retirement benefits are based on your age and years of service. After three years of service, you are "vested" with MSRS, which entitles you to a lifetime annuity as early as age 55 or when you retire.
If you leave University service before you are vested (i.e., with less than three years of service), you can (1) take a refund of your retirement contributions plus 6 percent interest, a sum that is subject to a 10 percent tax penalty if you are under age 59-1/2, plus 20 percent federal income tax, or (2) roll your contributions plus 6 percent interest into an Individual Retirement Account (IRA) or a qualified retirement plan and incur no tax or penalty.
If you leave state service after you are vested, you have the same two options plus one: leaving your contributions with MSRS and collecting your annuity at age 55 or later.
But what about retirement options other than MSRS and social security? As a University employee, you can take advantage of other retirement options. The U offers the following voluntary retirement savings plans for all faculty and staff:
Optional Retirement Plan (ORP)If you are paid on a continuous basis, you are eligible for the ORP. You may contribute as little as $200 a year or as much as $14,000 (in 2005) or 100 percent of your salary, whichever is less, each calendar year. In addition, if you are 50 or older, you are allowed to make an additional catch-up contribution of $4,000 in 2005. You can choose from more than 250 investment options from five top investment firms: Fidelity, Minnesota Life, Scudder, TIAA-CREF, and Vanguard. You can begin participating at any time during the year.
457 Deferred Compensation PlanIf you are paid on a continuous basis, you are also eligible for the 457 Plan. This plan has a contribution limit of $14,000 for 2005 in addition to any contributions you may make to the ORP. This allows you to substantially increase your amount of tax-deferred contributions to retirement plans. A range of investment options is offered through Fidelity Investments, Minnesota Life, TIAA-CREF, and Vanguard Funds. You can begin participating at any time during the year.
Start nowThe key to investing is to start early and gradually adjust your investment risk level as you approach your goal. By taking advantage of the power of compounding, you can build wealth with even small, regular investments, if you give it enough time.
Explore your options at the University of Minnesota Employee Benefits Retirement Options Web site, http://www.umn.edu/ohr/eb/uplan/retire.htm. In the left column, go to the third heading, "All Faculty and Staff," or call 612-624-9090 or 1-800-756-2363 and press 2.
Start today and take control of your retirement.
Joseph Jameson is a senior architect/engineer for University Construction in Capital Planning and Project Management.