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The Faculty Retirement Plan (FRP) is a 401(a) retirement plan in which you accumulate tax-deferred contributions. Eligible academic employees who started working for the University (or were rehired) on or after January 2, 2012, contribute 5.5% of covered salary and the University contributes 10%. Eligible academic employees working for the University prior to January 2, 2012, contribute 2.5% of covered salary and the University contributes 13%. These are required contributions and participation in the Plan is mandatory.
Faculty Retirement Plan: Frequently Asked Questions
The Retirement Subcommittee, of the Senate Committee on Faculty Affairs, oversees the Faculty Retirement Plan and makes recommendations about changes that should be made to the plan. In this 1st Quarter 2013 letter to FRP participants, the subcommittee provides some key questions and resources to assist you in reviewing your investments and overall finances.
1st Quarter 2013 Letter (pdf)
If you have an appointment of at least nine months and meet one of the following eligibility categories, you are eligible to participate in the Plan. If you hold an appointment between 67 to 99% time, you are entitled to prorated participation. Securian will contact your to discuss the Plan and have you complete the necessary forms.
Eligible employees will participate in the Plan as of the first day of the first full pay period in an eligible appointment.
Eligible academic employees working for the University prior to January 2, 2012, contribute 2.5% of covered salary and the University contributes 13%. If you started working for the University (or were rehired) on or after January 2, 2012, you contribute 5.5% of covered salary and the University contributes 10%. These are required contributions and participation in the Plan is mandatory.
Covered salary includes: basic appointment salary, administrative augmentation, commutation allowance, increment, Regents' Professor Stipend, and nine-month appointee summer research and summer session instructional earnings. All other earnings are excluded.
Federal tax law limits combined employee and employer contributions to the plan, subject to cost of living increases. If you joined the plan prior to 1996, your contribution limit for 2014 is $50,000. If you joined the plan in 1996 or later, your contribution limit for 2014 is $40,300, or 15.5 percent of covered compensation of up to $260,000. Your contributions are scheduled to begin on the first paycheck following the first day of the first full pay period in an eligible appointment.
You defer paying income tax on your contributions to the Retirement Plan. This is done by reducing your salary by an amount equal to your contributions. The result is that the University makes the full contribution to the Plan for you. In turn, your federal and state taxable salary is reduced, giving you an immediate tax advantage.
Since your contributions to the retirement plan will be made with “before tax” dollars, your income from the Plan will be subject to federal and state income tax when you receive it.
All accumulated values in the Plan are fully vested. This means that University contributions, your contributions, and any investment earnings belong to you. You have full ownership and the values cannot be taken away; however, you may not assign the benefits or borrow against them.