The Faculty Retirement Plan is a 401(a) retirement plan in which you accumulate tax-deferred contributions. You contribute 2.5% of your covered salary, and the University contributes 13%. You defer paying income taxes on your contributions. Participation in the Plan is mandatory.

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Eligibility

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. When you become eligible to participate in the Plan, Employee Benefits will contact you prior to your effective date to discuss the Plan and have you complete the necessary forms.

• Regular (tenured, tenure-track) faculty members and term faculty members(contract, temporary) 94XX, with appointments at 67% time or greater. Faculty members with Visiting or Adjunct prefixes, or clinical faculty from outside the University, are not eligible to participate.
• Administrative staff members with 67% time or greater appointments and with personnel classifications 9301 through 9399. Staff members filling administrative positions on an acting basis are not eligible.
• Professional staff members with 67% time or greater appointments with personnel classifications 9701 through 9799, except for Research Specialist (9755), Clinical Preceptor (9756), and Industrial Fellow (9757).
• University of Minnesota Extension Service (MES) academic staff with 67% time or greater appointments, personnel classifications 9621 through 9640, who are not eligible for a federal appointment. MES academic staff holding appointments between 67% to 99% time, who are not eligible for a federal appointment, are entitled to prorated participation. MES academic staff with federal appointments are eligible only for the Faculty Disability Plan.

Eligible employees will participate in the Plan after completion of the required waiting period.

The required waiting period is based on the following salary schedule:

Contributions

You contribute 2.5% of covered salary. This is a required contribution. The University contributes 13% of your covered salary.

Covered salary includes: basic appointment salary, administrative augmentation, commutation allowance, increment, Regents' Professor Stipend, and nine-month appointee summer research earnings funded by sources other than the State of Minnesota. 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 2008 is $46,000. If you joined the plan in 1996 or later, your contribution limit for 2008 is $35,650, or 15.5 percent of covered compensation of up to $230,000. Your contributions are scheduled to begin on the first paycheck following completion of the waiting period. Contributions will be delayed if we have not received your application. If delayed, contributions will be retroactive to the completion of the waiting period.

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.

Vesting

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.