- Investment Options
- Investment Performance Results
- Investment Company Contact Information
- Schedule of Effective Dates (pdf)
- Comparing the ORP and 457 Plans (pdf)
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The Optional Retirement Plan is a voluntary retirement savings/investment plan covered under section 403(b) of the Internal Revenue Code.
Its tax deferral feature allows you to make contributions into your retirement account on a before-tax basis. This means you may reduce the amount of your salary that is taxable under both state and federal income taxes and delay paying taxes on the money you contribute as well as on your gains, dividends, and interest. Tax deferral can allow your savings to accumulate faster than an after-tax savings program.
Contributions are deducted directly from your paycheck, so it's convenient and easy to build your retirement nest egg. You can choose from more than 250 investment options, ranging from aggressive growth mutual funds to conservative interest-bearing accounts from four top investment firms: Fidelity, Securian, Scudder, and Vanguard. The participating investment companies waive sales charges and account maintenance fees for University of Minnesota participants.
All faculty and staff members who are paid on a continuous basis are eligible to participate in the Optional Retirement Plan. You may begin participation at any time during the year.
Attach the Salary Reduction Agreement to the investment company enrollment form(s) and return them to:
University of Minnesota
319 15th Avenue SE
Minneapolis, MN 55455-0103
If you have questions about enrollment, call 612-624-8647 or 800-756-2363 to reach the Employee Benefits Service Center.
You may contribute as little as $200 in each calendar year or the lesser of 100 percent of your reduced salary or $18,000 for 2015. Your "reduced salary" is defined as the amount after your required contribution to your basic retirement plan. After 2006, if your limit is indexed by the IRS, it will be indexed in $500 increments.
If you are or will be age 50 or older in the current calendar year, you are permitted to contribute an additional amount to the Plan up to $6,000 for 2015.
Your participation in another employer's retirement plan during the year may affect your limit.
You may change or stop your contributions at any time by completing a new Salary Reduction Agreement and submitting it to Employee Benefits.
The key to investing is to start early and gradually adjust your 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. The chart below compiled from figures provided by Fidelity Investments shows the results of investing $100 per month with an average return of 8% over a number of years. Over a 25-year period, investing this much could add up to over $95,000.
You may easily change investment funds within a particular company. Subject to the investment company's restrictions, you may change your new contributions and move money you have already invested. Some companies permit transfers by phone or through their Web sites. Contact the company directly for specific information on their policies.
You may change investment companies at any time. If you want to select a different company for future contributions, you must complete a new Salary Reduction Agreement and an account enrollment form for the new investment company unless you already have an existing Optional Retirement Plan account with them.
To transfer existing funds, you must complete a transfer form for the new investment company. You must also complete an account enrollment form for the new investment company, unless you have an existing Optional Retirement Plan account with them.
Transferring money from one investment company to another is subject to the company's restrictions. Contact the individual company to find out what those restrictions are.
The University publishes quarterly Investment Performance Results online. Additional information is available on your quarterly statements and on the investment companies' Web sites.
For the most part, funds may not be withdrawn before your retirement or termination of employment. The IRS restricts when funds may be paid from your account. You may withdraw your money only under these circumstances:
Hardship withdrawals are subject to a 10% penalty tax unless they are for out-of-pocket medical expenses totaling more than 7.5% of your adjusted gross income.
Please note that IRS rules are subject to change.
Money withdrawn is subject to federal and state income tax. Except for "rollovers," annuities, and regular installments over 10 years or more, all other payments will have 20% withheld automatically for federal taxes. If you are under age 59-1/2 when you terminate, payments that are not part of a "rollover" will be subject to an additional 10% penalty tax.
Please note that this material is intended for informational purposes only, and no warranty is given regarding the information. None of the information is intended to constitute, nor does it constitute, financial advice. This information is not a substitute for professional financial advice, and each person should always consult his or her own financial or other professional advisors and discuss the facts and circumstances that apply to the person. So far as it is permitted by law, the University of Minnesota disclaims liability for any loss, however caused, arising directly or indirectly from the use and content of this Web site.