Chapter 2: Retirement Programs
The Vanderbilt Retirement Plan offers a choice of mutual funds. The following are selected excerpts and paraphrase from the Vanderbilt University Retirement Plan and the Vanderbilt University Retirement Plan for New Faculty, which set forth the provisions of the retirement plan.
With the following exceptions (members of the faculty with the prefixes “adjunct,” “adjoint,” “visiting,” or the suffixes “emeritus,” “emerita,” or “in-residence” in their titles or the title “research associate” or “senior research associate”), all full-status members of the faculty, general officers, members of the Executive Administration, and senior exempt staff who do not meet the Internal Revenue Service definition of “highly compensated” employee are eligible at the time of their employment with the University to receive University matching contributions as described below. Full-status faculty members with the title of research associate or senior research associate become eligible for the University matching contribution after 12 months of full-time employment. Most newly hired faculty will not meet the IRS definition and therefore will be eligible on the date of their employment to receive the University matching contributions. Even if a particular faculty member is treated as “highly compensated” under this definition, they/she/he will be eligible to receive the matching contribution on the first day of the month after the date of completion of 12 months of full-time employment with Vanderbilt.
Under Internal Revenue Service definition, a faculty member is “highly compensated” for a particular calendar year (the “determination year”) if in the year preceding or in the determination year the faculty member received compensation from Vanderbilt in excess of a specified index amount ($110,000 in 2009). The gross compensation paid during the determination year is counted. Faculty members seeking more specific information regarding their own situations or wishing to review the plan document should contact the Benefits Office of Human Resources.
Contributions under this retirement plan will be made on a monthly basis during years of participation, except for months in which no salary is paid. Participation in the Vanderbilt retirement plan is mandatory. For all faculty members except those who are in the School of Medicine Clinical Departments (and those faculty who are in the Basic Sciences Departments and who also participate in the Vanderbilt Medical mandatory contribution amount is three percent of salary. Faculty who are in the School of Medicine Clinical Departments are employed by Vanderbilt University Medical Center. They consult the Benefits Office of the Vanderbilt University Medical Center’s Human Resources current amount of their mandatory contribution. Contributions will be made on a tax deferred basis under an agreement with the University for salary reduction to reduce a participant’s salary by an amount not less than $200 in a plan year nor more than the limit allowed under the Internal Revenue Code (excluding from this calculation the salary supplement, described in Section B, below). No elective deferrals may be made to the Vanderbilt plan in excess of the annual limit imposed by the Internal Revenue Code, which in 2009 is $16,500. Only an election for Roth IRA contributions may be made to this plan on an after tax basis.
Subject to the eligibility requirements described above, the University will make matching contributions to the plan for each participant equal to at least three percent (3%) of their/her/his salary. An additional elective two percent (2%) may be made and will be matched. (The term “salary” means the amount of base salary during the plan year paid to the participant, excluding such items as bonuses, overtime pay, and any salary supplement paid to a faculty participant. “Salary” includes a participant’s elective deferrals and elective contributions to Flexible Spending Accounts.) The matching contributions are also capped by the recognizable pay limits of Internal Revenue Code section 40l(a) (17).
It may be necessary to distribute each year to faculty members who are “highly compensated” under the Internal Revenue Service definition a portion of the University matching contribution (including investment earnings). Any such distribution must be treated as taxable income.
Faculty members should consult the Benefits Office of Human Resources for more information. Investment of Contributions Plan contributions will be forwarded to TIAA-CREF, Vanguard, VALIC, and/or Fidelity to be applied to premiums on regular retirement annuity contracts or deposits for mutual fund shares in any proportion elected by the participant. Matching contributions on behalf of a participant will be divided in the same manner as the respective designations by such participant for the first three percent (3%) and the first additional two percent (2%) of their/her/his elective deferrals.
The associate vice chancellor for human resources of the University is the administrator of this plan and is responsible for enrolling participants, sending plan contributions for each participant as premiums to annuity contracts issued on the participant’s life, and for performing other duties required for the operation of the plan. The administrator may designate in writing other persons to carry out duties under this plan.
B: Salary Supplement
Subject to the conditions stated in Section A, above, Investment of Contributions, the following will receive a taxable salary supplement equal to five percent (5%) of their salary, up to $10,500: professors, associate professors, assistant professors, professors of the practice, lecturers, senior lecturers, principal senior lecturers, and instructors; collegiate and pre-collegiate faculty members in the Blair School of Music; research professors, research associate professors, research assistant professors, and research instructors; School of Medicine ranks designated by the words “assistant in” “associate in,” and “senior associate in,” each followed by a departmental designation; general officers, members of the Executive Administration, and senior exempt staff.
The salary supplement is a benefit intended for retirement planning purposes. This supplement is not considered a part of the base salary, and no other fringe benefits will be attached to the supplement. The salary supplement must be treated as taxable income, unless the participant elects to defer all or a portion of the salary supplement through a salary reduction agreement.