Voluntary Contribution Plan
Thinking of increasing your contribution toward your voluntary contribution plan? It's easy. Just complete a salary reduction agreement form and submit it to the Office of Faculty and Staff Benefits!
The Voluntary Contribution Retirement Plan is a 403(b) plan that provides an opportunity for you to add to your retirement savings while decreasing current income tax. When you participate in the Plan, you contribute to your Plan account by payroll reduction on a pre-tax basis. Your contributions are then invested according to investment options that you choose. While employed at Georgetown, you have limited access to the money in your account; however, when you leave Georgetown University, you will have full access to the money in your account.
Who is Eligible?
You are eligible to participate in the Voluntary Contribution Plan if you are:
- A staff employee;
- A Jesuit Community lay employee;
- An employee covered under the collective bargaining agreements with the Allied International Union or SEIU 1199 United Healthcare Workers East;
- A fellow;
- An academic employee; or
A faculty member.
Where Do My Contributions Go?
Each month, Georgetown University remits your contributions to whichever investment company(ies) you have chosen. You may choose from three investment companies:
Fidelity Investments (1-800-343-0860);
TIAA-CREF (1-800-842-2776); or
The Vanguard Group (1-800-523-1188).
The investment company(ies), in turn, invest your contributions in the specific funds you have chosen. Each company offers a variety of investment options, ranging from conservative to aggressive.
How Do I Enroll?
To enroll, you must complete two separate forms. They are:
- Georgetown University Salary Reduction Agreement. This form authorizes Georgetown University to reduce your salary by the amount you elect, and remit the contributions to the company(ies) you elect.
- Enrollment Application/Contract for each investment company you elect. The investment company specific enrollment application/contract tells Georgetown where you want your contributions invested. You may obtain an enrollment application/contract for each of the investment companies by stopping by the Human Resource Office at Ground Floor Healy Hall or by e-mailing us at firstname.lastname@example.org to request we send one to you. When you e-mail us for the packets, we will send them via inter-campus mail, so please include your office mailing address when requesting these packets. Unfortunately, the packets are too lengthy for us to post online.
Each enrollment application/contract comes in a packet that describes the funds available, provides information to you on the fund's investment objectives, historical rates of return, etc.. It also includes a contract for you to complete and sign if you choose to invest with that company. You should review the entire packet of information for each investment company so you are comfortable with:
- The company(ies) you choose
- The investment fund(s)s you choose
If you want more details on the investment options available, you can visit the investment company websites or contact each of the company's representatives and ask him or her any questions you may have about the investment funds available.
You should send all completed forms together (i.e., the Salary Reduction Agreement and one or more enrollment application(s)/contract) to the Office of Faculty and Staff Benefits on the Ground Floor of Healy Hall. Please make copies of the completed forms for your records.
When Can I Enroll? Are There Enrollment Deadlines?
You may enroll in the Voluntary Contribution Retirement Plan at any time. You do not have to wait for Open Enrollment if you do not enroll when first eligible to do so.
However, please note that many employees who enroll in this plan wish to contribute at a level so that their contributions (combined with any employee contributions in the Defined Contribution Retirement Plan) reach the yearly IRS limits imposed on employee contributions. If you wish to reach this limit, you will need to enroll early enough in the plan year, and contribute at a high enough level, to reach this limit strictly through payroll deductions. Although it has done so in the past, the Office of Faculty and Staff Benefits has discontinued the policy of allowing employees to contribute to this plan by writing personal checks in order to reach the IRS limit at the end of the year.
How Much Can I Contribute to This Plan? Is There A Minimum Amount Required?
You decide how much you would like to contribute. The minimum amount required is $25.00 per month.
Are There Any Limits To The Amount I Can Contribute To This Plan? Are These Limits Imposed by Georgetown Or By Law?
Yes, your contributions are limited by IRS regulation, not Georgetown policy. In 2009, the IRS will allow participants under the age of 50 to contribute up to $16,500 throughout the year. Participants aged 50 and older are permitted to contribute up to $22,000 throughout the year. In 2008, the limits were $15,500 and $20,500, respectively. Please note that these limits apply to the combined amount you contribute to both the Voluntary Contribution Retirement Plan and the Defined Contribution Retirement Plan. The maximums apply only to employee contributions, so the contributions Georgetown makes to the Defined Contribution Plan or the GURP plan do not count for purposes of calculating this limitation.
403 (b) plan effective deferral
Catch-up contributions for
participants aged 50 and older
Please note that this limit does apply to all the tax-deferred contributions you may have made to other 401(k) or 403(b) plans during the calendar year. This rule commonly affects participants who change employers during the year, but can also affect any employee who contributes to more than one employer's plan or plans in the same calendar year.
Our payroll system will automatically discontinue employee contributions when you reach the appropriate dollar limit for the calendar year. However, if you have contributed to more than one employer's plan in a calendar year, it is your responsibility to monitor this limit, because Georgetown will not have any record of your contributions to the other plan(s). If you are a newly hired employee, you can usually determine your employee contributions to your prior employer's plan by looking at your last pay stub from that employer. If you notify us of the amount you contributed to that plan, we can adjust our payroll system to monitor this limit.
If you contribute to more than one employer's retirement plan or plans simultaneously, you will need to monitor your contributions so you do not exceed the limit.
How Much Does Georgetown Contribute To This Plan?
Georgetown University does not make any employer contributions to this plan. It is funded exclusively with employee contributions.
Once Enrolled, How Do I Make Changes?
Once enrolled in the Plan, you may make changes at any time. The following are examples of changes you may wish to make, and the directions for how to make those changes:
- Increase or decrease the amount you wish to contribute --To change the amount you contribute, simply complete a new Salary Reduction Agreement
- Discontinue contributions entirely -- To discontinue contributing to the plan, simply complete a new Salary Reduction Agreement indicating future contributions of "zero"
- Change where you wish your future contributions be invested -- An example of this is if you wish to change the direction of your contribution from 100% Fidelity to 50% Fidelity and 50% TIAA- CREF. To change your investment allocation with respect to the investment companies, complete a new Salary Reduction Agreement and any applicable company applications/contracts. (Please note that this type of change will change the allocation of future contributions only)
- Redirect your contributions in a different manner to the investment companies -- An example of this would be if you wish to change your investment election choice from 100% of one Vanguard fund to 100% of another Vanguard fund. To change your investment allocation with respect to the investments within one company, simply contact that company directly, either on-line or by telephone. You do not need to contact the Faculty & Staff Benefits Office to make this type of change.
- Transfer existing accumulated funds -- An example of this would be if you wish to transfer your entire account balance from Vanguard to TIAA-CREF. In order to accomplish this, contact the investment company that will be receiving the transfer:
Fidelity: Ms. April Winstead at 1-800-841-3363, ext. 73468
TIAA-CREF: Mr. D. Glenn Collins at 202-637-8939
Vanguard: Participant Services at 1-800-523-1188, hit "0" to speak with an associate.
The investment company representatives will outline the steps necessary to affect the transfer. Please note that this will not change, in and of itself, the directions regarding where you want your future contributions to go. If you wish to move your existing account balance to another investment company, and begin making future contributions to that company, simply combine this step with the third step listed above. Please note that the Office of Faculty and Staff Benefits has no involvement in this process.
Once Enrolled, How Often Do I Receive Updates On My Account Balance?
Once you are enrolled in the plan, you will begin to receive quarterly statements from the investment company(ies) indicating amounts contributed and returns generated by the investments. You also have the ability to view your account balance at any time you wish via the internet, since each investment company offers you the ability to view your account on-line. You must establish a password with each investment company to use this feature, as it is not connected with Employee Access + in any way.
Will the Employee and Employer Contributions Made to the Plan Agree With The Amounts Shown On My Pay Advice?
No. The statements you receive are prepared on a "cash" basis, while the amount contributed to the plan shown on your pay advice and W-2 form is prepared on an "accrual" basis. This is a common and completely lawful distinction found in almost all employer retirement plans. For example, the contributions you make in the 4th quarter of any year, as recorded on your paycheck will be the contributions for October, November, and December. The contributions shown on your 4th quarter statements from the investment companies will show the amounts they received in the 4th quarter -- which generally will be your September, October and November contributions. This difference will be most apparent to participants who contribute at the maximum amounts for the year.
This difference is due to the simple fact that we remit the contributions shortly after the end of the month for which they are attributable
Distribution Rules For Participants Who Are 70 1/2 Or Older
As long as you are employed, you are not required to take a distribution from this plan, regardless of your age. Once you terminate employment, you are required to take a minimum distribution from the plan once you attain age 70 1/2. Contact the appropriate vendor (Fidelity, Vanguard, or TIAA-CREF) to do so.
Accessing Funds While Still Employed
While working at Georgetown University, you only have very limited access to the money accumulated in your account(s). You cannot take a distribution of your account balance while still employed. The only ways in which you can access your money are by hardship withdrawal , by personal loan, and through an in-service age 59 ½ distribution.
Hardship withdrawals will only be authorized for one of six purposes:
- to finance the purchase of a primary residence;
- to avoid eviction/foreclosure;
- educational expenses for you or your dependents;
- out-of-pocket medical expenses for you or your dependents;
- funeral expenses for your parent, spouse, children or dependents; or
- to pay for expenses for the repair of damage to your residence, that would qualify for the casualty deduction
These rules are promulgated by the IRS and therefore we cannot make any exceptions to them. Most notably, you cannot receive a hardship withdrawal to pay off credit card balances.
When requesting a hardship withdrawal, you must submit proof of the hardship that corresponds to one of the above categories. Examples of the type of proof we require include: documentation showing the purchase or sale of a primary residence, an eviction or foreclosure notice, or a college tuition bill. You would need to submit this documentation to the Benefits Office at the time that you apply for the hardship withdrawal.
Hardship withdrawals are subject to Federal and state income tax and early withdrawal penalties if used before retirement age. Please note that if you elect to take a hardship withdrawal, your contributions to the Voluntary Contribution Retirement Plan will be suspended for one year. Contact the Benefits Office at email@example.com for more information about Hardship Withdrawals from the Voluntary Contribution Retirement Plan.
You may borrow up to 45% or $50,000 (whichever is less) from your Voluntary Contribution Retirement Plan account by personal loan. Money borrowed can be used for any purpose and is not subject to taxes or penalties. You must repay the loan directly through the investment company. At this time, TIAA-CREF is the only one of the three investment companies that can process a loan in a manner compatible with Georgetown University. If you are interested in a loan, but your account is not with TIAA-CREF, you may transfer funds into TIAA-CREF (see above for the steps required to transfer existing accumulated funds from one investment company to another) and then request a loan. For more information regarding loans from the Voluntary Contribution Retirement Plan, contact the Benefits Office at firstname.lastname@example.org .
If you are working at Georgetown University when you reach age 59 ½, you can access your 403(b) account(s) without penalty. This is through what is called an in-service age 59 ½ distribution. Please contact the appropriate investment company(ies). Please note that federal and state taxes are applicable.
What Does Vesting Mean?
Vesting means the granting to an employee of credits toward a pension even if separated from the job before retirement. You are always 100% vested in your account balance in this plan. Therefore, you are entitled to all the funds in your account, regardless of how long you have been employed at Georgetown when you terminate.
How Does Participation In This Plan Affect My Ability To Contribute To An Individual Retirement Account ("IRA")?
The rules regarding an individual's ability to contribute to an IRA, and the tax deductibility of contributions to an IRA, are complex and depend on many factors that are beyond the scope of your employment at Georgetown. Your marital status, total household income, other sources of income (self-employment income from outside consulting is one of many examples) amount of employee contributions made to our plans, and other factors can impact the type of IRA that is appropriate for you. Consequently, the Office of Faculty and Staff Benefits cannot provide you with guidance regarding IRA contributions. You should contact your tax or investment advisor for assistance.
What Do I Do When I Retire or Terminate Employment?
When you terminate employment from Georgetown University for any reason (voluntarily, non-voluntarily, due to retirement, etc), you have full access to any funds accumulated in the Plan. Taxes and penalties vary according to distribution option. Some of the distribution options available are:
- Direct rollover to IRA or other compatible plan;
- Cash out;
- Annuity payments*;
- Systematic withdrawals*; or
- Interest only payments*.
*Indicates options available only through TIAA-CREF.
When you leave Georgetown University and you wish to access your funds, you should take the following steps:
- Contact the applicable investment company and request distribution paperwork. The investment company will send the paperwork directly to you.
- When you receive the distribution paperwork, complete and sign all appropriate sections. Obtain the required spousal signature, if required (including notarization)
- Send the distribution paperwork to the Office of Faculty and Staff Benefits so your distribution can be authorized: You may mail the form to:
Office of Faculty and Staff Benefits
Ground Floor, Healy Hall
37 & O Streets, NW
Washington, DC 20057-1265
attn: Retirement Plan Benefits Analyst
It is critical that you complete the steps listed in the order above. If you do not, your distribution will be delayed. Please note that we can accept faxed copies of these signed forms. You may fax them to 202-687-2389. If you include your e-mail address on the fax cover sheet, we will send you an e-mail acknowledging receipt of your paperwork.
Once we receive your signed paperwork, the Office of Faculty and Staff Benefits will verify that you have terminated employment with Georgetown University and authorize your distribution (in the form of a signature). The Faculty and Staff Benefits Office will then forward your completed distribution paperwork to the investment company and the investment company will process your distribution.
Please note that if you terminate employment after attaining age 55 and completing 10 years of service (measured on an elapsed-time basis), you are entitled to additional retiree benefits, such as retiree medical insurance coverage and retiree life insurance. To request a full retirement packet, please contact the Office of Faculty and Staff Benefits at email@example.com.