5. Retirement

The University participates as the employer in the federally-mandated social security program that provides benefits to the employee and/or dependents at the time the employee attains the age of eligibility as prescribed by law. The law requires that the employer contribute a specific amount of money on a regular basis, with an equal amount contributed by the employee. The schedule of contributions and benefits is modified periodically by Congress.

The base benefits available starting at age 62 up to age 65 vary depending on the overall earnings which have been subject to social security taxes throughout the employee’s work career .

For persons born in 1938 or later, the normal retirement age at which a person can receive full Social Security benefits will gradually increase from age 65, eventually reaching age 67 for persons born after 1959.

The 1973 amendments to the Social Security Act included a cost of living clause in order to sustain the purchasing power of those receiving Social Security benefits. Increases in benefits and changes in contribution rates can occur no more than once per year under current amendments.

Additional information regarding supplemental benefits included under the law such as Medicare, long-term disability benefits, and survivors' benefits, is available from the office of human resources.

5.2 Retirement and TDA Plans

The University’s retirement plan is established under Section 401(a) of the IRS code and is funded solely by University contributions. The University’s contributions are made to an employer-funded Group Retirement Annuity (GRA) with Teachers Insurance and Annuity Association and College Retirement Equity Fund (TIAA-CREF). The TDA (Tax-Deferred Annuity) plan is established under Section 403(b) of the IRS code and is funded by employee contributions only. Contributions to both of these plans grow on a tax-deferred basis, which means that they are not taxed as long as they remain in the employee’s retirement account. The University’s TDA plans offer a choice of investment funds managed by TIAA/CREF, Fidelity Investments, and Lincoln National. Employees decide how contributions to their accounts are invested among the funds offered.

New employees in an eligible classification (see page 7) may participate immediately.

A. 401(a) Group Retirement Annuity Plan – University Contributions

The University contributes to a 401(a) group retirement annuity (GRA) on behalf of each eligible employee. The GRA plan is written with TIAA-CREF. Its distinguishing features include a four-year vesting schedule, and full funding (University contributions are made every pay period. No contributions are held back).

The University’s contribution rate changes take effect on the first pay date of each quarter based upon length of service in an eligible category as of the last day of that quarter.

Contribution Rate as a Percentage of Normal Wages

Completed Years of Eligible Service	UD Contribution With Less Than 5% Employee Contribution	UD Contribution With At Least 5% Employee Contribution
From
0	2.5%	5.0%
5	3.5%	7.0%
10	7.5%	7.5%
15	8.0%	8.0%
20	8.5%	8.5%
25 or more	9.0%	9.0%

During the first 10 years of service, an employee may contribute more than the 5% contribution necessary for the higher university contribution; however, the additional contributions will not be matched beyond the University’s scheduled percentage contribution. Similarly, after 10 years of service an employee can continue to make contributions though none are required to receive the University's contribution.

Participants have the opportunity to direct the allocation of University contributions among several variable annuities (CREF and TIAA Real Estate) and/or a fixed income annuity (TIAA Traditional). Payment options available from the 401(a) GRA plan upon separation from service include a choice of several lifetime annuity options, fixed period annuities, interest only payments (TIAA Traditional), systematic withdrawals, and full or partial cash withdrawals, including IRA rollovers, or a minimum distribution option at age 70-½. Payout options are subject to all applicable rules and restrictions imposed by the IRS and/or TIAA/CREF.

Vesting

University contributions to the 401(a) GRA plan are subject to the following vesting schedule shown below. Vesting refers to the employee’s right of ownership of the retirement account balance. Employees who are fully vested when terminating employment own 100% of the retirement contributions made by the University and the earnings from those contributions. Employees who are partially vested when terminating employment, own a percentage of both the contributions made by the University and the earnings from those contributions according to the schedule.

Completed Years of Service	Vesting Percentage	Forfeited Percentage
Less than 1	0%	100%
1 but less than 2	25%	75%
2 but less than 3	50%	50%
3 but less than 4	75%	25%
4 or more	100%	0%

B. 403(b) Tax-Deferred Annuities (TDA) – Employee Contributions

Employee contributions are optional and may be made to any of the following 403(b) tax deferred annuity (TDA) plans:

TIAA/CREF Group Retirement Annuity

Investment options include the same choice of funds as the 401(a) group retirement annuity. Payment options available at separation from service include a choice of several lifetime annuities, fixed period annuities, interest only payments (TIAA Traditional), systematic withdrawals, and full or partial cash withdrawals, including IRA rollovers or a minimum distribution option at age 70-½.

TIAA/CREF Group Supplemental Retirement Annuity

Investment options include the same choice of funds as the 401(a) group retirement annuity. This plan also offers a loan feature as well as cash withdrawal anytime after reaching age 59-½, regardless of work status. Payment options available at separation from service include a choice of several lifetime annuities, fixed period annuities, systematic withdrawals, and full or partial cash withdrawals, including IRA rollovers or a minimum distribution option at age 70-½.

Fidelity Investments

Investment options include a variety of mutual funds including money market, common stock and bond funds. This plan also offers a loan feature. Payment options available any time after 59-½ or at separation from service include a choice of several lifetime annuities, fixed period annuities, systematic withdrawals, and full or partial cash withdrawals, including IRA rollovers or a minimum distribution option at age 70-½.

Lincoln National

Investment options include fixed accounts, money market, common stock and bond funds. This plan offers a loan feature and cash withdrawal anytime after age 59-½. Payment options available at separation from service include lifetime annuities, fixed period annuities, systematic withdrawals, and full or partial cash withdrawals, including IRA rollovers.

Payment options for all of the above TDA plans are subject to all applicable rules and restrictions imposed by the IRS or individual financial providers.

Employee contributions can be treated as deferred income (non-taxable at present time) by completing a salary reduction form in the office of human resources. Federal maximum exclusion allowance limitations on contributions vary by individual circumstance and are communicated to employees in spring of each year by the office of human resources. Transferability among carriers is available, but may be subject to restrictions.

5.3 Retirement Eligibility & Benefits

A. Eligibility Criteria

A person, regardless of the position held at the University, may retire voluntarily at any time after attaining one of the following levels of service:

· An employee with fewer than 5 years of service will not be recognized as a University of Dayton retiree regardless of age at retirement.

B. Benefits

At age 60 with at least 10 years of service
AND
At age 55 when age plus years of service total at least 75

· Life Insurance: The retiree is eligible for $5,000 worth of life insurance, and the University will pay the premiums until age 70. The retiree may convert to a private life insurance policy upon attaining age 70.

· Health Insurance: The University will contribute a portion of the premium for the retiree coverage. Dependents may be covered under the plan. For additional information regarding premium contributions and plan provisions, contact the office of human resources.

· Discounts on Football and Basketball Tickets: Football and basketball tickets are made available at the same discount rates that are available to current active employees.

· Wellness Program: retirees and their immediate family members may participate.

At age 65 with 5 years of service

· Life Insurance: The retiree is eligible for $5,000 worth of life insurance and the University will pay the premiums until age 70. The retiree may convert to a private life insurance policy upon attaining age 70.

· Health Care Insurance: The retiree may purchase single and dependent coverage under the medical plans that are available to retirees; however, the retiree is responsible for the entire premium. For additional information contact the office of human resources.

· Discounts on Football and Basketball Tickets: Football and basketball tickets are made available at the same discount rates as are available to current active employees.

· Wellness Program: retirees and their immediate family members may participate.

C. Coordination of Health Care Benefits with Medicare

A retiree or dependent who reaches age 65 and/or qualifies for Medicare and wishes to remain covered under the University’s health care plans, is required to submit a copy of his or her Medicare card to the office of human resources. When the copy is received, the retiree will be placed on the University’s Medicare Supplemental plan as of the date Medicare coverage became effective.

D. Continuation of Retirement Benefits

The University currently intends to continue benefits for eligible retirees throughout their lifetime. However, future changes in benefit costs or other circumstances may necessitate benefit revisions. The University reserves the right to modify or eliminate benefits and the way they are paid at its discretion for any reason. The benefit program is reviewed annually to determine if any modifications are required.

The University also intends to continue the cost sharing benefits based upon the number of years in an eligible class at retirement. However, to the extent that costs increase by an amount the University deems to be excessive, the University may limit its contribution to a lesser amount and the retiree's share of the contribution may increase.

E. Employment After Retirement

Under unusual circumstances and only with the express approval of the president, an employee may be retained on a benefit-eligible basis after the date of retirement. In the event the retired person is employed in a benefit-eligible category, the specific period must be established, usually one year or less.

5.4 Medical Retirement

An employee who is eligible for Long-Term Disability coverage who has exhausted his or her medical leave of absence, and has completed five or more years of University service but is not yet eligible for regular voluntary retirement will be placed on medical retirement and will remain in this classification for as long as benefits are payable under the University of Dayton sponsored Long-Term Disability Plan. An employee who has exhausted a medical leave of absence and who is otherwise eligible for voluntary retirement (see p. 35 ) will be given the choice of medical retirement or regular retirement. In the event a medical retiree is no longer deemed to be disabled as determined by the Long-Term Disability carrier or reaches the maximum age for payment under the plan and benefit payments from the Long-Term Disability Plan cease, employment and all benefits from the University of Dayton will also cease. If the medical retiree is re-employed at the University of Dayton in a benefits eligible position or is eligible for voluntary retirement by virtue of years of service at the onset of medical retirement and current age applicable benefits will continue.

A. Benefits – Medical Retirees With 10 or More Completed Years of Service

· Life insurance: Life insurance will continue at the same level of coverage provided to active employees for as long as disability benefits through the University’s Long-term Disability plan continue. If at the time these payments cease, the retiree qualifies for voluntary retirement, the coverage will be reduced to $5,000 and the University will pay the premium until age 70. The retiree may convert to a private life insurance policy at age 70.

· Tuition Remission: Available at the same level and to the same family members as before the medical retirement.

· Discounts on Football and Basketball tickets: Football and basketball tickets are made available at the same discount rates as those available to current active employees.

· Wellness Program: Medical retirees and their immediate family members may participate.

B. Benefits – Medical Retirees With 5 But Less Than 10 Completed Years of Service

· Life Insurance: Life insurance will continue at the same level of coverage provided for active employees for as long as disability benefits through the University’s Long-term Disability plan continue. If at the time these payments cease, the retiree qualifies for voluntary retirement, the coverage will be reduced to $5,000 and the University will pay the premium until age 70. The medical retiree may convert to a private life insurance policy at age 70.

· Health Insurance: The medical retiree may purchase single or dependent coverage under the medical plan that is available to retirees; however, the medical retiree is responsible for the entire premium. For additional information contact the office of human resources.