Defined Contribution Retirement Plan
In the Defined Contribution Retirement Plan (403 (b) Plan), building retirement income is a shared responsibility between you and Georgetown University. With this Plan, you and Georgetown University work together to invest in your future. Your retirement account balance grows based on:
- Your contributions,
- Georgetown University’s contributions, and
- Investment income on your total account balance.
Once you are eligible, contributions to the Plan (yours and Georgetown University’s) are made to your account every pay period, giving your account the opportunity to grow throughout the year. Not only will the account grow with contributions, it also has the potential to grow as a result of investment returns on your balance that may be realized throughout the year. You decide how to invest your contributions and Georgetown University’s contributions by choosing among a variety of funds offered by Fidelity Investments, TIAA and Vanguard. All investment earnings and/or losses are reflected in your account.
Who is Eligible?
All benefits-eligible faculty, AAP and staff who are at least 18 years old and whose position is at least half Full Time Equivalent (“FTE”) or who are regularly scheduled to work at least 20 hours per week. Fellows are not eligible to participate in this plan.
Effective February 1, 2018, there will be a Phased Waiting Period before new employees are eligible to participate in or receive full University contributions under the DCRP.
- Phase One: Upon hire, DCRP-Eligible Employees are automatically enrolled in the Voluntary Contribution Retirement Plan (VCRP). Under the VCRP’s automatic enrollment feature, the University deducts 3% of your eligible pay each pay period, deposits that amount as a pre-tax contribution to your VCRP account, and invests that amount in a TIAA LifeCycle Index Fund most appropriate for your age, unless you choose otherwise. You may change the level of your deductions in the VCRP from the automatic deduction amount or stop contributions entirely, if you choose.
- Phase Two: After one year of service, VCRP contributions cease and DCRP-Eligible Employees are automatically enrolled in the DCRP. The University provides a matching contribution of up to 5% of eligible pay.
Under the DCRP’s automatic enrollment feature, the University deducts 3% of the employee’s eligible pay each pay period, deposits that amount, along with the University’s 5% contribution, as a pre-tax contribution in your DCRP account. Unless the employee chooses otherwise, the money is invested in a TIAA LifeCycle Index Fund most age appropriate for the employee. If the employee chooses to contribute less than 3%, the University contribution will decrease accordingly. Employees may also elect to enroll in VCRP.
Phase Three: At the conclusion of two full years of service, the University will contribute an additional 5% of your eligible pay to your DCRP account.
There are certain exceptions to waiting period that would allow some employees to participate in the DCRP upon hire and be automatically enrolled at a 3% employee contribution, a 5% University matching contribution and a 5% University core contribution. These contributions will be defaulted to a TIAA Lifecycle Index fund.
You may change your retirement vendor, fund allocations and employee contribution at any time.
Where Do My Contributions Go?
Each month, Georgetown University remits your contributions, along with the University contributions, to whichever investment company(ies) you have chosen. You may choose from three investment companies:
- Fidelity Investments (1-800-343-0860);
- TIAA (1-800-842-2776); or
- Vanguard Group (1-800-523-1188, hit “*” then “0” to speak with an associate.)
The investment companies, in turn, invest the contributions in the specific fund or funds you have chosen. Each company offers a variety of investment options, ranging from conservative to aggressive. Georgetown University contributions are allocated proportionately to your contribution allocation. You may split your investments in any way you like, however many employees find using more than one vendor leads to unnecessary paperwork upon withdrawal.
Once your eligibility is confirmed, you will be automatically enrolled in the DCRP to contribute 3% of earnings on a pre-tax basis with such amounts invested in a TIAA LIFECYCLE Fund. You may log in to GMS to opt out of, or decrease the DCRP 3% automatic election and/or select different retirement vendors and/or investment fund allocation(s). Based on your employee contribution, you would receive a “matching contribution” from the University as illustrated below:
- GU contributes 5% (You contribute 3%)
- GU contributes 3.34% (You contribute 2%)
- GU contributes 1.67% (You contribute 1%)
- GU contributes 0% (You contribute 0%)
Upon completion (or waiver) of the waiting period, the University will automatically contribute a non-elective contribution of 5% of earnings. This brings the University and Employee combined contributions to up to 13% of salary.
When you participate in this Plan, you can contribute no more than 3% of your compensation. However, you may supplement your retirement savings, if you wish, by participating in the Voluntary Contribution Retirement Plan .
Is There A Limit on My Compensation For The Purposes Of Contributions To This Plan?
Yes, there is a limit of $200,000 earnings recognized for Plan purposes. When your contributions reach the limit for a given Plan Year (calendar year), Georgetown University will automatically suspend your contributions (and the corresponding University contributions) for the remainder of the Plan Year, and subsequently re-start contributions when the next Plan Year begins.
Therefore, the maximum employee contribution to this Plan is $6,000 per year ($200,000 multiplied by 3%). The maximum employer contribution to this Plan is $20,000 for employees hired on or after January 1, 1996 and $24,000 for employees hired on or before December 31, 1995.
Are There Limits On Contributions To The Plan?
Yes, your contributions are limited by IRS regulation, not Georgetown policy. In 2019, the IRS will continue allow participants under the age of 50 to contribute up to $19,000 throughout the year. Participants aged 50 and older are permitted to contribute an additional $6,000. It takes into account only employee contributions, but it includes those contributions in:
- This Defined Contribution Retirement Plan
- The Voluntary Contribution Retirement Plan
- Any other tax-qualified plan into which you make 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:
- Change where you wish your future contributions to 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. To change your investment allocation with respect to the investment companies, log in to GMS and follow the steps for completing a Retirement Savings Change (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 Office of Faculty and Staff Benefits 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. In order to accomplish this, the first step you should take is to contact the investment company that will be receiving the transfer. The appropriate consultant will assist you in this process. The appropriate consultant will assist you in this process:
Fidelity: Mr. Deren Reid, firstname.lastname@example.org
TIAA: Ms. Jahleel Gordon at email@example.com
The Vanguard Group: Participant Services at 1-800-523-1188, hit “0” to speak with an associate.
They 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 first step listed above.
- Discontinue your contributions entirely — To discontinue contributing to the plan, simply complete the Retirement Savings Change process in GMS indicating future contributions of “zero”. Once your request has been processed, you will continue to receive the non-elective University contribution of 5% of your gross pay to the company of your choice.
Can I Roll Over Money From a Prior Employer’s Retirement Plan Into This Plan?
The Defined Contribution Retirement Plan does not accept rollovers. You may roll over money into the Voluntary Contribution Retirement Plan only.
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 separate password with each investment company to use this feature, as it is not connected with your NetID or GMS in any way.
Will Contributions Made to the Plan Agree With The Amounts Shown On My Payslip?
No. There is an administrative delay between the time your contributions are taken from your paycheck and when they are actually posted to your account. Typically, you should see the contributions posted to your account within ten days.
Accessing Funds While Still Employed
While working at Georgetown University, you do not have access to the money accumulated in your account(s) for any reason whatsoever. There is limited access to funds accumulated in the Voluntary Contribution Retirement Plan while still working at Georgetown. Please see that Plan’s web page for details.
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 your vendor (Fidelity, Vanguard, or TIAA) to do so.
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.
If I Have a 403(b), Can I 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 at Georgetown University for any reason (voluntarily, non-voluntarily, due to retirement, etc.), you have full access to all funds accumulated in the Plan. Funds can be accessed in a variety of forms, including, but not limited to, the following:
- Direct rollover to IRA or to other compatible plan;
- Cash out;
- Annuity payments*;
- Systematic withdrawals; and
- Interest only payments*.
*Indicates options available only through TIAA.
Taxes and penalties vary according to distribution option. Please contact the applicable investment company(ies) for more specific information regarding distribution options.
If you wish to access your funds after you terminate, you must 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 spousal signature, if required (including notarization)
- Send the distribution paperwork back to your vendor as indicated on the form. If there is a section on the form prompting you to get Employer Authorization, simply write in “On File.” Our office completes this portion electronically when you terminate employment.
Please note that if you terminate employment after 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 firstname.lastname@example.org. If you are planning to retire, we suggest reviewing our Retiree Checklist and the Benefits for Retirees webpage at least three months before your retirement date.
How do I obtain information for my attorney to prepare a qualified domestic relations order, or QDRO?
Contact your retirement plan company (Fidelity, TIAA, Vanguard) directly for guidance on preparing the QDRO.