Voluntary Contribution Retirement Plan
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?
If you are a paid employee of the University (you receive a W-2), you are eligible to enroll in the Voluntary Plan.
If you were hired on February 1, 2018 or later, and meet the eligibility for participating in the Defined Contribution Retirement Plan (DCRP), during year one of the phased waiting period for DCRP you’ll be automatically enrolled in the Voluntary Contribution Retirement Plan at a default 3% employee contribution to a TIAA LifeCycle Index Fund. Learn more here.
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:
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.
Log on to http://gms.georgetown.edu with your NetID and password. New Employees will be prompted to enroll as part of the New Hire benefit event in their GMS inbox (see the New Employees section for more information). All other employees should follow the instructions below to enroll or make changes to your 403(b) elections.
Once you submit your choices, you’ll be automatically enrolled in a target retirement fund by the investment company(ies) you have selected. You can change your investment allocations at any time after your first contribution has been made by contacting your investment company. You’ll be receiving information from your chosen investment company(ies) shortly after you enroll with instructions.
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 by the IRS is $200.00 per year.
Are There Any Limits To The Amount I Can Contribute To This Plan?
Yes, your contributions are limited by IRS regulation. In 2021, the IRS will allow participants under the age of 50 to contribute up to $19,500 throughout the year. Participants aged 50 and older are permitted to contribute an additional $6,500. 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.
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 (your) 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 log into gms.georgetown.edu and follow the steps described above to indicate the new total amount which you wish to contribute to the Voluntary Contribution Retirement Plan.
- Discontinue contributions entirely — To discontinue contributing to the plan, simply log into gms.georgetown.edu and indicate that you wish to contribute zero dollars to the Voluntary Contribution Retirement Plan as described above.
- 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. To change your investment allocation with respect to the investment companies, log into gms.georgetown.edu and follow the steps described above to adjust the allocation of your chosen contribution amount between the retirement companies. Please note that the distribution will need to total 100%.
- 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. In order to accomplish this, contact the investment company that will be receiving the transfer:
Fidelity Investments (1-800-343-0860)
The Vanguard Group (1-800-523-1188)
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, it is handled directly between you and the investment companies.
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 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.
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.
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 (Please note that personal loans and hardship withdrawals are only available through TIAA).
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 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, you may transfer funds into TIAA (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 .
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.
Before requesting a hardship withdrawal, you must first maximize your personal loan options with TIAA. If this has been done, you will need to 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 both the Deined Contribution Retirement Plan and the Voluntary Contribution Retirement Plan will be suspended for six months. For more information about Hardship Withdrawals from the Voluntary Contribution Retirement Plan, please contact the Office of Faculty and Staff Benefits at email@example.com or 202-687-2500 to make an appointment.
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) for information and paperwork. Once complete, contact the Office of Faculty & Staff Benefits to set up an appointment with our Retirement analyst, who will need to sign off on your withdrawal. 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 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 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.