Cash Balance Retirement Plan for Staff
The Cash Balance Retirement Plan assists employees with financial security in retirement. Once an employee becomes eligible, that employee's account is credited annually with an amount based on age, annual pay and length of service.
The Institute also offers Tax Sheltered Annuities [403(b)] that enable employees to save for retirement voluntarily on a pretax basis through TIAA-CREF, Fidelity and Vanguard.
Academic Annuity Plan for Faculty and Executive Staff
The AAP (Academic Annuity Plan) is available to faculty and executive staff after three years of eligible service. These contributions may be invested with TIAA-CREF, Fidelity Investments, and Vanguard.
Future Income Plan (FIP)
During the first year of eligibility service, the Institute will calculate what would have been paid into the AAP if the year of service requirement had been satisfied, and pay it to you in cash as taxable income. This is called a First Year FIP payment. First Year FIP payments are made once a year (in March) for the previous calendar year.
Amount Contributed by the Institute
The federal government limits the amount of annual compensation an employer can recognize in a pension plan calculation. As of January 1, 2009, "maximum recognizable compensation" is set at $245,000. This limit may increase in future years.
The AAP percentage contribution differs on "recognizable compensation" under and over the Social Security Taxable Wage Base. The Taxable Wage Base is the amount of annual earnings subject to taxation for Social Security. The 2009 Taxable Wage Base is $106,800. This amount may increase in future years.
If you are under age 40, the Institute will contribute an amount equal to 5% of your monthly pensionable earnings until your Year-To-Date pensionable earnings reach the Taxable Wage Base, and 10% on pensionable earnings above the Taxable Wage Base up to the "maximum recognizable compensation" limit.
If you are age 40 or over, the Institute will contribute an amount equal to 11% of your monthly pensionable earnings until your Year-To-Date pensionable earnings reach the Taxable Wage Base, and 16% on pensionable earnings above the Taxable Wage Base up to the "maximum recognizable compensation" limit.
If your pensionable earnings exceed the maximum recognizable compensation before the end of the calendar year, the AAP amount will continue to be calculated each month, but it will be paid to you in cash as taxable income.
The combined limit of contributions to the AAP and contributions to the Tax Sheltered Annuity Plan cannot exceed $49,000 (2009 limit). It is possible that employees receiving high AAP contributions may have to limit TSA contributions to an amount below the Federal limit.
Effective January 1, 2009, the vesting requirement changed from one year to three years. This change was made to comply with new federal pension plan regulations. This means that you will have a vested interest in AAP contributions remitted on your behalf when you have completed three years of service. Your first year of employment, even if you are not an AAP participant, will count toward the three year vesting requirement. If your employment ends before meeting the new three-year vesting requirement you must forfeit your interest in these funds.