Tax-Deferred Retirement Plan (TDR): Contributions and Vesting
Beginning July 1, Penn faculty and staff will have another savings vehicle to consider for your retirement portfolio. The Roth 403 (b) will be added as on option under Penn's Tax Deferred Retirement (TDR) Plan and the Supplemental Retirement Annuity (SRA) Plan. Click here for more information.
Contributions
Under the TDR, you will receive Basic contributions from the University whether or
not you choose to contribute your own money. These contributions are a percentage of
your base salary based on your age as of January 1 of each year. Then, if you choose to
make your own contributions to your account, the University will provide Matching
contributions up to 5% of your base salary (subject to Internal Revenue Code
limitations). The chart below details the contribution schedule under the TDR.
|
Up to 30
|
1.5%
|
$-for-$ match on employee contributions up to 5%
|
6.5%
|
11.5%
|
|
30 - 39
|
3%
|
8%
|
13%
|
|
40 and over
|
4%
|
9%
|
14%
|
Your contributions can be made on either a pre-tax or Roth after-tax basis from your paycheck*. All pre-tax contributions (from both you and the University) are made on a tax-deferred basis, which means you do not pay taxes on the contributions or any investment
earnings until you actually take the money out of your account. If you choose the Roth after-tax option, you pay taxes up front on the contributions you make and all earnings are tax-free if they are part of a "qualified distribution"—one that is made five years after the year of the first Roth contribution and when you attain age 59 ½ and have a severance from employment, die or become disabled.
*You may make after-tax contributions if desired. Contact the Retirement Call Center at 1-877-PENN-RET for more information.
Please note that you may supplement the TDR by making additional tax-deferred or Roth contributions through the Supplemental Retirement Annuity (SRA) Plan.
Vesting
Being vested means that you own the money in your TDR account completely, even if you leave the University. Employee contributions (the funds you contribute) immediately belong to you no matter what your hire date, but Penn’s contributions follow a vesting schedule which will now depend on when you were hired.
If you were originally hired before January 1, 2010, Penn’s contributions are immediately 100% vested.
If you were hired on or after January 1, 2010, Penn’s contributions become vested once you’ve worked at Penn for at least three years. Previous employment at the University or Penn’s Health System will count toward this requirement; you simply need to use the Employment History Verification Form to get credit for your service. Keep in mind that University contributions will still start being made to your TDR account once you’ve completed the one-year waiting period (or immediately if you receive a prior service credit waiver); you just won’t be vested in the contributions until you meet the three year requirement. This means that if you leave Penn before completing three years of service, you’ll forfeit any contributions Penn has made to your TDR account. Click here for more information.