State to match employees'
like money for nothing. Well, sort of. The state has sweetened
the pot for those who participate in the University's tax-deferred
savings plan by matching 50 percent of an employee's contribution,
up to a maximum of $240 per year.
how the tax-deferred savings plan works. Eligible employees --
faculty and classified workers with at least a year's full- or
part-time service -- may set aside a portion of their paychecks,
to be deducted before state and federal taxes are taken out, for
long-term savings. This lowers your taxable income.
can choose how they want to invest the money from an array of
options, and later may change those selections, and even how much
they wish to invest. Employees may invest as little as a few dollars
per month to as much as legally allowed (an amount that the Benefits
Office can calculate for you.) The interest generated is also
tax-free until you begin to draw down the account, perhaps as
soon as age 59 1/2.
There are restrictions and penalties for withdrawing funds from
the plan before reaching retirement age, so employees should only
invest money that is not needed in the short term.
new twist is that the state will also add some money to the plan,
matching half of the employee's contribution up to $10 per bimonthly
pay period, or $20 per month. Employees must contribute at least
$40 per month to receive the maximum state match. And unlike many
private plans, there is no vesting requirement -- employees are
eligible to receive 100 percent of the state match, no matter
how long they have been in the plan. However, employees may not
withdraw any of the state contributions until they terminate their
state employment or move to another state position in which they
are not eligible to participate.
state's money will be kept in accounts separate from the employees'
contributions. Employees may still choose how to invest it, although
they are limited to funds offered by two vendors: Teachers Insurance
and Annuity Association-College Retirement Equities Fund (TIAA/CREF)
and Fidelity Investments. The state's match will take effect on
pay earned in April. Those currently enrolled in the plan will
be mailed details of the state matching plan in early March, said
Laura Larew, director of employee benefits. If employees do not
specify how the state funds are to be invested, they will be distributed
in the same manner in which their contributions are now.
2,800 U.Va. employees take part in the tax-deferred savings plan,
Larew said. She anticipates that number will increase with the
additional state contribution. Employees may sign up for the plan
at any time, she said.
information, call the benefits office at 924-4392, or send e-mail