UWRP Information Brochure by BronsonDurrant


									U n i v e r s i t y   o f   W a s h i n g t o n   r e t i r e m e n t   P l a n
The University of Washington Retirement Plan (UWRP)           act now You can wait two years for automatic
is a tax-deferred defined contribution plan that helps        enrollment, but you would lose two years of
you save for retirement. Newly eligible employees             University of Washington contributions to your UWRP
can start to participate on their first day of eligible       account. To compare, see the chart on opposite page
employment. Enrollment can be delayed for up to two           (Delaying enrollment Could be Costly) and act now
years from the date of eligible employment. At two            to take full advantage of UWRP participation.
years, enrollment is mandatory and a condition of
continued employment.                                         total SavingS
                                                              The amount you contribute to your UWRP account,
                                                              and the amount the University matches, depends on
Save More The UW helps you save even more for                 your current age. The closer you are to retirement
retirement by providing 100% matching funds to your           age, the more you are permitted to contribute (see
                                                              chart Total Savings).
UWRP contributions. Both your contributions and UW’s
matching funds are immediately vested (i.e., you have
the right to receive all of the money in your account         total SavingS This chart shows the percentage of your regular pay
when you leave the University), and the plan is 100%          allocated each pay period to your UWRP account (up to a maximum limit
                                                              set and periodically adjusted by the Internal Revenue Service).
portable if you leave the UW.                                                                         university         total uwrp
                                                              your age         your contributions     matching            savings

                                                              under 35                5%                 5%                10 %
eligibility                                                   35+                    7.5 %              7.5 %              15 %
                                                              50+ (optional)         10 %               10 %               20 %
If you are a UW faculty, librarian, or professional
staff member employed at least 50% in an eligible
job class, with an appointment that is ongoing, or a
fixed duration of at least six consecutive months,
you are eligible to participate in the UWRP until:            augMenting retireMent SavingS
• you retire or separate from employment
      with the UW, or                                         The “The UW’s Voluntary Investment Plan (VIP) and
                                                              the Washington State Deferred Compensation Plan
•     you move from an eligible to an ineligible              are available to most UWRP participants who wish
      job class.                                              to save a higher percentage of their salary, pre-tax,
If you move to a UWRP-eligible position from prior            than the UWRP allows. You can find more information
participation in the Public Employees’ Retirement             on the VIP at www.washington.edu/admin/hr/
System (PERS), contact UW Benefits & Work/Life                benefits/vip/ and the WSDCP at www.washington.
regarding your retirement plan options.                       edu/admin/hr/benefits/retirement/defer-comp.
You can begin contributing to the UWRP in any pay
period during your first two years of eligibility;
however, participation in the UWRP is mandatory by
the end of your second year of eligibility.

If you have not enrolled by the end of your
second year of eligibility, enrollment will begin
automatically and UWRP contributions will be                  new employees note In addition to faculty and professional staff, newly-
deducted from your paycheck. Once enrolled, your              hired classified staff may be eligible to participate in the UWRP. Did you
UWRP deductions will be invested in a life cycle fund
with Vanguard until you choose one or more Fund               participate for at least two years immediately prior to UW employment in a
Sponsors.                                                     qualified, employer-matched retirement plan with assets held at one of the
                                                              UWRP’s Fund Sponsors? Contact UW Benefits & Work/Life if you think you
                                                              may be eligible to participate in the UWRP due to this exception.

Delaying enrollMent CoulD be CoStly You could wait up to two years to begin UWRP contributions, but
waiting could be costly. This chart shows the potential cost of waiting two years to enroll for a person who earns
$25,000 per year. If you earn more than $25,000, the potential cost of delay is even greater.

                   $0 —
           ( $10,000 ) —
          ( $20,000 ) —
          ( $30,000 ) —
          ( $40,000 ) —
          ( $50,000 ) —
          ( $60,000 ) —
          ( $70,000 ) —
          ( $80,000 ) —
          ( $90,000 ) —
         ( $100,000 ) —
                               current age 25         current age 35         current age 50
    potential cost of two
    year delay at age 62        ( $80,000 )             ( $55,000 )            ( $23,000 )

The chart above assumes contributions for 24 pay periods using the maximum savings rate available for
each age and a hypothetical average annual rate of return of 8% which does not reflect the performance
of any specific investment. All numbers are rounded to the nearest $1,000. This example is shown for
illustrative purposes only.

    groSS Pay Though your individual situation will differ depending on your
    actual tax rate, this chart shows how UWRP participation affects your paycheck
    (per pay period). In each row, the top figures are approximate amounts
    contributed to your UWRP account, the bottom figures are the corresponding
    reductions to your take-home pay. The difference in the amounts is money
    applied to your retirement savings, rather than paid as income tax.

     Gross income per pay period     $1,000      $2,000       $3,000

                     5% savings       50           100         150
             impact on paycheck       43            79          115

                   7.5% savings       75           150         225
             impact on paycheck       64           119         172

                    10% savings       100         200          300
             impact on paycheck        85         158          229

beneFitS oF Saving via uWrP                                 asset allocation The old adage “don’t put all of
Tax-Advantages When you participate in the                  your eggs in one basket” is a good one to keep in
UWRP, deductions are made from your gross salary            mind when choosing your investments. Putting all
before taxes are calculated, so you pay less tax            of your money into just one area of investment, a
now. Another tax advantage: Your contributions and          single Large Company Stock Mutual Fund or a single
earnings grow, tax-deferred, until you request a            Investment Grade Bond Fund for example, will
distribution, usually at retirement when you may be         likely increase your risk relative to a portfolio that
in a lower tax bracket.                                     is a blend of several different investments. When
                                                            you are selecting your investments there are two
In a taxable account, gains are subject to taxes in         questions to ask yourself:
the year earned.
                                                            •    First “Will I be able to stick with my
automatic Payroll Deduction Your UWRP                            investment allocations through the ups and
contributions are automatically deducted from                    downs I’ll likely face?” The more aggressive
your paycheck every pay period. While this puts                  your investment selections, the more
less money in your pocket to spend, you will quickly             important this question becomes. If you have
realize the long-term merit of retirement funds that             all of your UWRP assets invested in a fund
continue to grow with regular contributions and                  that goes down 50% the year after it goes up
100% employer matching.                                          50%, how will you feel?

Fees and expenses Your UWRP investments are                 •    Second “Will my investments provide enough
not charged a “load” or commission on each                       growth to overcome inflation?” The further
transaction. This is an important cost savings when              you are from retirement, the more important
you are investing on a regular basis. All funds have             this question becomes. Since most of us don’t
expense ratios that should be considered when                    have all of the money that we will require
choosing a fund.                                                 during retirement, we need our retirement
                                                                 savings to grow significantly faster than
Even if you are close to retirement, you can still               inflation.
take advantage of tax-deferred growth since you
probably won’t withdraw your UWRP savings all at            Time vs. Timing The UWRP allows you to transfer
once. Money left in your UWRP account will continue         your savings between different approved funds at
to benefit from tax-deferred growth potential until         your discretion and there can be good reason to do
you withdraw it as retirement income.                       so. However, investors should be cautious of trying
                                                            to “time the market.” The danger in attempting
about inveSting WitH uWrP                                   to “time the market” and avoid significant down
                                                            days is that often the best up days are lost as well.
Choosing Investments How your savings in the                Calculations by DALBAR, a consulting firm, show
UWRP are invested is up to you. You are responsible         that stock investors who frequently trade in and
for selecting from the approved investment funds            out of mutual funds earned a meager 3.51 percent
and making sure that they are appropriate for               annually between 1984 and 2003—dramatically
your individual situation and goals. For this reason,       below the 12.98 percent annual average earned by
educating yourself about the investment options             the S&P 500 stock index over the same period.
available through the UWRP is crucial. UW Benefits &
Work/Life provides objective, general education on
its website and in regularly scheduled seminars.

You are strongly encouraged to meet with a Fund
Sponsor representative. Representatives can
provide general information about saving for
retirement or review your account. You do not
need an account to meet with a representative.
Visit www.washington.edu/admin/hr/benefits/
retirement/vip/sponsors.html to schedule an
individual appointment.

Fund Sponsor websites also provide investor
education. Specific questions should be directed to
qualified investment, tax, and legal professionals.

HoW to enroll

1.   Enroll in the UWRP at the Benefits & Work/Life website;        CoMMon inveStMentS anD inveStMent terMS
     start by reading the information at www.washington.
     edu/admin/hr/benefits/uwrp.html                                Securities—This term includes stocks, bonds, and stable
2.   Choose the Fund Sponsor with whom you wish to
     establish your UWRP account and the specific funds               Stocks—Also known as equities, stocks are securities
     in which you wish to invest. Fund Sponsors are the               that represent ownership of a company or other
     companies that manage the investment funds in which              business enterprise.
     you can choose to place your UWRP savings. On the
     UWRP webpage, you will find links to the Fund Sponsor            bonds—Also known as fixed-income, bonds are
     websites.                                                        securities that represent loans to corporations,
                                                                      governments, and other agencies.
3.   Determine your beneficiary or beneficiaries (who will
     receive the money in your UWRP account in the event of           Stable assets—Similar to cash in liquidity and price
     your death) before you begin the process of establishing         stability, money market funds are considered stable
     your account/s with Fund Sponsor/s. Note: you provide            assets.
     your beneficiary’s Social Security number in your
     account application with your Fund Sponsor/s.                  Mutual Funds—Mutual funds are a way to invest in order
4.   Open an account with your Fund Sponsor/s. As part of           to get diversification with a small amount of money. When
     the process, the Fund Sponsor/s will ask you to select         you own one share of a mutual fund it is like owning an even
     specific initial investments. (Remember that you can           smaller share of every stock, bond or stable asset that the
     later change your investment choices with the Fund             mutual fund owns. Mutual funds have a pre-defined area of
     Sponsor.) Hint: use the links on the UWRP webpage to           investment.
     access the account applications.
                                                                    Prospectus—A legal document that gives prospective
5.   Complete the UWRP Enrollment Form available at the             investors information about an investment, including
     UWRP website. On this form, you decide how much of             discussions of the fund’s investment objectives, and
     your UWRP savings goes to each Fund Sponsor with               the fund’s risks, expenses, and past performance.
     whom you established an account.                               Prospectuses are available from the Fund Sponsor
                                                                    websites. A prospectus will also show the fund’s historical
     NOTE: If you are age 50 or above, you can elect to             performance by year for the previous ten years and
     save an additional 2.5% (10% instead of 7.5%) of your          as annual averages for five and ten year periods. The
     gross salary in the UWRP. Find the “UWRP Increased             prospectus will correctly point out that past performance
     Contribution” form at the UWRP online enrollment               does not guarantee or indicate future results.
     webpage, complete it, and return it to UW Benefits &
     Work/Life.                                                     expense ratio—The expense ratio is the percentage of
                                                                    the fund’s average net assets that is paid out in expenses.
6.   Send your completed UWRP enrollment form to UW                 Expenses include the fees to pay the fund managers as well
     Benefits & Work/Life, which will confirm your account/s        as marketing, trading, and other operational costs. The
     with your Fund Sponsor/s.                                      expense ratio is deducted from fund performance.

                                                                    risk—The potential to lose money (principal and earnings)
                                                                    or not make money on an investment. Two types of risks to
                                                                    consider when investing for the long term are market risk
                                                                    and inflation risk.

                                                                      Market risk— Consider the risk that an investment’s
                                                                      value will rise or fall due to changing economic, political,
                                                                      or market conditions, or due to a company’s business

                                                                      Inflation risk—Consider the risk that the return on your
                                                                      investments will not keep up with increases in the cost
                                                                      of living.

       retirement account growth Potential
             tax-deferred                                            taxable account                                                                         BALANCE
                                                                                                                                                           $ 450,000

                                                                                                                                                           $ 400,000

                                                                                                                                                           $ 350,000

                                                                                                                                                           $ 300,000

                                                                                                                                                           $ 250,000

                                                                                                                                                           $ 200,000

                                                                                                                                                           $ 150,000

                                                                                                                                                           $ 100,000

                                                                                                                                                           $ 50,000

        1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 ( yearS )
        This graph illustrates the growth potential of an account that has accumulated $2,500 annually for 30 years, assuming a hypothetical
        8% average annual rate of return and 25% combined capital gains and income tax rates.

   Income tax is due upon distribution of amount from the tax-deferred plan, and an IRS 10% premature distribution penalty tax may apply to withdrawals before age 59.5. Lower
  maximum tax rate on capital gains and dividends would make the investment return from the taxable investment more favorable, thereby reducing the difference in performance
 between the accounts shown. Please consider your personal time horizon and income tax bracket, both current and anticipated, when making an investment decision as they may
       further impact the results of the comparison. Bear in mind that changes in tax rates and tax treatment of investment earnings may impact the comcparative results.

                                            View the UWRP document and summary description online

                                 univerSity oF WaSHington retireMent Plan • HUMAN RESOURCES
                    BENEFITS & WORk/LIFE • CAMPUS BOx 355660 • 3903 BROOkLYN AVE. NE • SEATTLE, WA 98105-6694

                                                                     UWHR 6/08
 Although this booklet includes certain key features and brief summaries of University of Washington Retirement Plan or Voluntary Investment
 Plan, it does not provide a detailed description. If you have questions about specific plan details, contact Benefits & Work/Life. Details of plan
provisions are available upon request, and the plan document is posted on the Benefits & Work/Life website. Every attempt has been made to ensure
 the accuracy of this information. However, if there is any discrepancy between this overview and other plan documents, the plan documents will
always govern. The University of Washington intends to continue this plan indefinitely but reserves the right to amend or terminate it at any time,
                     for any reason. This booklet does not create a contract of employment with the University of Washington.

To top