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					                                                                         Human Resources
                                                                       Policies and Procedures



                    University Hospitals

                                                                  Primary Age Group: All
                365 - TAX DEFERRED ANNUITY




1.       POLICY

         It is the policy of the University of New Mexico Health Sciences Center (UNMHSC) Clinical
         Operations to provide a tax deferred annuity for employees covered under Section 403(b) of the
         Internal Revenue Code.

2.       POLICY CROSS REFERENCE

         315 - Retirement Eligibility

3.       DEFINITIONS

         Employee Eligibility and Vesting:

         Regular employees who have completed one (1) year of continuous employment in a benefit
         eligible status of 0.5 FTE or higher are eligible to receive Hospitals contributions. The Hospitals
         will contribute a percentage of the employee's base salary to a fixed account administered by the
         contract carrier.

         Vesting Schedule:

         The vesting schedule for Hospitals contributions is as follows:

                         Years of Service                Vested Percentage
                             3 Years                           25%
                             4 Years                           55%
                               5 Years                          100%


4.       PURPOSE

         Under the Tax Deferred Annuity program, the Hospitals will contribute a set percentage of an
         eligible employee’s salary to the annuity. An employee may make additional contributions as
         outlined below in the form of payroll deductions. The employee may thus postpone paying


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         income tax on that portion of earnings until retirement. At retirement, the employee's income
         and tax rate may be lower.

5.       PROCEDURE

         5.1       Voluntary Employee Contributions

                   All employees are eligible to make voluntary contributions at any time. Employees may
                   designate either a specific dollar amount or a percentage of salary to be deducted from
                   paychecks. The minimum contribution is $10.00 per paycheck. Per Diem (casual pool)
                   employees may contribute on a percentage basis only. The maximum amount an
                   employee may contribute to the tax deferred annuity is defined by the Internal Revenue
                   Code. Contact the Human Resources Department for assistance in determining
                   maximum levels. Employees may change or stop voluntary contributions at any time.

         5.2       Loans

                   5.2.1       Employees may request a loan against one-half (1/2) of existing vested dollars in
                               all accounts. The minimum loan amount is $1,000 and the maximum loan
                               amount is $50,000 depending on the account balance. Generally, the loan term
                               shall be five (5) years unless the loan is used to acquire or construct an
                               employee's principal residence.

                   5.2.2       Only one (1) loan may be outstanding at a time. If an employee defaults on any
                               loan, the employee shall be restricted from requesting or obtaining any further
                               loans. Upon complete repayment of a loan, an employee must wait six (6)
                               months before being eligible to request another loan as set forth by Internal
                               Revenue Code.

                   5.2.3       Loans may be made for the following reasons:

                                  Purchase (but not to make mortgage payments), construction and/or
                                   improvement of employee's principal residence.

                                  Prevent eviction or foreclosure.

                                  Pay for employee's/employee's spouse and/or children's post-secondary
                                   educational tuition within a twelve (12) month period.

                                  Pay for medical and/or dental expenses that exceed twenty per cent (20%) of
                                   employee's annual base salary and which will not be reimbursed.

         5.3       Hardship Withdrawals

                   Employees may request hardship withdrawals subject to limitations set forth by the
                   Internal Revenue Code. The hardship withdrawal must be due to an immediate financial
                   need as follows:

                       Medical expenses incurred by the employee, the employee's spouse or dependents.



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                       Costs directly related to the purchase of the employee's principal residence, excluding
                        mortgage payments.

                       Payment of tuition and related education fees for the next twelve (12) months of post-
                        secondary education for the employee, the employee's spouse or dependents.

                       Prevention of eviction from the employee’s principal residence.

                       Prevention of foreclosure of a mortgage on the employee’s principal residence.

         5.4       Distributions

                   Employees may request a distribution only for the following reasons.

                   5.4.1       Termination

                               To avoid taxes an employee may request a direct rollover to another qualified
                               plan or Individual Retirement Account. If the employee elects a lump sum
                               distribution, he/she must pay income taxes and may be subject to an additional
                               penalty tax for early withdrawal.

                   5.4.2       Attainment of age 59 1/2

                               Upon attaining the age of fifty-nine and one-half (59 1/2) years of age, an
                               employee may elect distribution without the imposition of a penalty tax.

                   5.4.3       Disability

                               If an employee becomes disabled, he/she is entitled to a distribution without
                               penalty.

                   5.4.4       Death

                               Upon death, a distribution is payable to the employee's beneficiary.

                   5.4.5       Loans and Hardship Withdrawals

                               Contact the Human Resources Department for information regarding loans and
                               hardship withdrawals.

6.       KEY DOCUMENATION

         Tax deferred annuity and payroll deduction forms may be obtained from the Human Resources
         Department.

         Development Date:             09/12/1997
         Revised Date:                 11/26/2001
         Reviewed By:                  Debra S. Stacy, Senior Human Resources Representative
                                       ______________________________________________
         Approved By:                  Stephen W. McKernan, Associate Vice President, Clinical Operations
         Approved Date:                11/30/2001
         (policy365.doc)

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        Summary of Revisions:
        1.    Cross references added, 11/30/2001.
        2.    Intent of policy unchanged; language clean up only, 11/30/2001.

        Supercedes Policy Tax Deferred Annuity, August 20, 2000.




                                                                                Policies and Procedures
Title: Tax Deferred Annuity
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