Information for Safe Harbor Participants by ban11070


									Neither the Regents of the University of California nor
any officer or affiliated officer of the University makes any
recommendation to participants for building supplemental
retirement savings, and the various options available for con-
tributions should not be construed in any respect as judgment
regarding the prudence or advisability of such investments or
as tax advice.

By authority of the Regents, University of California Human
Resources and Benefits, located in Oakland, administers all
benefit plans in accordance with applicable plan documents
and regulations, custodial agreements, University of California     University of California
Group Insurance Regulations, group insurance contracts, and
state and federal laws. No person is authorized to provide          Defined Contribution Plan
benefits information not contained in these source documents,
and information not contained in these source documents can-
not be relied upon as having been authorized by the Regents.
Source documents are available for inspection upon request
                                                                    Information for
(1-800-888-8267). What is written here does not constitute a
guarantee of plan coverage or benefits—particular rules and
                                                                    Safe Harbor Participants:
eligibility requirements must be met before benefits can be
received. The University of California intends to continue the
benefits described here indefinitely; however, the benefits of            ➣ Part-time,
all employees, retirees, and plan beneficiaries are subject to
change or termination at the time of contract renewal or at
                                                                       ➣ Seasonal, and
any other time by the University or other governing authori-           ➣ Temporary
ties. The University also reserves the right to determine new
premiums, employer contributions and monthly costs at any                UC Employees
time. Health and welfare benefits are not accrued or vested               and
benefit entitlements. UC’s contribution toward the monthly
cost of the coverage is determined by UC and may change or             ➣ Non-exempt
stop altogether, and may be affected by the state of California’s
annual budget appropriation. If you belong to an exclusively
                                                                         Student Employees
represented bargaining unit, some of your benefits may differ
from the ones described here. Contact your Human Resources
Office for more information.

In conformance with applicable law and University policy, the
University is an affirmative action/equal opportunity employ-
er. Please send inquiries regarding the University’s affirmative
action and equal opportunity policies for staff to Director of
Diversity and Employee Programs, University of California
Office of the President, 300 Lakeside Drive, Oakland, CA 94612
and for faculty to Director of Academic Affirmative Action,
University of California Office of the President, 1111 Franklin
Street, Oakland, CA 94607.

Website address:

               University of California
               Human Resources and Benefits
               P.O. Box 24570
               Oakland, CA 94623-1570
16M                                                 1102    1/05
To satisfy state and federal requirements, certain     Note—employees with limited appointments,
University of California employees who are not         employees in contract positions, employees in
otherwise covered by a retirement system contrib-      “noncareer” positions at the Department of Energy
ute to the University of California Defined             laboratories, and certain academic appointees may
Contribution Plan (the DC Plan or the Plan) in lieu    become eligible for UCRP membership after
of paying Social Security taxes. The DC Plan is        working 1,000 hours in a rolling, continuous
qualified under section 401(a) of the Internal          12-month period. (Members of the Non-Senate
Revenue Code (IRC). Administered by the Univer-        Instructional Unit qualify for UCRP membership
sity of California Retirement System (UCRS) for        after working 750 hours in an eligible position.)
the sole benefit of participants and their benefi-       Once an employee becomes a UCRP member,
ciaries, the DC Plan provides retirement benefits       mandatory Safe Harbor participation in the DC
based on participants’ contributions, plus earnings.   Plan stops automatically.
Participation in the Plan is mandatory as a condi-
tion of employment. Part-time, seasonal, and           2. Are any employees exempt from
temporary employees, as well as non-exempt             mandatory DC Plan participation?
student employees, who participate in the DC Plan      Yes. Federal law does not require the following
under this arrangement are called Safe Harbor          employees to contribute:
                                                       • Registered UC students working for the
Please read this brochure for information about the      University who are enrolled in the campus
DC Plan and the impact of participation on your          required minimum courseload (exempt student
current salary and future retirement benefits.            employees);
Questions about eligibility for DC Plan partici-       • Nonresident aliens with F-1 or J-1 visa status; and
pation should be directed to the person in your
                                                       • Nonresident aliens living and working outside
department, laboratory or medical center who is
                                                         of the United States
responsible for handling benefits.
                                                       3. When do I enroll in the Plan and how
1. Who must contribute to the DC Plan?                 much am I required to contribute?
UC employees who are currently excluded from           DC Plan enrollment is automatic and begins the
membership in the University of California Retire-     first day of an eligible appointment. The manda-
ment Plan (UCRP) because of their appointment.         tory Safe Harbor contribution rate is 7.50 percent
This includes the following:                           of wages. Contributions are deducted from your
• Employees working in Per Diem, Floater, or           salary before income taxes are calculated, reducing
  Casual Restricted appointments;                      your taxable income. The net effect is that you pay
• Academics hired as visiting appointees after         less in current federal and state income taxes.
  August 1, 1989;
                                                       4. What happens to my DC Plan
• Regents’ Professors or Regents’ Lecturers;
• Housestaff (medical residents); and
                                                       Your contributions to the DC Plan are automati-
• UC student employees who are not enrolled            cally invested in the Savings Fund, one of six
  in the campus required minimum courseload,           investment funds managed by the University
  regardless of their UC appointment percentage        Treasurer’s Office. You may, however, direct
  (non-exempt student employees)                       contributions to one of the other five UC-managed
investment funds or to Fidelity Investments             • Treasury Inflation-Protected Securities Fund
mutual funds (see question #6). You may contrib-          (TIPS)—seeks to provide long-term total return
ute to one of the UC-managed funds or to Fidelity,        and inflation protection consistent with an
but not to both.                                          investment in U.S. government inflation-in-
                                                          dexed securities. Inflation-indexed securities are
See chart, “For Information and Transactions,” at
                                                          designed to protect future purchasing power.
the end of this brochure.
                                                        • Insurance Company Contract Fund (ICC)—seeks
5. What is the UC-managed Savings Fund?                   to maximize interest income while protecting prin-
                                                          cipal. Invests in pooled insurance contracts issued
The Savings Fund seeks to maximize interest
                                                          by select, highly rated insurance companies.
income while protecting principal. The Fund in-
vests in government, government-guaranteed, and         Yet another investment option is Fidelity
government agency securities with maturities of         Investments mutual funds.
five years or less.
                                                        7. Can I transfer all or part of my Plan
6. What are my other investment options?                balance among the different investment
In addition to the Savings Fund, the UC
Treasurer manages five other funds with different        Yes. Although you may direct contributions to only
investment objectives and portfolio characteristics.    one UC-managed investment fund at a time, you
Briefly, the funds are as follows:                       may transfer money you’ve accumulated among
                                                        the investment fund options as often as once
• Equity Fund—seeks to maximize long-term               a month. You may not, however, transfer money
  capital appreciation with moderate risk. Histori-     directly between the UC-managed Insurance
  cal focus on large-capitalization stocks; currently   Company Contract Fund and the Savings Fund.
  expanding to include a range of equity strategies;
  small representation in private equities.             See the chart at the end of this brochure for
• Bond Fund—seeks to maximize real (adjusted
  for inflation) long-term total return through a
  combination of interest income and price appre-       8. Are participants charged any
  ciation. Invests in high-quality government and       administrative fees?
  corporate bonds (U.S. and foreign).                   Not directly. Currently, an administrative fee equal
• Balanced Growth Fund—seeks to provide long-           to .0125 percent is deducted from the total monthly
  term growth and income through a balanced             earnings of each UC investment fund. Fidelity’s
  portfolio of equity and fixed-income securities        management fee structure is described in the
  held within the UC-managed Equity, Bond and           prospectus for each fund. No fees are deducted
  TIPS funds. The Fund is rebalanced monthly to         from individual participants’ accounts.
  prevent the three component funds in which it
  is invested (65 percent Equity, 30 percent Bond       9. Can I temporarily suspend my
  and 5 percent TIPS) from growing outside their        contributions?
  allocation percentages. The Fund is subject           No. Federal regulations require you to contribute a
  to fluctuating prices in the equity and                percentage of income to a retirement system or an
  fixed-income markets.                                  equivalent plan “as services are performed.”
                                                        As long as you are subject to the Safe Harbor
provisions, contributions will be deducted from       ( See the chart at
your pay. DC Plan contributions will stop only if     the end of this brochure for website instructions.
you leave UC employment, go on leave without
                                                      Fidelity sends quarterly statements of account
pay or furlough or if your appointment changes
and you become eligible for membership in UCRP
(see question #21). Contributions from non-exempt
student employees will stop if a change in their
                                                      14. When can I receive my DC Plan money?
courseload later exempts them from Plan               The IRC permits participants to take a distribu-
participation.                                        tion from the DC Plan Pretax Account only when
                                                      they are no longer working for UC in any capacity.
10. Will UC match my DC Plan                          This rule also applies to student employees who,
contributions?                                        because of a change in their courseload, become
                                                      exempt from Plan participation but are still
No. Generally there is no matching employer con-
                                                      employed by UC in any wage-earning capacity.
tribution; retirement benefits from the DC Plan are
                                                      Documentation indicating your separation date
based exclusively on participants’ contributions,
                                                      is required. Also note that if you leave UC
plus any earnings.
                                                      employment and request a distribution, but are
                                                      reemployed by UC before the distribution is paid,
11. Will my participation in the DC Plan              you may be ineligible to receive the distribution.
affect any IRA contributions I make?
Participation in the DC Plan may affect the income    15. What options do I have for my money
tax deductibility of any contributions you make       when I leave UC employment?
to a traditional IRA. IRA contributions may still
                                                      If you leave UC employment:
qualify for a full or partial income tax deduction,
depending on your adjusted gross income and tax       • If your total plan balance is less than $2,000, you
filing status. You may also make nondeductible           must take your money when you leave—you
contributions to an IRA and defer taxes on the          may request a distribution to be paid to you or
earnings. Check with your tax advisor.                  arrange for a direct rollover of your money to
                                                        a traditional IRA or other employer plan (see
12. What are the vesting rules for DC Plan              question #16).
participants?                                         • If your total plan balance is $2,000 or more,
DC Plan participants are fully vested as soon as        you may keep your money in the plan with
they begin contributing to the Plan. Vesting refers     continued preferential tax treatment.
to the point at which you have nonforfeitable own-    • If you are eligible (see question #19), you may
ership of your contributions (plus any earnings).       receive retirement income from the plan.

13. How can I obtain information about                16. What are the distribution options?
my DC Plan account activity?                          You must choose how you want your money
Personalized account information is available         distributed before UC will issue your check. Your
online 24 hours a day, seven days a week. UC          choice will affect the amount of tax withheld from
HR/Benefits provides secure account data over          your distribution.
the Internet on its website, At Your Service          • If you want a distribution paid to you,
                                                        20 percent will be withheld for federal taxes.
  No exceptions. Note that if you are under age         18. Can my participation in the DC Plan
  59½, a distribution paid to you may be subject        affect future Social Security benefits to
  to federal and state early distribution penalties     which I may become entitled?
  in addition to ordinary income taxes. The early
                                                        Under Social Security rules, the pension you
  distribution penalties are substantial—currently
                                                        receive based on work in a government job (UC
  a 10 percent federal tax and a 2½ percent
                                                        is considered a “government” employer) that was
  California state tax.
                                                        not covered by Social Security may reduce Social
• If you arrange for a direct rollover of the distri-   Security benefits that you may receive based on
  bution to a traditional IRA or other employer         Social Security-covered jobs. Details are online at
  plans that accept rollovers, no taxes will be         the Social Security website (www.socialsecurity.
  withheld nor will the distribution be subject to      gov /gpo-wep) under “Government Pension
  early distribution penalties. UC will make the        Offset” and “Windfall Elimination Provision.”
  check payable to the recipient IRA or plan
  and mail it to you. You are responsible for           19. When can I receive retirement income
  depositing the money in the IRA or plan.              from the DC Plan and what options do I
Before withdrawing your money, you should read          have?
the Special Tax Notice for Plan Distributions. The      You may receive retirement income from the DC
notice explains the potential tax impacts of your       Plan after you leave UC employment if you are
distribution, depending on your personal circum-        age 50 or older. There are two retirement income
stances and whether you have the distribution           options at UC:
paid to you or directly rolled over to an IRA or
another employer-sponsored plan.                        • monthly systematic withdrawals from your
                                                          Plan balance; and
See the chart at the end of this brochure for infor-
mation on procedures and how to obtain a copy of        • commercial annuities you can arrange to buy
the Special Tax Notice for Plan Distributions.            through UC’s group contract with a California-
                                                          licensed, third-party insurance carrier.
17. How are distribution requests                       Alternatively, you may take a lump sum distri-
processed?                                              bution (subject to tax withholding) and purchase
                                                        an annuity on your own from the insurance carrier
Distribution checks are issued around the 7th and
                                                        of your choice.
the 23rd of each month.
                                                        Although you are eligible for retirement income
The date your check is issued will depend on when
                                                        from the Plan when you leave UC employment
you request the distribution and any recent payroll
                                                        and reach age 50, early distribution penalties may
activity. Cutoff dates are generally the 21st and
                                                        apply if you are under age 55 when you leave. If
the 25th of each month, as shown in the following
                                                        you choose a life annuity, however, the money will
                                                        be exempt from the early distribution penalties.
Distribution           Account       Check
                                                        For information about retirement income options
Requested              Valued        Mailed
                                                        at Fidelity, contact them directly (see question #26).
April 26–May 21        May 31        June 23
May 22–May 25          May 31        July 7
May 26–June 21         June 30       July 23
20. What happens to my DC Plan                         according to that formula (the percentage varies
accumulations if I die before I retire                 depending on UCRP membership status). Your
or leave UC employment?                                contributions will be automatically deposited in
                                                       the Savings Fund, unless you redirect them to
If you die before you retire or leave UC employment,
                                                       another fund (see question #4).
your DC Plan accumulations will be payable in a
lump sum to your beneficiary. Therefore, you should
designate a beneficiary to receive your DC Plan accu-   22. What happens to money I have
mulations. Your beneficiary may be a person, trustee    accumulated in the Plan as a non-exempt
or organization. You may also name more than one       student employee if I return to exempt
beneficiary and specify the percentage of your          status?
accumulations that each beneficiary is to receive.      Likewise, your accumulations will remain in the
                                                       Plan, and you will continue to accrue earnings
See the chart at the end of this brochure for
                                                       on your Safe Harbor account balance. If you later
information about naming a beneficiary.
                                                       return to non-exempt student status and resume
If you don’t designate a beneficiary, or if your        contributions to the DC Plan, your future contribu-
beneficiary dies before you do, your DC Plan            tions will be deposited in the investment fund you
accumulations will be paid to your survivors in the    previously designated. (If you made no previous
following order of succession:                         fund designation, your contributions will be
                                                       automatically deposited in the UC Savings Fund.)
• surviving legal spouse or surviving domestic
  partner; or, if none,
                                                       23. If I go to work for another employer,
• surviving children, natural or adopted, on an
                                                       can I roll over my DC Plan balance to my
  equal-share basis (children of a deceased child
                                                       new employer-sponsored plan?
  share their parent’s benefit); or, if none,
                                                       Yes. Your DC Plan savings are portable; when you
• surviving parents on an equal-share basis; or if
                                                       leave UC employment, you can roll over your
                                                       account balance into another employer’s plan if
• brothers and sisters on an equal-share basis; or,    they accept rollovers or into a traditional IRA, and
  if none,                                             retain the tax-deferred status of the money. There
• your estate.                                         are specific tax rules that apply to money being
                                                       rolled over into a new plan or IRA.
21. What happens to my money in the
DC Plan if I become eligible for UCRP                  24. If I move from California to another
membership?                                            state, will a distribution of my DC Plan
The money you accumulated in the DC Plan as a          accumulations be subject to California
Safe Harbor participant will remain in the Plan.       state income taxes?
You will continue to accrue earnings on your Safe      No. Unless you are a resident of California when
Harbor account balance.                                you receive the distribution, it will not be subject
                                                       to California state tax. Check with your local state
Currently, UCRP members contribute a percent-
                                                       tax agency about your state tax liability.
age of their covered compensation to the DC Plan
Pretax Account. Once you become eligible for
UCRP membership, you will begin contributing
25. Who should I notify about a change in                     Questions about campus required minimum
my address?                                                   courseloads for student employees should be
                                                              directed to student advisors or campus
See the chart at the end of this brochure for
                                                              For answers to questions about DC Plan money
26. Who should I contact if I have other                      invested at Fidelity Investments, call one of their
questions?                                                    Retirement Service Specialists at 1-800-343-0860.
If you have other questions about DC Plan partici-
pation, call your local Benefits Office.

For Information and Transactions
HR/Benefits Website                                            See chart below if you need to set or reset your
Go to the UC HR/Benefits website (At Your                      password.
Service) at To                 The UC HR/Benefits Customer Service Center
obtain personal information or to make online                 can be reached at 1-800-888-8267 from 8:30 a.m. to
transactions, you will need your username or                  4:30 p.m. weekdays.
Social Security number and your UC password.

                                At Your Service Website                  Other

Set or reset your UC password   Select “Forgot Your Password?”           If you can’t use the online option, call your local
                                on home page                             Benefits Office.

Redirect contributions among    Under “Your Benefits Online,” select      If you can’t use the online option, complete a
investment funds                “Begin/Change Plan Contributions”        Fund Designation—Defined Contribution Plan Pretax
                                                                         Account form (UPAY 752)—available from local
                                                                         departments or Benefits Offices.

Transfer money among            Under “Your Benefits Online,” select      If you can’t use the online option, complete a
UC-managed funds                “Transfer UC Fund Balances”              Transfer Request—Defined Contribution Plan and
                                                                         Tax-Deferred 403(b) Plan form (U5637T)—available
                                                                         on At Your Service or from local departments,
                                                                         Benefits Offices, or the UC Customer Service
                                 At Your Service Website               Other

Transfer money between           N/A                                   Complete a Transfer Request—Defined Contribu-
UC funds and Fidelity                                                  tion Plan/Fidelity Investments Mutual Funds form
                                                                       (U5641T)—available on At Your Service or from
                                                                       local departments, Benefits Offices, or the UC
                                                                       Customer Service Center.

Individual account information   Under “Your Benefits Online,” select   N/A
                                 “View UCRS Account Balances” or
                                 “View Your Benefits Summary”

Request distributions from       Under “Your Benefits Online,” select   N/A
UC funds                         “Request a Distribution”
• Non-exempt student             N/A                                   Complete the form in the UCRS Distribution Kit for
  employees                                                            Non-exempt Student Employees (UBEN 200)—
                                                                       available on At Your Service or from local
                                                                       departments, Benefits Offices, or the UC Customer
                                                                       Service Center.

Obtain Special Tax Notice for    Under “Forms and Publications,” go    Request a copy from the UC Customer Service
Plan Distributions               to “By Title” and select Special      Center.
                                 Tax Notice for Plan Distributions

Request distributions from       N/A                                   Call a Fidelity Retirement Service Specialist at
Fidelity                                                               1-800-343-0860.

Name a beneficiary                Select “Your Benefits Online” and      Complete form UBEN 116 (Designation of
                                 go to “Your Beneficiaries” under       Beneficiary—Employees). Retirees, former
                                 “Quick Links”                         employees, and others must use form UBEN 117
                                                                       to name retirement/savings plan beneficiaries.
                                                                       These forms are available on At Your Service or
                                                                       from local departments, Benefits Offices, or the
                                                                       UC Customer Service Center.

Change your address
• Active employees               Go to UC For Yourself at              Notify your local Payroll Office.
• No longer working at UC or     N/A                                   Complete a UC Benefits Address Change form
  retired                                                              (UBEN 131)—available on At Your Service or from
                                                                       local departments, Benefits Offices, or the UC
                                                                       Customer Service Center, or write to:
                                                                       UC Human Resources and Benefits
                                                                       Attn: Mail Services Unit
                                                                       P.O. Box 24570
                                                                       Oakland, CA 94623-1570

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