UW Faculty Retirement Transition Options

Faculty Retirement Transition Options

Office of Academic Personnel

UW Benefits Office

Presented by:

Goals and Purpose of this Presentation

General Retirement Planning

UW Faculty Reemployment Policy

Voluntary Retirement Incentive (VRI) Option

Resources/Contact Information

At the conclusion of this tutorial, you should have a better understanding of:

General Retirement Planning

How engaged do you want to be with the University after retirement?

Do you want to be reemployed, or would you rather spend your retirement engaged in pursuits outside of the University?

If you do wish to reemploy after retirement, how much of your time do you want to devote to the University?

There is no right answer to any of these questions as retirement is not a one-size-fits-all decision

Questions to Consider When Planning Your Retirement

General Retirement Planning

Get financial advice

Attend UW Retirement Workshop

Discuss transition with spouse and family

Plan for continued professional activity

Make plans for after retirement

Talk to other retirees about their transition

UW Faculty Retirees Recommended Steps for Retirement

Introduction to Retirement Transition Options

Retiree Reemployment Policy Vested right to five years of up to 40% annual

reemployment

Qualifying age = 62

Voluntary Retirement Incentive (VRI) Option Exchange of vested right to reemployment for a one-time,

lump-sum contribution to a VEBA tax-free health reimbursement arrangement

Sign up during the open election period and agree to retire in the specified retirement window

Overview

Reemployment Policy

40% annual maximum established by state law

Reemployment is locally funded

Reemployment funded from state or tuition funds must be for classroom teaching unless otherwise agreed to by reemploying unit

Definition of the Policy

Desire for a financial “safety net” during the first years of retirement

Provides a gradual phase-out into retirement

Amount earned from reemploying at full 40% for 5 years is greater than the VRI contribution amount

Desire to maintain intellectual connection to University

No current medical needs; no concerns regarding adequate medical coverage

Common considerations of those who elect reemployment*

*Sample answers from ACE|Sloan survey of retired UW faculty members in response to “Why did you retain your vested right to reemployment?”

Reemployment Policy

What does 40% look like? 40% teaching load determined locally, varies by unit

Final determination of teaching assignments are locally determined based on the needs of the unit

Possible reemployment options for a 9-month faculty member:

Criteria for Reemployment

Autumn Quarter

WinterQuarter

Spring Quarter

Annual Reemployment

100% - - 33%

60% 60% - 40%

40% 40% 40% 40%

Reemployment Policy

Reemployment in each of the 5 vested years is not required - however, skipping a year does not extend the 5-year period

For mid-year retirees, the 5-year reemployment period starts the year of retirement For example, retiring in Winter Quarter 2020 means your first

year of eligible reemployment is the 2019-20 academic year, as you could reemploy in Spring Quarter 2020

December 1 - Deadline to indicate decision to reemploy for the following academic year

Criteria for Reemployment

Reemployment Policy

Voluntary Retirement Incentive (VRI) Option

One-time, lump-sum contribution to a tax-free health reimbursement arrangement

Tenured faculty members who retire under the VRI option must waive their vested right to 5 years of partial reemployment

Tenured faculty members who elect the VRI option may still be partially reemployed after retirement at the discretion of their department chair, program director, dean, or chancellor

Overview

Contribution is based on the faculty member’s 9 or 12 month tenure-backed position

Minimum contribution = $25,000

Maximum contribution = $100,000

Your minimum and maximum contribution amounts are also based on tenure percentage

For a faculty member with 50% tenure, e.g., the minimum contribution would be $12,500 and the maximum contribution would be $50,000

Voluntary Retirement Incentive (VRI) Option

Tenured faculty members – full or partial tenure

Age 62 or older at the time of retirement

Eligible for and have a vested right to partial (40%) reemployment

Eligible to retire under retirement plan To check eligibility requirements, go to

http://hr.uw.edu/benefits/retirement-plans/nearing-retirement/uwrp-preparing-to-retire/

Criteria for Eligibility

Voluntary Retirement Incentive (VRI) Option

No intention of reemploying, VRI “icing on the cake”

Concerns with rising cost of healthcare

Ongoing health issues not covered by insurance

Teaching became difficult

Planned to travel/move upon retirement

Wanted a clean break

Common considerations of those who elect the VRI Option*

*Sample answers from ACE|Sloan survey of retired UW faculty members in response

to “Why did you elect the VRI and forego your vested right to reemployment?”

Voluntary Retirement Incentive (VRI) Option

Open Election Period: February 1, 2020 – March 31, 2020

In order to participate in this VRI Offering, your Notice of Interest must be received by the Office of Academic Personnel by 5pm on March 31. Submission of a Notice of Interest does not guarantee your enrollment, however this first step must be completed by the stated deadline.

Retirement Window: February 1, 2020 – June 30, 2020

In order to elect this VRI Offering, your separation/termination date must fall within this retirement window

Following the current VRI Offering, the program will be suspended for the foreseeable future

Current VRI Offering

Voluntary Retirement Incentive (VRI) Option

In order to elect this VRI offering, you must choose a separation/termination date (i.e. last working day) that falls within the retirement window of February 1, 2020 – June 30, 2020

The Benefits Office will refer to your retirement date (i.e. 1st of the month following your separation/termination date)

For example, a separation/termination date of January 31, 2020 (with a Benefits Office retirement date of February 1, 2020) would not meet the eligibility requirements of this VRI Offering

Alternatively, a separation/termination date of February 1, 2020 (with a Benefits Office retirement date of March 1, 2020) would meet the eligibility requirements of this VRI Offering

Clarification about dates

Voluntary Retirement Incentive (VRI) Option

The VRI Contribution is equivalent to 25% of the five-year value of the 40% reemployment

Generally equivalent to 50% of the annual tenure-backed salary

VRI Contributions are put into a VEBA tax-free health reimbursement arrangement

Contribution Calculation

Voluntary Retirement Incentive (VRI) Option

Reduction of tenure prior to retirement will reduce the VRI contribution accordingly

Leaves (i.e. Paid Sick Leave, Leave Without Pay, Family and Medical Leave) do not affect the VEBA contribution calculation If you have been on a recent Sabbatical (Paid Professional

Leave), contact your chair or dean regarding fulfillment of your payback obligation

Contribution Calculation

Voluntary Retirement Incentive (VRI) Option

Nine-month tenured faculty member, regardless of history of summer funding: Base annual salary: $90,000 ($10,000 per month)

One-time lump sum contribution to VEBA: $45,000

50% of annual tenure-backed salary = $45,000

5 year value of 40% reemployment: $180,000 ($36,000 x 5 = $180,000)

Annual 40% reemployment : $36,000 ($90,000 x .40 = $36,000)

Example Calculations – Nine-month Appointment

Voluntary Retirement Incentive (VRI) Option

Twelve-month 50% tenured faculty member: Base annual salary: $120,000 ($10,000 per month)

50% tenure-backed salary: $60,000

One-time lump sum contribution to VEBA: $30,000

50% of annual tenure-backed salary = $30,000

5 year value of 40% reemployment: $120,000 ($24,000 x 5 = $120,000)

Annual 40% reemployment: $24,000 ($60,000 x .40 = $24,000)

Example Calculations – Twelve-month Appointment

Voluntary Retirement Incentive (VRI) Option

Nine-month tenured faculty member with an 80/20 A/B salary arrangement Base annual salary: $90,000 ($10,000 per month)

80% A tenure-backed salary: $72,000

One-time lump sum contribution to VEBA: $36,000

50% of annual tenure-backed salary = $36,000

5 year value of 40% reemployment: $144,000 ($28,800 x 5 = $144,000)

Annual 40% reemployment: $28,800 ($72,000 x .40 = $28,800)

Example Calculations – A/B Salary Arrangement

Voluntary Retirement Incentive (VRI) Option

Nine-month tenured faculty member, regardless of history of summer funding: Base annual salary: $270,000 ($30,000 per month)

Calculated one-time lump sum contribution to VEBA: $135,000 exceeds the proportional maximum contribution limit, therefore the one-time lump sum contribution to VEBA will be $100,000.

5 year value of 40% reemployment: $540,000 ($108,000 x 5 = $540,000)

Annual 40% reemployment : $108,000 ($270,000 x .40 = $108,000)

Example Calculations – Contribution Limits Applicable

Voluntary Retirement Incentive (VRI) Option

Approved uses for the VEBA account include reimbursement of medical/dental insurance premiums, as well as other out-of-pocket health care expenses not covered by insurance Copays, deductibles, co-insurance

Prescription drugs

Healthcare premiums (retiree medical, Medicare Part B)

Eligible expenses outlined in IRS Publication 502

VEBA – Allowable expenses

Voluntary Retirement Incentive (VRI) Option

Surviving Spouse / IRS Qualified Dependents: VEBA can be left to your legal spouse or IRS qualified

dependents, tax-free

They can use it to reimburse their eligible healthcare expenses, tax-free

If you have no legal spouse or IRS qualified dependents: Name a beneficiary – funds are now available to provide

medical reimbursement benefits, on a taxable basis, to a deceased participant’s non-dependent heir(s) or beneficiaries

VEBA – Survivor Benefit

Voluntary Retirement Incentive (VRI) Option

Select an investment option when you establish the VEBA Option A: Design a Pre-mix Portfolio

Option B: Self Managed Portfolio

VEBA – Investment Options

Voluntary Retirement Incentive (VRI) Option

1. Submit a Notice of Interest Form: http://bit.ly/VRI-NOI Please note that submission of a Notice of Interest does not guarantee your

participation in the program, nor does it formally recognize your intent to retire from the University.

You are encouraged to talk to your chair/dean/director to discuss your intent to retire. Your unit will be consulted and notified by the Office of Academic Personnel at the time a Notice of Interest form is received

2. Review the VRI Contract that you will receive after your eligibility is confirmed

3. Submit the signed VRI Contract to the Office of Academic Personnel. It must be received prior to 5pm on the date listed on your contract. Please note that electing the VRI and retiring from the University are two

separate processes.

.

Next steps to elect the VRI

Voluntary Retirement Incentive (VRI) Option

The Notice of Interest form was sent to you via email. It can also be found on the Office of Academic Personnel website, or at http://bit.ly/VRI-NOI

Remember, your Notice of Interest form must be received by the Office of Academic Personnel no later than 5pm on March 31, 2020

Resources –Notice of Interest Form

Resources –Office of Academic Personnel

Contact for questions regarding the VRI Option or Reemployment Policy

VRI Optionhttps://ap.washington.edu/ahr/working/leaving-the-uw/vri/

Reemployment Policyhttps://ap.washington.edu/ahr/working/leaving-the-uw/working-after-retirement/

Contact Phone Email

Academic Personnel (206) 221-1405 vri@uw.edu

Contact for questions regarding the VEBA account, UW Retirement Application process, or other general retirement resources

UWRP: Preparing to Retire

https://hr.uw.edu/benefits/retirement-plans/nearing-retirement/uwrp-preparing-to-retire/

Prepare to retire from UW - Workshops

https://hr.uw.edu/benefits/retirement-plans/nearing-retirement/workshops-prepare-to-retire-from-uw/

Contact Phone Email

UW Benefits Office (206) 543-4444 totalben@uw.edu

Resources –UW Benefits Office

Contact for questions about UWRA membership eligibility, available retiree privileges, and upcoming retirement transition workshops.

Resources for retirees

https://www.washington.edu/uwra/retiree-resources/

Retirement Transition Workshops

https://www.washington.edu/uwra/retiree-resources/retirement-transitions/

Contact Phone Email

UWRA (206) 543-8600 retiremt@uw.edu

Resources after Retirement –UW Retirement Association

Takeaways from this Presentation

> Reemployment Policy:– What is the Reemployment Policy?

– What is the eligibility criteria?

– How are teaching/research activities determined for reemployed faculty?

> Voluntary Retirement Incentive (VRI) Option:– How to calculate your VRI contribution

– What is a VEBA (Voluntary Employees Beneficiary Association) Plan and how does it work?

– How to enroll in the VRI option?

Thank you for your participation in the UW

Faculty Retirement Transition Options

presentation> https://catalyst.uw.edu/webq/survey/vpap/298777