Retirement Savings Plan

As a reminder, starting October 2021 your quarterly statement will reflect the new University Retirement Plan recordkeeping fee structure (fixed per-participant annual fee).

Recordkeeping fees pay Fidelity and TIAA for their administration of the plan, including maintaining the website and call centers, sending quarterly and annual reports, managing loans and distributions, providing one-on-one counseling services, and similar administrative functions.

What’s Changing

Until July 1, 2021, TIAA and Fidelity covered their recordkeeping expenses through revenue credits generated on some, but not all, investment selections. Revenue credits are paid by various investment funds such as JP Morgan, Blackrock, MassMutual or Nuveen to TIAA and Fidelity when their funds are included in investment option lineups. These fees are built into the fund’s operating expenses—while they are not prominently disclosed, they do have a cost to participants in the form of reduced investment earnings.

The new quarterly fixed per-participant fee (effective July 1, 2021), will be more transparent, straightforward and equitable. Regardless of account balance and investment selections, the fee will be:

• TIAA: $35 per year (charged at $8.75 per quarter)
• Fidelity: $41 per year (charged at $10.25 per quarter)

The difference in pricing is driven primarily by the number of participants and the cumulative accounts balance with each vendor. Participants with accounts at TIAA and at Fidelity will pay the fixed annual recordkeeping fee to each.

Why Make a Change

The fee structure was changed because the existing revenue credit process was not sustainable or equitable. Several of the most popular investment options generate no revenue credits, including target date funds. Today about 40% of participants are enrolled at some level in a target date fund. Those funds generate no revenue credit; therefore, participants in those funds do not contribute toward the recordkeeping fees. Based on popular fund options, projections indicate that by mid-2022 revenue credits at Fidelity will not cover recordkeeping expenses.

While all participants have access to the same services and receive the same level of recordkeeping support from TIAA and Fidelity, some pay nothing in fees and some pay considerable amounts. Within TIAA alone, 38% of participants pay $0 per year, 50% pay between $1 and $200, and 12% pay over $200. In addition, participants who use only a brokerage account do not pay any recordkeeping fees. A participant with $100,000 in the brokerage account or a target date funds is paying $0 in recordkeeping fees while a participant with that same $100,000 balance in annuity funds could be paying $150 or more per year.

Under the new structure, when revenue credits exceed the required fixed fees, the excess will be returned to participant accounts that generate those excess credits. For example, a Fidelity participant whose account currently generates $150 in revenue credits will see a net credit of $109 ($150 in revenue credits less the $41 fixed fee).

There will be “winners and losers” in the new fee structure, with some paying less than they do today and some paying more. But on an ongoing basis the fee structure will be more equitable for all participants. And, rather than closing or limiting access to funds that don’t generate revenue credits, the new fixed rate fee structure will allow participants to continue to have the option to select among any of the Plan investments.

• You must contribute 5% of your regular salary, pre-tax, to the 403(b)
• The University will contribute 5% of your regular salary automatically to the 403(b)

If you elect to contribute more than 5% of your regular salary (pre-tax or after-tax Roth), the University will match your contribution, dollar-for-dollar, up to 10% of your regular salary.

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required 5% contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

• If you were benefits-eligible prior to July 1, 2020, you must contribute 6% of your regular salary, pre-tax, to the 403(b). The University will contribute 14% of your regular salary automatically to the 403(b).
• If you were hired or re-hired, transferred from another campus, or became benefits-eligible after July 1, 2020, you must contribute 5% of your regular salary, pre-tax, to the 403(b). The University will contribute 5% of your regular salary automatically to the 403(b). If you voluntarily contribute over 5%, the University will match your contributions up to 10% (within IRS limits).

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

• If you were benefits-eligible before July 1, 2020, you must contribute 6% of your regular salary, pre-tax, to the 403(b). The University will contribute 13% of your regular salary automatically to the 403(b).
• If you were hired or re-hired, transferred from another campus, or became benefits-eligible after July 1, 2020, you must contribute 5% of your regular salary, pre-tax, to the 403(b). The University will contribute 5% of your regular salary automatically to the 403(b). If you voluntarily contribute over 5%, the University will match your contributions up to 10% (within IRS limits).

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

• If you were benefits-eligible before July 1, 2020, you must contribute 6% of your regular salary, pre-tax, to the 403(b). The University will contribute 11% of your regular salary automatically to the 403(b). 
• If you were hired or re-hired, transferred from another campus, or became benefits-eligible after July 1, 2020, you must contribute 5% of your regular salary, pre-tax, to the 403(b). The University will contribute 5% of your regular salary automatically to the 403(b). If you voluntarily contribute over 5%, the University will match your contributions up to 10% (within IRS limits).

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

• If you were benefits-eligible before July 1, 2020, you must contribute 6% of your regular salary, pre-tax, to the 403(b). The University will contribute a percentage of your regular salary automatically to the 403(b) based on your date of hire:
  • If you were hired before July 1, 1992, the University will contribute 12% of your regular salary
  • If you were hired after June 30, 1992, the University will contribute 10% of your regular salary.
• If you were hired or re-hired, transferred from another campus, or became benefits-eligible after July 1, 2020, you must contribute 5% of your regular salary, pre-tax, to the 403(b). The University will contribute 5% of your regular salary automatically to the 403(b). If you voluntarily contribute over 5%, the University will match your contributions up to 10% (within IRS limits).

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

• If you were benefits-eligible by July 1, 2020, you must contribute 6% of your regular salary, pre-tax, to the 403(b). The University will contribute a percentage of your regular salary automatically to the 403(b) based on your date of hire:
  • If you were hired before July 1, 1991, the University will contribute 12% of your regular salary
  • If you were hired after June 30, 1991, the University will contribute 10% of your regular salary.
• If you were hired or re-hired, transferred from another campus, or became benefits-eligible after July 1, 2020, you must contribute 5% of your regular salary, pre-tax, to the 403(b). The University will contribute 5% of your regular salary automatically to the 403(b). If you voluntarily contribute over 5%, the University will match your contributions up to 10% (within IRS limits).

There are two types of contributions you can make to your 403(b):

• Pre-tax: Contributions are made from your salary before state and federal taxes are taken out. You pay taxes on the money you withdraw at and after retirement. The required contribution is pre-tax.
• After-tax (Roth): Contributions are made from your salary after state and federal taxes are taken out. Since you’ve already paid taxes on these contributions, you won’t pay them when you withdraw the money at or after retirement.

Note: You can only participate in the 457(b) Plan after you have reached the 403(b) Plan contribution limits before the end of each calendar year. To make a 457(b) contribution, contact your campus Human Resources.

In 2021, you can contribute up to the IRS annual limit of $19,500 to your 403(b). If you will be age 50 or older in 2021, you can contribute an additional $6,500 in catch-up contributions in 2021.

If you reach the 2021 403(b) contribution limits, you can contribute up to $19,500 (or up to $26,000, if you’re 50 years old or older) to the 457(b) in 2021.

You are vested automatically in your own contributions. This means you can take them with you if you leave the University for any reason.

You become vested in the University contributions if you:

• Complete 24 consecutive months of employment in a benefits eligible position; OR
• Die; OR
• Reach age 65; OR
• Become disabled as determined by the Social Security Administration or the University's long-term disability insurance provider.

If you are not vested when you leave University employment and return to the University after 30 or more days, your vesting period starts over. If you are vested when you leave University employment and then return as an employee at the same or another University of Arkansas campus, you will still be vested. Once you are vested in the University retirement plan, you are always vested.

After you have chosen the retirement plan vendor to use (TIAA or Fidelity), you must set-up your retirement plan account directly with the vendor.

You can participate with one retirement plan vendor at a time. Retirement income planning tools are available on the TIAA and Fidelity websites if you need assistance.

Changes to Your 403(b)

Contact your campus Human Resources for the form required to:

• Start, stop, increase or decrease your voluntary 403(b) contribution
• Choose between pre-tax and/or after-tax (Roth) contributions
• Switch between TIAA and Fidelity.

Note: When enrolling for the first time, you must complete an application with TIAA or Fidelity.

Changes to your 403(b) will be effective in the month you make them, as long as they are made before the applicable payroll processing date. You can also make a change at a designated future date.

Changes to Your 457(b)

Changes to your 457(b) will be effective the first day of the month following the date Human Resources receives your completed form. Contact your campus Human Resources for a copy of the form.

Changing Your Beneficiaries

When you set up your retirement plan, you must elect a beneficiary—someone who will receive the money in your account if you die. It’s important that you review your beneficiaries at least annually to ensure the correct person will receive your benefit. To elect or change your beneficiary:

• TIAA
• Fidelity Investments

You must set-up and/or update your beneficiaries on the 403(b) plan and the 457(b) plan if you participate in both plans.

Changes to Your 403(b)

Login to Workday to:

• Start, stop, increase, or decrease your voluntary 403(b) contribution
• Choose between pre-tax and/or after-tax (Roth) contributions
• Switch between TIAA and Fidelity. Note: Only one retirement plan vendor can be selected each pay period. You can switch vendors as often as you choose.

Note: When enrolling for the first time, you must complete an application with TIAA or Fidelity.

Changes to your 403(b) will be effective in the month you make them, as long as they are made before the applicable payroll processing date.

Changes to your 457(b) will be effective the first day of the following month, since these changes must be made prospectively. You will be notified by your retirement plan vendor that you must complete a new application when your first 457(b) contribution is made (if you have not already completed this step).

To change your elections, follow the steps outlined in the Manage Benefits Job Aid.