Contributions
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Employer Contributions - ORP
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| The University will automatically contribute to your account, for each payroll period, an amount equal to a Percentage of your earnings, based on the amount established by State law, less some expenses for ORP program administration. Your personnel office can provide further information regarding the current percentage rate applicable to ORP. Effective July 1, 2002, the employer contribution paid to your provider company or companies is 10.42 percent of your eligible salary.
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| Contributions on your behalf will be made to a contract or contracts in your name. You are being offered these contracts so that you can choose an investment option that meets your needs. You can choose among products offered by the approved provider companies (VALIC, MetLife Investors, TIAA-CREF, Jefferson National, and ING) that have been selected to participate in the ORP. You can choose to split contributions made to your account among two or more companies, subject only to the minimum deposit requirements of any of the companies. Your account will continue to change through future contributions and investment earnings or losses on those contributions.
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| You will have the opportunity to alter your investment choices in the future, either between different products offered by any of the provider companies, or by directing that your funds be transferred from one provider company to another. (Restrictions or penalties may apply, based on your product selection.) This investment flexibility has been designed to allow you to actively manage your retirement planning.
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Because ORP contributions have been made to support your retirement, your contract prohibits any withdrawal of University funds contributed on your behalf while you are employed with the university or any other FRS covered employer. However, if you terminate your employment from all FRS covered positions, you may request payment in one of the following manners:
- A lump-sum distribution to the participant;
- A lump-sum direct rollover distribution whereby all accrued benefits, plus interest and investment earnings, are paid from the participant's account directly to an eligible retirement plan, as defined in Sec. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the participant;
- Periodic distributions;
- A partial lump-sum payment whereby a portion of the accrued benefit is paid to the participant and the remaining amount is transferred to an eligible retirement plan, as defined in Sec. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the participant; or
- Such other distribution options as are provided for in the participant's optional retirement program contract.
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| Note You will not earn interest on your account until you have selected a provider company and executed a contract. Only at that time are funds forwarded to that company.
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Employer Contributions - FRS Plans
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| The FRS Pension Plan and FRS Investment Plan are both tax-qualified plans authorized under Sec. 401(a) of the Internal Revenue Code. Both plans are funded entirely by employer contributions, plus interest and investment earnings generated therefrom. Employer contributions are made on behalf of each plan participant under a uniform system of blended rates 1.
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| Because the FRS Pension Plan is a defined benefit plan, at retirement, the member's retirement benefit is determined by formula. Each month the University makes a contribution on the member's behalf to the FRS Trust Fund, equal to a specified percentage of salary. By state law, contribution rates are established for each membership class and subclass at levels that are actuarially determined to be sufficient to prefund promised benefits under the plan. (For more on the benefits available under the FRS Pension Plan, see Benefits.)
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| Employer contributions made under the FRS Pension Plan are not the property of the member; therefore, they are not refundable. If a member terminates employment before vesting, he/she is not eligible for any employer-funded payments or a retirement benefit. When he/she is vested, a member qualifies to receive a future retirement benefit upon reaching normal or early retirement age, terminating all covered employment, and requesting that benefits begin.
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| The FRS Investment Plan, on the other hand, is a defined contribution retirement plan. As with the Pension Plan, monthly contributions are made on the member's behalf to the FRS Trust Fund. Allocations are then made to member accounts to fund benefits under the Investment Plan, according to allocation rates established under s. 121.72, F.S. Benefits are based on the total value of the member's account at distribution. This amount is based on accumulated employer contributions, plus interest and earnings on those contributions, less fees and plan charges. (For more on the benefits available under the FRS Investment Plan, see Benefits.)
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| 1 Contribution rates for the FRS Investment Plan are set by state law based on membership class, at the same level as is required for members of the FRS Pension Plan.
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Note Both federal and state law limit the amount of compensation that is eligible for coverage under a tax-qualified retirement plan like the FRS Pension Plan or FRS Investment Plan. For employees who first became FRS members or ORP participants on or after July 1, 1996, this means that no retirement contributions are permitted for that portion of their compensation that exceeds the compensation limit established under Sec. 401(a)(17) of the Internal Revenue Code and s. 121.021(22)(c) and (d) of the Florida Statutes - $230,000, indexed, as of July 2008. Employees who first became FRS members or ORP participants before July 1, 1996 (who were "grandfathered in" by law) are subject to a different maximum compensation limit - $348,560, indexed, as of July 2008.
In addition to the compensation limits applicable under the FRS Pension Plan as described above, for a tax-qualified defined contribution retirement plan like the FRS Investment Plan, the Internal Revenue Code also imposes limits on the amount of salary that may be contributed for retirement purposes. In other words, federal law limits the contributions that may be made on your behalf. Because these limits are high (in 2008, the federal contribution limit is $46,000 annually), very few participants are affected. Your employer will be notified if you approach these limits.
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Employee Contributions - ORP
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| The university pays the full cost of your ORP participation. No employee contributions are required, but employees may make contributions if they wish, as explained below. No "service credit" may be earned or purchased under the plan.
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| You may choose to make voluntary tax-sheltered contributions to your ORP account. Special tax laws allow public employees to exclude certain contributions from current federal income taxes (not including Social Security taxes). You may elect to contribute a percentage of your earnings, subject to Internal Revenue Code limits under Secs. 403(b)2, 415(c), and 402(g). You may direct these voluntary contributions to be invested among any of the approved annuity products offered by the approved provider companies that are part of the ORP.
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| Benefits funded by employee voluntary contributions may be paid out at anytime and in any form within limits provided for in the provider company contract and subject to Federal restrictions and penalties on withdrawals prior to age 59½. For more information on this subject, you should consult a qualified tax and/or investment advisor.
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| If you contribute to your ORP account and also wish to make voluntary contributions to a tax-sheltered annuity outside of the ORP, your voluntary contributions must first be directed to the ORP equal to the maximum amount allowed by the plan. You may participate in the State's Deferred Compensation Program (457 plan) without making any employee contribution to the ORP; however, participation in the State's 457 plan may decrease your maximum allowable ORP contributions. For more information on this subject, you should consult a qualified tax and/or investment advisor.
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| It is your responsibility to ensure that your voluntary contributions do not exceed the limits established by Internal Revenue Code Secs. 403(b)2., 415(c), and 402(g). You will not be allowed to purchase previous ORP service time under the FRS.
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Employee Contributions - FRS Plans
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| The university pays the full cost of your participation in the FRS Pension Plan or the FRS Investment Plan. No employee contributions are required or allowed under the FRS except for the purchase of additional service credit as discussed below.
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| Under the FRS Pension Plan, you are allowed to purchase credit for certain service outside the plan in order to increase your retirement benefit. The types of service for which you may be able to buy optional credit include military leaves, personal leaves of absence without pay during your employment, and out-of-state or non-FRS in-state public employment service. For more information about purchasing credit for other types of creditable service, please refer to the class guide for your FRS membership class (Regular Class or Senior Management Service Class). Your personnel office will assist you in determining your eligibility for these purchase credits and in determining the amount that you will owe for the credit. You are not allowed to purchase credit under the FRS Pension Plan for your previous ORP service time.
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| Under the FRS Investment Plan, it is not possible to increase your retirement benefit by making voluntary contributions to the plan or by buying additional credit for service outside that plan.
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| Regardless of which FRS plan you participate in, you may be able to supplement your retirement income by participating in the Government Employees' Deferred Compensation Plan as authorized under s. 112.215, F.S., or by contributing to a supplemental tax-sheltered annuity program offered by the university (or the United Faculty of Florida if you are eligible).
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| Note If you decide to make voluntary contributions under the ORP, you are required to complete a salary reduction agreement form (available from your personnel office). You should also consult a qualified investment advisor, or the ORP companies you are investing with, to determine the maximum amount you may contribute. The aggregate of employer contributions and voluntary employee contributions cannot exceed limits set under Internal Revenue Code Secs. 403(b)2, 415(c), and 402(g).
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| E-mail your SUSORP comments or questions to us. Please include your name, mailing address, e-mail address, the last four digits of your social security number (SSN), and your phone number if you require an answer from us.
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