Washburn University Board of Regents
SUBJECT: Retirement Program Changes
Currently, employees making voluntary contributions to the University's Retirement Program are limited by the $10,000 amount set forth in section 402(g) of the Internal Revenue Code. Only voluntary, non-mandatory contributions are subject to this limit.
If a mandatory employee contribution were to be established, that amount would be excluded from the 402(g) limitation, thereby allowing for the possibility of tax deferring more than the current limit.
In June of this year, a letter was sent to each benefit-eligible University employee with a FY99 annual contractual salary of $70,000 or more, requesting comments regarding the possibility of the University imposing a mandatory contribution rate of 3% to the retirement program. There are 45 employees meeting this annual contract salary criterion. Of these 45 employees, 37 agreed with the proposal, 4 were neutral on the proposal, and 4 disagreed. Based upon this strong support (82.2% agreed and 8.9% neutral, for a total of 91.1%), it was determined that the implementation of this proposal should be brought to the Regents. In addition to surveying these 45 employees, the proposal was also shared with the University's Personnel Committee. No concerns were expressed by the Committee Chair.
The mandatory contribution would apply only to employees with a salary of $70,000 or more. 96% of these employees are already contributing 3% or more on a voluntary basis. These employees would not experience a reduction in take home pay because they could reduce their voluntary contribution by the 3% mandatory contribution; however, if the employee is making the maximum voluntary contribution, he/she could make the 3% mandatory contribution plus the maximum voluntary contribution. The net result is that the employee could contribute 3% more to his/her TIAA-CREF contracts.
None. The 3% mandatory retirement contribution will be funded by those benefit-eligible employees making $70,000 or more.
President Farley recommends the Board of Regents approve the implementation of a 3% mandatory contribution to the basic retirement program for employees with annual contractual salaries of $70,000 or more, effective January 1, 1999.
(date) Jerry B. Farley, President