Historically, the Optional Retirement Plan (ORP) has operated on a fiscal year schedule, July 1–June 30. The Arizona Board of Regents is requiring a change to a calendar year, January 1–December 31. This transition brings the ORP plan year into alignment with other benefit plans and ensures compliance with IRS regulations.
The short plan year was July 1 to December 31, 2015.
A short plan year reduces the maximum allowable amount that can be contributed to the ORP in a full plan year by half.
If your total compensation is less than $265,000 annually (for employees hired and enrolled in the ORP after June 30, 1996) or $395,000 (for employees hired and enrolled in the ORP before June 30, 1996), you will be unaffected by the short plan year. You and the UA will each contribute 7% of your salary to the ORP as always.
If your compensation exceeds $265,000 annually (for employees hired and enrolled in the ORP after June 30, 1996) or $395,000 (for employees hired and enrolled in the ORP before June 30, 1996), you and UA will contribute less to your ORP than you normally would in a 12-month plan year.
Each year, the IRS sets compensation limits, which are subject to change from year to year. UA and the employee are each permitted to make contributions of 7% of the employee’s salary up the compensation limit. For 2015, the limits are as shown below:
|Hired & Enrolled Date||12-month plan year||6-month plan year|
|Hired and enrolled in ORP after June 30, 1996||$265,000 of salary||$132,500 of salary|
|$395,000 of salary||$197,500 of salary|
Your contributions to your ORP are made on a pre-tax basis. Therefore, by contributing less to the ORP, your taxable income in 2015 may increase. Also, UA’s employer contribution will be reduced as it must match your contribution to the plan.
UA will contribute that amount to a Voluntary 403(b) account on your behalf. You must have an open Voluntary 403(b) account with Fidelity or TIAA to receive this contribution.
Voluntary 403(b) contributions are reflected on your paycheck. You can also visit UAccess Employee and select Self Service > Benefits > Benefits Summary to determine if you are currently contributing.
You are encouraged to meet with a Fidelity or TIAA representative to open an account. However, you can also open an account by visiting www.netbenefits.com/aus or reviewing the Voluntary 403(b) Plan Enrollment Guide.
If you have contributed to a Voluntary 403(b) Account with Fidelity or TIAA in the past, no action is required. However, you may wish meet with a Fidelity or TIAA representative to review your account.
No, individual contribution limits to the Voluntary 403(b) Plan are not impacted by UA’s contribution. In 2016, employees under age 50 may contribute up to $18,000 to the Voluntary 403(b) Plan; employees age 50 and over may contribute up to $24,000. UA may contribute in addition to an employee’s individual contributions up to $53,000.
Yes, employees who are affected by the short ORP plan year will still receive the contribution to their Voluntary 403(b) accounts should their employment transition to Banner Health in January 2016.
UA offers two supplemental retirement plans that would allow you to reduce your taxable income by making pre-tax contributions. The Voluntary 403(b) Plan is available with TIAA and/or Fidelity Investments, and the 457(b) Deferred Compensation Plan is available with Nationwide. If you are enrolled in the Health Savings Account (HSA) Option as your medical plan, you may also elect to make (or increase) contributions to your HSA to reduce taxable income. You are also encouraged to consult with your tax or financial advisor.
More information about the Voluntary 403(b) Plan and 457(b) Deferred Compensation Plan is available on the Division of Human Resources website.
Representatives from Fidelity, TIAA and Nationwide are also available to help with any questions and can assist with opening up accounts. To schedule an appointment, visit the Division of Human Resources website.
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