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ORP Short Plan Year FAQs

Why is the short plan year necessary?

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.

When is the short ORP plan year?

The short plan year was July 1 to December 31, 2015.

What is the impact of a short plan (6 months) year?

A short plan year reduces the maximum allowable amount that can be contributed to the ORP in a full plan year by half.

Does the short plan year affect me?

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.

My compensation exceeds $265,000 annually. How am I affected?

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.

How does the IRS calculate my total allowable contribution?

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
Hired and enrolled in ORP before June 30, 1996
 
$395,000 of salary $197,500 of salary

 

What is the impact of a lower contribution to my ORP?

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.

What will happen to the employer contribution that can't be contributed because of the short plan year?

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.

How do I know if I am currently contributing to the Voluntary 403(b)?

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.

How do I open a Voluntary 403(b) Account?

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 I used to contribute to the Voluntary 403(b) Plan with Fidelity or TIAA but no longer contribute, do I have to take action and "re-activate" my account?

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.

Will UA’s contribution to the 403(b) Plan impact how much I can contribute to the Voluntary 403(b) Plan?

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.

Will I receive UA’s contribution to my 403(b) in January, 2016, if I am employed by Banner Health at that time?

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.

What options does the UA provide to employees to reduce taxable income?

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.

Where can I get more information on these options?

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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