The University of North Carolina System (“UNC System”) offers a choice of voluntary supplemental retirement programs so employees can save additional amounts for retirement. Under the UNC System Section 403(b) Plan (“the 403(b) Plan”), eligible employees may elect to defer a portion of their compensation to the 403(b) Plan on a pre-tax or post-tax (Roth) basis.
The 403(b) Plan is designed to help you invest more money today so that you have the income you need in your retirement years. It provides a supplement to either the N.C. Teachers’ and State Employees’ Retirement System or the Optional Retirement Program of the University of North Carolina, the State’s mandatory retirement plans available to permanent employees who work 30 or more hours per week. Moreover, even employees not eligible for one of the mandatory retirement plans may also be able to make voluntary contributions to the 403(b) Plan.
All employees, other than UNC Health Care System employees, who receive compensation reportable on a Form W-2 and pay FICA (Social Security) tax are eligible to participate in the 403(b) Plan, so long as the employee elects to contribute at least $200 each calendar year.
An eligible employee may elect to defer a portion of his or her compensation on a pre-tax or post-tax (Roth) basis.
Pre-tax Contributions: Both federal and state income taxes are deferred on the contributions and any earnings until distributed from the Plan. Distributions are taxable as ordinary income for federal and state income tax purposes. Generally, a participant must begin receiving a distribution by April 1 following the later of the year in they turn age 70½ or terminate employment with the UNC System.
Post-tax Contributions (Roth): Federal and state income taxes are withheld from Roth contributions at the time that they are contributed to the Plan. Contributions are not taxed again at distribution. Moreover, any earnings on the contributions are never subject to federal and state income taxes upon distribution, as long as a five-year period has passed since Roth contributions were first made to the Plan and the distribution is a “qualified distribution”. A qualified distribution is a distribution (i) made on or after the date on which the participant attains age 59 ½, (ii) made to a beneficiary on or after the death of the participant, or (iii) made on or after the participant becomes disabled.
Annual contribution limits are set by the Internal Revenue Service (IRS). The IRS allows an eligible employee to make an additional catch-up contribution beginning in the year in which he or she turns age 50. For 2019, the calendar year limits under the 403(b) Plan is as follows:
Calendar Year Annual Contribution Limit: $19,000
Age 50+ Catch-up Contribution Limit: $6,000
Note: This is a combined limit for pre-tax and Roth after-tax contributions.
The UNC System has approved Fidelity Investments and TIAA as the two financial services companies offering options under the 403(b) Plan. Fidelity and TIAA provide a wide range of mutual fund investment options and annuity products through their own funds as well as other investment managers. Both companies offer resources and tools to help participants plan their investment strategy. Eligible employees should contact each vendor for information about plan investment options and services provided.
- Fidelity Investments: 1-800-343-0860
- TIAA: 1-800-842-2252
Eligible employees may enroll immediately upon date of hire or at any time. To start the enrollment process, please visit the website and follow the steps listed:
- Step 1 – Complete a Salary Reduction Agreement (SRA) (forms and instructions available on the website)
- Step 2 – Enroll in the plan with Fidelity and/or TIAA
Contributions may be designated as a percent of salary or as a flat dollar amount depending on your campus payroll capability. The SRA will apply only to amounts earned after enrolling in the Plan, and an employee’s election under the SRA will continue until the SRA is modified or revoked by the employee.
Modifying a Deferral Election
An eligible employee may increase, decrease or stop his or her future contributions to the plan at any time by completing an SRA. Employees may also change from one vendor to another at any time by completing an SRA to stop contributions with the existing vendor, and following the steps above to enter into a new agreement with another vendor. It is also possible to make contributions to more than one vendor at a time.
This notice is provided as a source of information and does not constitute legal, tax or other professional advice. If legal advice, tax advice or other professional assistance is required, the services of a professional advisor should be sought. Every effort has been made to make this notice as thorough and accurate as possible. However, there are other legal documents, laws, and regulations that govern the operation of the Program. It is understood that in the event of any conflict, the terms of the Plan Document, applicable laws, and regulations will govern.