Saving for Retirement - Officers Hired Before July 1, 2013

Columbia University’s retirement savings program is designed to provide a foundation of retirement income that will be supplemented by your additional savings and investments and Social Security benefits.

The program consists of two retirement plans: the Voluntary Retirement Savings Plan (VRSP) and the Officers’ Retirement Plan. 

Voluntary Retirement Savings Plan (VRSP)

You are always fully vested in (have a right to) the value of your own contributions to the VRSP, whether they are pre-tax contributions, Roth contributions or a combination.

You can make changes to your VRSP and catch-up contribution percentage elections at any time during the year in CUBES. There are no limitations.

The IRS sets a maximum contribution limit each year, which applies to combined contributions, pre-tax and Roth. Please review the table below:

If you contributed to a 403(b) or 401(k) plan at a previous employer on either a pre-tax or Roth basis, you can roll over your contributions to the VRSP.

For Roth rollovers, the five-year requirement to receive tax-free investment earnings on your Roth contributions begins as of the date you first made contributions to your previous employer’s plan, and applies to any future Roth contributions you make to the VRSP. For example, if you started making Roth contributions to a previous employer’s plan in September, your five-year period would begin as of January 1 of the year you made your first contribution and be met as of December 31 five years later.

You would be able to receive a tax-free payout (what you rolled over plus your Roth contributions to the VRSP plus investment earnings on all your Roth money) any time after December 31 five years later, as long as you are at least age 59½.

To arrange for a pre-tax or Roth rollover to the VRSP, you will need to notify that plan’s recordkeeper. Your prior employer must issue the rollover directly to your account in the VRSP and document that it is a pre-tax or Roth contribution, as appropriate. For more information, call the Columbia Benefits Service Center at (212) 851-7000 

When it comes to saving in the VRSP, the sooner you start, the better your chances of achieving a financially secure retirement.

That’s because your savings grow over time through compounding, meaning that any investment earnings or interest earned on your contributions will be reinvested to generate additional investment earnings, which in turn are reinvested, and so on.

Officers' Retirement Plan

The Officers’ Retirement Plan, like the VRSP, is a defined contribution 403(b) plan. However, unlike the VRSP where you contribute, the University makes all contributions to the Officers’ Retirement Plan once you are eligible; you do not need to enroll.

However, you need to actively elect a carrier (TIAA or Vanguard) and investment funds. Otherwise, default carrier and investment elections for the University’s contributions will apply.

*If you were hired on or before June 30, 1993, other contribution formulas may have applied.

Important: The Social Security wage base (SSWB) is the amount of your earnings that is subject to Social Security tax each year.

Vesting
You are always fully vested in (have a right to) the value of the University’s contributions made on your behalf to the Officers’ Retirement Plan. 

Additional Information

The VRSP and Officers’ Retirement Plan together are intended to help you build a source of income for retirement—so, in general, you cannot receive payouts from the plans while you are still working without incurring a penalty.

In special circumstances, however, you may be able to receive a portion of your VRSP savings while you are working through loans or withdrawals from the plan, as follows:

  • Your pre-tax contributions (adjusted for investment performance) are available to borrow at any time through TIAA. Roth contributions are not available to borrow. However, your Roth contributions (adjusted for investment performance) will be included when determining the maximum loan amount available to you.
  • Hardship withdrawals of both pre-tax and Roth savings (adjusted for investment performance) are available in limited situations through TIAA.
  • If you wish to borrow or withdraw your savings that are invested with Vanguard, you will need to transfer your money to TIAA before applying for a loan or hardship withdrawal. This transfer can take up to six weeks. For additional information, see the Summary Plan Description (SPD) for the VRSP.
  • Once you reach age 59½, you can withdraw up to the full balance from your VRSP account. Taxes will apply to your pre-tax savings. Investment earnings on your Roth contributions will be tax-free if it has been at least five years since you started making Roth contributions.

You can also withdraw your pre-tax savings and Roth savings (Roth investment earnings will be tax-free) if you become disabled. If you die, payment will be made to your beneficiary. Your beneficiary will be eligible to make a tax-free withdrawal of Roth investment earnings once your Roth contributions have been in the plan for at least five years.

When you leave the University, you can leave your savings in your plan accounts or receive payment of your plan accounts. You have several options for receiving payment of your plan accounts, including transferring your account to a different carrier or making a rollover into an Individual Retirement Account (IRA), Roth IRA or another employer’s qualified retirement savings plan.

You will need to designate a beneficiary for the VRSP and the Officers’ Retirement Plan. Your beneficiary will receive plan benefits if you die before the entire value of your accounts is distributed. The value of your accounts includes your contributions and Columbia University’s contributions, adjusted for investment gains and losses. To name a beneficiary, log in to the TIAA and Vanguard websites and follow the prompts.

Once you start receiving payments from the plans, the amount your beneficiary will receive will depend on the form of payment you elected. For information about forms of benefit payment, refer to the Summary Plan Descriptions (SPDs).

In general, eligible pay for the Officers’ Retirement Plan is your W-2 pay up to the annual compensation limit for the year. It does not include special compensation such as:

  • Guaranteed income from clinical activities (for Medical Center faculty)
  • Special grants such as science and technology ventures – but not federal grants and contracts, which are included in eligible pay under the Officers’ Retirement Plan
  • Allowances – such as for housing – or other University contributions, such as contributions to the Officers’ Retirement Plan

Eligible pay for the VRSP generally is not capped and includes income from special compensation.

Because the VRSP and the Officers’ Retirement Plan consider different compensation elements in the pay used to determine contributions, your eligible pay and contribution amounts based on a percentage of pay under the VRSP and the Officers’ Retirement Plan may be different.

If a portion of your pay at Columbia University is earned from clinical activities—also known as private practice earnings or faculty practice earnings—it’s important to know that eligible earnings under the VRSP include your clinical earnings, but eligible earnings under the Officers’ Retirement Plan do not.

Because clinical earnings are considered in your eligible pay under the VRSP, your contributions may reach the IRS annual limit on pre-tax and/or Roth contributions before the end of the calendar year.

Deciding how to invest your savings may seem an overwhelming prospect. Both TIAA and Vanguard offer online resources to help you choose and monitor your plan investments. The websites are easy to use and take you step by step through basic saving and investing.

You’ll find descriptions of your investment fund options, financial planning tools and other investment information:

In addition to visiting the websites, you can call the carrier service centers. Call TIAA at 800-842-2252 and Vanguard at 800-523-1188.

The VRSP and Officers’ Retirement Plan have default carrier and investment elections that apply if you do not actively elect carriers for recordkeeping and investment of contributions.

There are two types of default that apply to both plans:

  1. If you do not select a carrier for recordkeeping, Vanguard will be your recordkeeper and all contributions will be invested in the Vanguard Target Retirement Fund closest to when you will reach age 65.
  2. If you select a carrier, but do not select specific investment funds with that carrier, all contributions will be invested in the default fund for the carrier, which will be either the Vanguard Target Retirement Fund or the TIAA Lifecycle Fund closest to when you will reach age 65.

Please be aware that depending on when you make your elections, payroll deductions may occur before you elect your investment funds. You can always change carriers and investment funds after the defaults are in effect.

For more information regarding the Vanguard Target Retirement Fund or the TIAA Lifecycle Fund, refer to the Qualified Default Investment Alternative (QDIA) Notices or contact the carriers directly.

You can also refer to the prospectus for each default fund, available on the carrier’s website. The prospectus contains information about the fund’s investment strategy and goals as well as its past investment performance.

It’s a good idea to periodically review your approach to saving and investing to make sure you are on track to achieve your retirement income goals.

Saving for retirement should be a priority even if your personal situation changes in a way that may affect your current expenses; for example, you marry or enter a partnership, divorce, have a baby or receive an increase in salary.

If you are early in your career, it may be beneficial to save on a Roth basis, paying taxes on your savings today when your earnings—and tax rate—may be lower than later in your career.

If you are mid-career, there are steps you can take if you aren’t saving enough for retirement. For example, you may want to consider increasing the percent of pay you contribute to the VRSP.

If you are close to retirement and will need access to your savings in the near future, consider whether your investment mix—and the risk of loss—is appropriate based on your time horizon.

It’s easy to check the status of your account balances and investment fund performance on the carrier websites. To access your accounts online with the carrier, you will need to create a user ID and password the first time you log in. You will also receive a paper statement every calendar quarter, unless you opt to receive it online.