2.55.08 Tax-Sheltered 403(b) Annuity and Custodial Account Retirement Program

2.55.08.180
 
(f) The employee is not classified by the University as a "part-time faculty" member, i.e., a faculty member who is not covered by a collective bargaining agreement with the University and who is employed pursuant to an agreement with the University for a period less than a full academic year; and
1 2.55.08.350
 
(9) Investment Vehicles. The University shall make available under this retirement program, for purchase for eligible employees annuity contracts to be issued by TIAA/CREF and/or custodial accounts to be established and maintained by Fidelity Investments, and may in its discretion make available annuity contracts and/or custodial accounts issued or established and maintained by other organizations. In connection with making annuity contracts and custodial accounts available to eligible employees under this Section 9 (2.55.08.350), the University shall assist in the distribution of information to eligible employees, process applications, collect after-tax employee contributions and salary reduction contributions by means of payroll deductions or reductions, and pay all contributions to TIAA/CREF or Fidelity (or other organization, if any).
2.55.08.010
  This retirement program is intended to permit eligible employees of Wayne State University, a State university (the "University"), to make salary reduction contributions and/or after-tax employee contributions to be used by the University to purchase for these employees annuity contracts and/or custodial accounts which meet the requirements of Section 403(b) of the Internal Revenue Code of 1986, as amended (the "Code"), and to cause the University to make matching contributions towards the purchase of such annuity contracts and/or custodial accounts for each employee who makes a minimum salary reduction contribution and/or after-tax employee contribution and who meets certain additional eligibility requirements. It is intended that this retirement program meet the nondiscrimination requirements of Section 403(b)(12) of the Code at such time as these requirements become applicable to the program. If it becomes necessary to amend the program to meet these requirements, the University intends to do so. The terms and conditions of the retirement program are set forth below in this document and in the annuity contracts and/or custodial accounts purchased for participating employees hereunder.
2.55.08.020 I. EMPLOYEE SALARY REDUCTION AND AFTER-TAX EMPLOYEE CONTRIBUTIONS
  Part I of the retirement program ("Part I") (sections 2.55.08.020 through 2.55.08.100) is intended to permit employees of the University who meet the requirements of Section 1 below (2.55.08.030 through 2.55.08.070) to make salary reduction contributions and/or after-tax employee contributions to be used by the University to purchase for these employees annuity contracts and/or custodial accounts which meet the requirements of Section 403(b) of the Code. Part I is intended to meet the nondiscrimination requirements of Section 403(b)(12)(ii) of the Code.
2.55.08.030
  (1) Eligibility. Any employee of the University shall be eligible to participate in Part I of the retirement program (2.55.08.020 through 2.55.08.100) on any Entry Date on which the employee meets all of the following requirements:
2.55.08.040
  (a) The employee normally works at least 20 hours per week, or in the case of an employee who is covered by a collective bargaining agreement with the University, such lesser number of hours per week as is required for eligibility to participate in this retirement program by the collective bargaining agreement;
2.55.08.050
 
b) The employee is not a student performing services for the University described in Section 3121(b)(10) of the Code, such as a "graduate assistant" or "student assistant." This requirement does not exclude a regular employee of the University who also is attending University classes; and
2.55.08.060
 
(c) The employee is not included in a unit of employees covered by a collective bargaining agreement between employee representatives and the University if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and the University, unless the collective bargaining agreement provides that the employee shall be eligible for participation in Part I (sections 2.55.08.020 through 2.55.08.100).
2.55.08.070
 
For purposes of this Section 1 (2.55.08.030 thru 2.55.08.070), the term "Entry Date" means the first date on which Compensation normally would 1 be paid by the University to an employee following (i) satisfaction by the employee of all of the above eligibility requirements for participation in Part I (sections 2.55.08.020 thru 2.55.08.100); (ii) receipt by the University from the employee of an application to participate in Part I; and (iii) the passage of sufficient time after receipt of such application to enable the University to complete the administrative processing necessary to begin withholding from the employee's Compensation the salary reduction contributions and/or after-tax employee contributions elected by the employee to be made under Section 2 of Part I (2.55.08.080).
2.55.08.080
 
(2) Salary Reduction and After-Tax Employee Contributions. An eligible employee may elect to make salary reduction contributions and/or after-tax employee contributions in a specified percentage of the employee's Compensation towards the purchase of an annuity contract or custodial account which meets the requirements of Section 403(b) of the Code, commencing as of any Entry Date on which the employee is eligible to participate in Part I (sections 2.55.08.020 thru 2.55.08.100).
2.55.08.090
 
(3) Compliance with the Nondiscrimination Test of Section 401(m) of the Code. Effective for the Plan Year in which Section 401(m) of the Code becomes applicable to Part I of the retirement program (2.55.08.020 thru 2.55.08.100) and for each subsequent Plan Year in which Section 401(m) applies to Part I, any after-tax employee contributions made under Section 2 of Part I (2.55.08.080) shall meet the actual contribution test of Section 401(m)(2) of the Code as it applies to a Code Section 403(b) annuity plan. The University may take any action permitted by the Regulations under Code Section 401(m) to cause any after-tax employee contributions made under Section 2 of Part I to meet such test, including but not limited to, reducing or eliminating after-tax employee contributions by highly compensated employees, refunding excess after-tax employee contributions to highly compensated employees, or making qualified non-elective contributions for non-highly compensated eligible employees.
2.55.08.100
 
In applying the actual contribution test of Code Section 401(m) (2) to after-tax employee contributions made under Section 2 of Part I (2.55.08.080), the test shall be applied separately to each portion of Part I required under applicable Treasury Regulations to be disaggregated and treated as a separate plan for purposes for Section 401(m); e.g., the test shall be applied separately to each group of eligible employees covered by a separate collective bargaining agreement and to the group of eligible employees not covered by any collective bargaining agreement.
2.55.08.110 II. UNIVERSITY MATCHING CONTRIBUTIONS
  Part II of the retirement program ("Part II") (sections 2.55.08.110 through 2.55.08.250) is intended to cause the University to make matching contributions towards the purchase of annuity contracts and/or custodial accounts which meet the requirements of Section 403(b) of the Code for each employee who meets the requirements of Section 1 of Part II (2.55.08.120 through 2.55.08.220) and who makes a salary reduction contribution and/or an after-tax employee contribution in the amount of at least 5% of the employee's Compensation. It is intended that Part II meet the nondiscrimination requirements of Section 403(b)(12)(i) of the Code at such time as these requirements become applicable to Part II. If it becomes necessary to amend Part II to meet these requirements, the University intends to do so.
2.55.08.120
  (1) Eligibility. Any employee of the University shall be eligible to participate in Part II of the retirement program (sections 2.55.08.110 through 2.55.08.250) on any Entry Date on which the employee meets all of the following requirements:
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(a) The employee has attained age 26 or more.
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(b) The employee has completed at least two Years of Service.
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(c) The employee normally works at least 20 hours per week, or in the case of an employee who is         covered by a collective bargaining agreement with the University, such lesser number of hours per         week as is required for eligibility to participate in this retirement program by the collective bargaining     agreement.
2.55.08.160
 
(d) The employee is not a student performing services for the University described in Section                 3121(b)(10) of the Code, such as a "graduate assistant" or "student assistant". This requirement         does not exclude a regular employee of the University who also is attending University classes.
2.55.08.170
 
(e) The employee is not included in a unit of employees covered by a collective bargaining agreement between employee representatives and the University if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and the University, unless the collective bargaining agreement provides that the employee shall be eligible for participation in Part II (sections 2.55.08.110 through 2.55.08.250).
2.55.08.190
 
(g) The employee is not classified by the University as a "technician."
2.55.08.200
 
For purposes of this Section 1 (sections 2.55.08.120 through 2.55.08.220), the term "Entry Date" means the first date on which Compensation normally would be paid by the University to an employee following (i) satisfaction by the employee of all of the above eligibility requirements for participation in Part II (sections 2.55.08.110 through 2.55.08.250); (ii) receipt by the University from the employee of an application to participate in Part II; and (iii) the passage of sufficient time after receipt of such application to enable the University to complete the administrative processing necessary to begin withholding from the employee's Compensation the contributions required to be made by the employee to entitle the employee to matching University contributions under Section 2 (section 2.55.08.230) of this Part II.
2.55.08.210
 
For purposes of this Section 1 (sections 2.55.08.120 through 2.55.08.220), the term "Year of Service" means any period of at least nine consecutive months which overlaps two calendar years during which the employee normally works at least 20 hours per week provided that no month shall be counted twice and provided further that no period of service with the University prior to a break in service of at least three consecutive years shall be counted in determining whether an employee has a Year of Service.
2.55.08.220
 
In determining an employee's Years of Service, years of service with (i) any other institution of higher learning, (ii) any other educational organization eligible to purchase annuity contracts for its employees under 1 Section 403(b) of the Code, and (iii) any tax-exempt organization described in Section 501(c)(3) of the Code which is affiliated with an institution of higher learning, shall be counted as service with the University. As a condition of counting service with any predecessor employer as service with the University, the University may require the employee to furnish to the University evidence satisfactory to it that the predecessor employer meets the requirements of this paragraph.
2.55.08.230
 
(2) University Matching Contributions. If an employee who meets the requirements of Section 1 (2.55.08.120 through 2.55.08.220) of Part II elects to make salary reduction contributions and/or after-tax employee contributions in the amount of 5% of the employee's Compensation towards the purchase of an annuity contract or custodial account which meets the requirements of Section 403(b) of the Code, the University shall contribute towards the purchase of such annuity contract or custodial account a matching contribution equal to 10% of the employee's Compensation, commencing as of the Entry Date on which the employee becomes a participant in Part II (sections ` 2.55.08.110 through 2.55.08.250).
2.55.08.240
 
(3) Compliance with the Nondiscrimination Test of Section 401(m) of the Code. Effective for the Plan Year in which Section 401(m) of the Code becomes applicable to Part II of the retirement program (sections 2.55.08.110 through 2.55.08.250) and for each subsequent Plan Year in which Section 401(m) applies to Part II, any matching contributions made under Section 2 (2.55.08.230) of Part II shall meet the actual contribution test of Section 401(m)(2) of the Code as it applies to a Section 403(b) annuity plan. The University may take action permitted by the Regulations under Code Section 401(m) to cause any matching contributions made under Section 2 of Part II to meet such test, provided such action shall be limited to making qualified nonelective contributions for non-highly compensated eligible employees and/or to any other action permitted by such Regulations and consented to by the union representing the affected eligible employees.
2.55.08.250
 
In applying the actual contribution test of Code Section 401(m)(2) to matching contributions made under Section 2 (2.55.08.230) of Part II, the test shall be applied separately to each portion of Part II (sections 2.55.08.110 through 2.55.08.250) required under applicable Treasury Regulations to be disaggregated and treated as a separate plan for purposes of Section 401(m), e.g., the test shall be applied separately to each group of eligible employees covered by a separate collective bargaining agreement and to the group of eligible employees not covered by any collective bargaining agreement.
2.55.08.260 III. Provisions Applicable to Parts I and II.
 
The provisions set forth below apply to Part I (sections 2.55.08.020 through 2.55.08.100) and Part II (sections 2.55.08.110 through 2.55.08.250) above.
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(1) Effective Date. The effective date of this retirement program shall be December 1, 1989.
2.55.08.280
 
(2) Plan Year. The Plan Year (and the "limitation year" under Section 415 of the Code when applicable) of this retirement program shall be the twelve-month period beginning December 1 and ending November 30.
2.55.08.290
 
(3) Compensation. The word Compensation as used in Section 2 of Parts I and II (sections 2.55.08.080 and 2.55.08.230) shall mean and include the salary, wages, and overtime paid to an employee by the University and shall include additional amounts classified as "administrative attachments" by the University, i.e., additional salary paid for serving in administrative positions, such as chairman of a University department or division, but shall not include bonuses, other supplemental compensation paid to an employee for additional services not rendered as part of the employee's primary assignment, compensation paid to regular faculty members for part-time faculty assignments in the fall or winter, or summer school pay of faculty members but only if the faculty member elects prior to the beginning of any summer school semester for which he will receive summer pay not to include this summer pay in his Compensation for purposes of this retirement program. Starting with the Plan Year in which Section 401(a)(17) of the Code becomes applicable to this retirement program, not more than $150,000 (adjusted for cost of living increases in $10,000 increments) in compensation for any employee hired on or after December 1, 1996, shall be taken into account under the program. For employees hired prior to December 1, 1996, not more than $200,000 (adjusted for cost-of-living increases in $10,000 increments) in compensation shall be taken into account under the program.
2.55.08.300
 
(4) Leased Employees. At such time as Section 414(n) of the Code becomes applicable to this retirement program, the term employee as used in Section 1 of Part 1 (2.55.08.030 through 2.55.08.070) and Section 1 of Part II (2.55.08.120 through 2.55.08.220) shall include leased employees within the meaning of Section 414(n)(2) of the Code but such persons, if any, shall not be eligible to participate in the program. Notwithstanding the foregoing, if any such leased employees constitute less than 20% of the University's non-highly compensated work force within the meaning of Section 414(n)(5)(C)(ii) of the Code, the term employee shall not include those leased employees, if any, covered by a plan described in Section 414(n)(5)(B) of the Code.
2.55.08.310
 
(5) Code Limitations and Requirements. All salary reduction contributions and/or after-tax employee contributions made by employees and all matching contributions made by the University towards the purchase of annuity contracts or custodial accounts which meet the requirements of Section 403(b) of the Code shall be subject to the limitations on these contributions imposed by the Code. All annuity contracts and/or custodial accounts purchased under this retirement program with salary reduction contributions and/or after-tax employee contributions made by employees and with matching contributions made by the University shall comply with Section 403(b) of the Code, including but not limited to the provisions of Section 403(b) which relates to distributions and rollovers.
2.55.08.320
 
(6) Vesting. Each employee for whom an annuity contract and/or custodial account is purchased under this retirement program shall be fully and immediately vested in such annuity and/or custodial account.
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(7) Required Beginning Date. An eligible employee's interest in the annuity contract or custodial account purchased for the employee under this retirement program shall be, or begin to be, distributed to the employee by the later of (i) April 1 of the calendar year following the calendar year in which the employee attains age 70-1/2 or (ii) April 1 of the calendar year following the calendar year in which the employee retires.
2.55.08.340
 
(8) Direct Rollovers and Mandatory Withholding. With respect to distributions made under this retirement program on or after January 1, 1993, this retirement program shall be administered to comply with the direct rollover and mandatory withholding provisions of the Code made applicable to 403(b) annuity plans by Code Sections 403(b)(8) and 403(b)(10). The obligation to comply with such provisions of the Code, including the obligation to withhold income taxes when required, shall be the obligation of the payor of the distribution.
2.55.08.360
 
(10) Optional Forms of Payment. Any optional form of payment permitted under Section 403(b) of the Code and under the terms of an annuity contract or custodial account purchased for an eligible employee under this retirement program shall be made available under the program to the employee or former employee (including a retiree) for whom the annuity or custodial account is purchased, provided that if the eligible employee or former employee is covered by a collective bargaining agreement with the University, such optional forms of payment shall be made available to the employee or former employee only to the extent provided in the collective bargaining agreement.
2.55.08.370
 
Such optional forms of payment may include, but shall not be limited to, payment in a single sum and payment for hardship subject to the terms and conditions of Section 403(b)(11) of the Code and to such rules relating to payments for hardship which the University may adopt.
2.55.08.380
 
(11) Transfers. Any transfer from (or to) a 403(b) annuity contract or custodial account purchased for an eligible employee under this retirement program to (or from) a different 403(b) annuity contract or custodial account (i.e., an annuity contract or custodial account other than an annuity contract or custodial account made available by the University under Section 9 [section 2.55.08.350]) permitted under Section 403(b) of the Code and the terms of both the transferor and transferee annuities or custodial accounts, shall be permitted under this retirement program, subject, however, to such conditions as the University may impose, such as a requirement that the employee or former employee sign an appropriate transfer authorization. However, if the employee or former employee is covered by a collective bargaining agreement with the University, such a transfer shall be permitted only to the extent provided in the collective bargaining agreement. If an eligible employee makes a transfer to an annuity contract or custodial account not made available to eligible employees by the University under Section 9 (2.55.08.350), the University will not, after the transfer, pay any contributions to such annuity contract or custodial account nor will it perform any other of its functions described in Section 9 in connection with such annuity contract or custodial account.
2.55.08.390
 
(12) Amendment and Termination. The University may amend or terminate this retirement program at any time provided that no such amendment or termination shall adversely affect the interest of any employee in any annuity contract and/or custodial account purchased for such employee under this retirement program at the time of such termination or amendment, and provided further that any such amendment or termination with respect to any employee shall be subject to the terms of any collective bargaining agreement with the University covering such employee.

Legistative History

Adopted 5-0(1); Official Proceedings 34:4523 (9 December 1989) Amended 8-0(2); Official Proceedings 35:4619 (2 November 1990) Amended 7-0(3); Official Proceedings 35:4669 (12 April 1991) Amended 6-0(4); Official Proceedings 39:5108 (2 December 1994) Amended 8-0(5); Official Proceedings 40:5173-5174 (21 July 1995) Prior Acts: Official Proceedings 2:399 (16 June 1958) Official Proceedings 29:4028 (29 March 1985)

Cross References

Sec. 2.55.05