Voluntary Retirement

The Voluntary Tax Sheltered Annuity program at The University of Kansas is an IRS 403(b) plan. It helps both university support staff and unclassified, benefits-eligible employees accumulate personal savings for use as future retirement income. This program is in addition to retirement contributions made through the Kansas Public Employees Retirement System (KPERS) and the Kansas Board of Regents mandatory retirement programs. Participation in the VTSA program is voluntary and may begin at any time regardless of the eligibility date for mandatory retirement.

VTSA contributions are excludable from the current year's income which results in a lower income being reported to the IRS for tax purposes. Taxes on these contributions, as well as the investment earnings on them, are postponed until annuity payments begin, usually after retirement.

To participate in the VTSA program:

1.     Contact Benefits and ask for a VTSA maximum deferral calculation. In
a calendar year, deferrals of any amount may be made up to the calculated maximum. (Please notify Benefits if you expect to receive salary different from what appears in the University's budget, to be on sabbatical leave, to take leave without pay, or to change your appointment status in any way. Such changes could affect the outcome of the calculation.)

2.     Contact one of the approved VTSA companies, or one of its approved representatives, and complete an application to establish an account, choose investment allocations, and name beneficiaries.

Tips for Choosing a VTSA Company (html) Tips.doc

3.     Complete a Retirement Plan Investment Agreement form indicating the percentage of salary to be deferred from each bi-weekly paycheck. This form should then be returned to Benefits. Forms received in Staff Benefits on or before the second Friday of a pay period will be effective as of the first day of that pay period. Please keep in mind that the deferral amount may be changed/stopped at any time during the year by submitting a new Retirement Plan Investment Agreement form to Benefits.

Benefits will send VTSA deferrals to the company of your choice at the end of each bi-weekly pay cycle, and monitor deferrals to ensure they remain within the required limits.

Calculation of VTSA 403(b) Deferral Limits

Following is a brief explanation of complex Internal Revenue Code (IRC) rules and regulations governing maximum 403(b) contributions. Complete information about applicable limits and coordination of deferrals involving multiple employers can be found in federal and state statutes and regulations, by consulting with a tax attorney, or by viewing the IRS website [www.irs.gov]

Each calculation provided by Benefits is individualized based on an employee's KU salary, years of service with KU, prior tax-deferred contributions at KU, as well as other factors.

Calculation of VTSA 403(b) Deferral Limits

The calendar year 2007 limit is the lesser of:

IRC section 415(c) 100% of includible compensation or $45,000.00

OR

IRC section 402(g) $15,500.00

402(g) 15-year Cap Expansion

Employees with a minimum of 15 years of service with KU may be eligible for the 15-year cap expansion. This allows an employee to exceed the IRC section 402(g) limit ($15,500 in 2007) by the lesser of:
    1) $3,000
    2) $15,000 reduced by amounts not included in gross income for prior taxable years by reason of this cap expansion option
    3) $5,000 multiplied by years of service at KU, minus all amounts of prior years' contributions that were due to prior elective deferrals

However, the 15-year cap expansion can only be utilized if the limits calculated under section 415(c) exceed the current year's 402(g) limit.

Under the 15-year cap expansion, there is a $15,000 lifetime limit (regardless of employer) for amounts contributed after 1987 that were over the 402(g) limit. Once the $15,000 lifetime limit is reached, the 15-year cap expansion may not be used again.

414(v) Age 50+ Catchup

Employees that are age 50 or older on or before December 31st of 2007 are eligible to contribute an additional $5,000.00.

For further information, please contact:

Mary Karten
Benefits
864-7346
135 Carruth-O'Leary Hall
mkarten@ku.edu

rev 09/05 USS