The Kansas Board of Regents Voluntary Retirement Plan is an IRS 403(b) plan. It helps all benefits-eligible university support staff and unclassified faculty and staff accumulate personal savings for use as future retirement income. This program is in addition to mandatory retirement contributions made through the Kansas Public Employees Retirement System (KPERS) and the Kansas Board of Regents retirement plan. Participation in the Voluntary Retirement Plan is voluntary and may begin at any time regardless of the eligibility date for mandatory retirement. There are no employer contributions.

Beginning January 2011, 403(b) Voluntary Retirement Plan payroll deductions can be made on a pre-tax and/or Roth after-tax basis.

403(b) pre-tax contributions are excluded from the current year's income which results in a lower income being reported to the IRS for federal and state tax purposes. Taxes on these contributions, as well as the investment earnings on them, are postponed until distributions from the 403(b) contract begin, usually after retirement

403(b) Roth after-tax contributions offer the potential for tax-free income at distribution; however, certain qualifying conditions apply. Please see the Kansas Board of Regents web page for more information: http://www.kansasregents.org/voluntary_retirement_plan.

To participate in the VTSA program:

1. Contact Benefits and ask for a Voluntary Retirement maximum deferral calculation. In a calendar year, voluntary 403(b) contributions may be made up to the calculated maximum. Pre-tax and Roth after-tax contributions are aggregated and cannot exceed the overall annual 403(b) allowable 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, to terminate employment or retire, or to change your appointment status in any way. Such changes could affect the outcome of the calculation.)

2. Contact one of the approved Voluntary Plan Retirement companies, or one of its approved representatives, and complete an application to establish an account, choose investment allocations, and name beneficiaries. This account needs to be established before the first contribution is remitted to the company.

3. Complete a 403B Retirement Plan Investment Agreement form:

Roth after-tax Investment Agreement form

Pre-tax Investment Agreement form

Indicate the percentage of salary or set dollar amount to be deducted from each bi-weekly paycheck. The completed form(s) should then be returned to Benefits. Forms received in 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 deduction amount may be changed/stopped at any time during the year by submitting to Benefits a new Retirement Plan Investment Agreement form.

Benefits will send Voluntary Retirement Plan contributions to the company of your choice at the end of each bi-weekly pay cycle and monitor contributions 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.

Pre-tax and Roth after-tax contributions are aggregated and cannot exceed the overall annual 403(b) allowable maximum.

Calculation of VTSA 403(b) Deferral Limits

The calendar year 2012 limit is the lesser of:

IRC section 415(c) 100% of includible compensation or $50,000.00

IRC section 402(g) $17,000.00

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 ($16,500 in 2010) 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

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 cannot be used again.

414(v) Age 50+ Catchup

Employees that are age 50 or older on or before December 31, 2012 are eligible to contribute an additional $5,500.00.

For further information, please contact:

Mary Karten
Benefits
785/864-7346
135 Carruth-O'Leary Hall
mkarten@ku.edu

rev 01/12 USS