What is this account? University retirement benefit

[Fatmouse]

My fiancé has a retirement benefit that I do not really understand.  He works for a University, and I believe it is a 403b plan, but it has some strange features.

It is a defined contribution plan.  The University pays a generous percentage of his salary into this plan.  However, it does not appear there is any mechanism for the Employee to make any contributions at all!  Also, there is a statement in the program materials that the Employer contribution may be limited by "IRS limits", which I assume is the $17,500 limit.

Can this be right?  I have never heard of a retirement plan where an employee cannot contribute.  Also, in my 401k, I am pretty sure the "employer match" does not count toward that $17.5k limit.  Does my fiance's retirement program make sense to any Mustachians out there?

[NinetyFour]

He should talk to the folks in his Human Resources department.

At the college where I work, I have a TIAA defined contribution retirement account, but I can also defer more income into a 403B account.  I had to call TIAA to have them set up a separate account, and then I filled one a one page form with my HR office to defer the extra income into the 403B account.

I hope he can get the info so that he can take advantage of it!

[nereo]

It sounds similar to what the University of California (UC) has.  Like NinetyFour said, he should speak with HR about this to get specific details.  There is often periods of vestment and other peculiarities both of you should understand.

[NinetyFour]

If I were under my state's public employees retirement plan (PERA), I would have access to a 457.  But I am not.  So I just have access to the 403b (in addition to the regular retirement plan.

Knaak--are you sure you can contribute $17,500 per year to EACH plan?  For me, I'm pretty sure I can contribute $23,000 (because I am old) TOTAL--not to EACH plan.

[ToughMother]

457 and 403? SWEET.  I have that too.  I recommend (and also do myself) contribute to the 457 first.  It has no age-limits regarding taking out the money when you separate from service... No 59.5 to deal with, no penalties (very awesome for a potential early retiree).

Also the limits are separate for those two accounts.  50 or over? Yup, that's $23K that can be contributed to each account.

http://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You’re-Eligible-for-More-than-One-Retirement-Plan%3F

[NinetyFour]

Also the limits are separate for those two accounts.  50 or over? Yup, that's $23K that can be contributed to each account.

Wow--that is sweet!

[NinetyFour]

Actually, I wouldn't be able to max out 2 x $23,000 per year anyway--at least not while I'm making mortgage payments.  But your planning sounds great.

I'll pass on looking at rootofgood's stuff.  He chose not to repay his student loans, and that kind of turned me off.  If I chose not to repay my loans, I could quit work right now, but I wouldn't sleep well, and I certain wouldn't brag about retiring early.  Sorry--that was probably more than you wanted to hear.

[Fatmouse]

Thanks all, fiancé will speak to his HR folks.  I am just dumbfounded that, with all of the guidance available on the University website that I have reviewed, employee contribution opportunities are not better promoted or explained.  But clearly there must be a way. 

Feeling particularly spoiled by my 401k online tools.  All kinds of bells and whistles, planning tools, ability for me to change my contribution rates and investments effective with the next cut paycheck.  In comparison, this University thing seems... Old.

[nereo]

Thanks all, fiancé will speak to his HR folks.  I am just dumbfounded that, with all of the guidance available on the University website that I have reviewed, employee contribution opportunities are not better promoted or explained.  But clearly there must be a way. 

Yup.  My guess is this is the result of two factors at work:  A low overall participation rate (if the latest research is to be believed, less than half participate at all) and the fact that everyone who does participate costs the university more money. 
Ironically, having a good benefits package is a great recruitment and retention tool, but it is a drag on the university for employees that are already there and do not plan on leaving.

[NinetyFour]

457 and 403? SWEET.  I have that too.  I recommend (and also do myself) contribute to the 457 first.  It has no age-limits regarding taking out the money when you separate from service... No 59.5 to deal with, no penalties (very awesome for a potential early retiree).

Also the limits are separate for those two accounts.  50 or over? Yup, that's $23K that can be contributed to each account.

http://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You’re-Eligible-for-More-than-One-Retirement-Plan%3F

Sorry for the thread hijack, but I just checked with my HR department and found out that I can contribute $23,000 to my "regular" retirement fund through TIAA and ANOTHER $23,000 to my 403(b) plan! 

Now, since the first is only 8% of my gross, it won't get anywhere near $23,000, but it will be about $8000.  I had been thinking that this would mean I'd have to keep my 403(b) contributions at or below $15,000 (so that together they would not exceed $23,000).  But that is wrong--now I know (because of this thread, and ToughMother in particular) that I can put an additional $23,000 in my 403(b).  (Don't know if I will be able to put that much aside, but nice to know that I can!)

[ToughMother]

Sorry for the thread hijack, but I just checked with my HR department and found out that I can contribute $23,000 to my "regular" retirement fund through TIAA and ANOTHER $23,000 to my 403(b) plan! 

I'm another "late to the party' mustachian (life circumstances -- big bad illness where I had to live off of any savings, so only now working again and (re)building up the stache) and was super thrilled to see these opportunities to save save save.  Nice job @NinetyFour!!!