EFTA00729322.pdf

:Ca: HARVARD UNIVERSITY la O%/ice fit ihtman Resources / , .. 7 i. • Z .., N 'N14 / 1 ' ' / • - i ., N • , . set 14 / ••,;, , •• ,• • ^ \ \ \i . . • • \ ...". • ) • • / ." \ .14 / . .... '‘ • A • •14/ .,\ ; N -\:' ,. :5\ / . / •, .' N. „,. i _ ••• •t, \ es : f ' ..; ' ' .- • / • • N. . 1.• j• N •••• /‘ 1-‘ ..., \/ 14 / • • .\ r • • , N 14 / •\ •• • : /i f / \ ''''' k•••• . •`\‘ ' ; ./: .. '1 4 / - //- \ .• • ' -1 V 14/ : \ 4INK, N. - ‘N /.• J . \ ../ ,.." (.: \. • ; \ •1 ••••• .. " /‘, & -, r \ • •• Of \... - ' i ' --• ‘ 14 / . \ . 7 •1 .".., ti \ „ " \. )",....1 14,/ . l ‘,. •-:‘ ‘. en nccinie Pla for Teaching Faculty of Harvard University ummary Plag,Descriplion_ EFTA00729322 This summary plan description (SPD) applies only to participants in the Retirement Income Plan for Teaching Faculty of Harvard University. This SPD is also available on the benefits Web site at www.atwork.harvard.edu. Participants who are eligible for in the 2001 Retirement Program should refer to the separate summary plan description of the 2001 Retirement Program for a description of their benefits. This program is governed by the terms and conditions described in the legal plan documents. which may be reviewed in the Office of Human Resources. If there are differences between this summary and the plan documents, the plan documents will govern. The Benefits Services Group in the Office of Human Resources. Holyoke Center. Sixth Floor at (617) 4964001. is available to answer your questions and provide assistance. EFTA00729323 Table of Contents Introduction 1 When Benefits Are Paid 8 Retirement. Death or Plan Highlights 1 Other Termination of Employment 8 Plan Design 1 Benefits Paid While Employed Eligibility 1 After Your 65-' Birthday 8 Participation 1 Minimum Distributions After Age 701/2 8 Vesting 1 Qualified Domestic Benefits 1 Relations Order (QDRO) 9 Retirement Income Plan for Death Benefits 9 Teaching Faculty 2 Pre-Retirement Death Benefits 9 Eligibility 2 After Payments Begin 9 Loss of Eligibility 2 Disability 9 Participation 3 Other Retirement Income 10 Waiting Period 3 Tax-Deferred Annuity Plan 10 Contributions 3 Social Security 10 Contribution Rates 3 Applying for Benefits 10 Maximum Contribution 4 When Benefits Are Lost or Reduced 11 Annual Limit on Total Retirement Contributions 4 Other Important Information 11 Sabbatical Leaves and Unpaid Leaves 5 Plan Identification 11 Plan Sponsor 12 Investment Options 5 Plan Administration/Legal Process 12 Investment Changes and Fund Transfers 5 Benefits Administrative Committee 12 Plan Year 12 Benefits 6 Future of the Plan 12 Vesting Requirements 6 Plan Termination Insurance— Pension Benefit Guaranty Corporation 12 Forms of Benefits 7 Annuity Income 7 Your Rights Under ERISA 12 Installment Payments and Receive Information About Your Lump-Sum Withdrawals 8 Plan and Benefits 12 Possible Tax Implications Prudent Actions by Plan Fiduciaries 13 of Receiving Distributions 8 Enforce Your Rights 13 Spousal Waiver Provision 8 Assistance with Your Questions 13 Directory 14 Investment/Annuity Companies 15 EFTA00729324  Introduction T his booklet describes the Retirement Income Plan T he compensation taken into account is subject to for Teaching Faculty of H arvard University, as in an Internal Revenue Code maximum of $200,000 effect on January 1, 2002. Established July 1, 1973, for 2003. T his amount is adjusted from time to this Plan provides retirement income benefits based time by the IRS to reflect cost-of-living increases. on University contributions paid to selected funds Eligibility offered by the investment vendors listed in this SPD. You are eligible for this plan if you are employed T his Plan is an important part of your benefits by the University, you are at least age 21, and either program, and you should take time to become you hold a professorial appointment or your primary familiar with its terms. You may contact the appointment is as a member of the teaching faculty Benefits Services Group in the 0 ffice of H uman and your combined teaching faculty positions Resources at (617) 496-4001 for assistance and to amount to at least a half time. C ertain others may answer your questions. be eligible, as discussed under Eligibility. Participation Plan H ighlights Eligible faculty are enrolled after a six-month waiting period, and an individual who becomes a participant after six months receives retroactive contributions T his section highlights the major features of the for the six-month waiting period (provided that plan and is intended only for your broad under- the individual was not receiving contributions standing of its provisions. If you have specific under another University retirement plan during questions about plan provisions, or you need to the waiting period). act on any of its requirements, you should consult Vesting the more detailed summary plan description (SPD) D) that follows and the legal plan documents. Faculty hired before July 1, 1995, are immediately vested (entitled to plan benefits when they leave Plan Design H arvard) upon enrollment in the plan. Participating T he U niversity funds the retirement benefit by faculty hired on or after July 1, 1995, will be fully making contributions to the investment funds you vested upon the earliest to occur of the following: designate from those approved under the plan. • Completion of three years of eligible service; T hese funds are offered by the investment vendors listed in this SPD. University contributions are • Attainment of age 65 while still employed; based on your age and compensation as follows: • 0 nset of total disability; If You H ave Not Attained Age 40 Before the First • Termination of the plan; or Day of the M onth-5% of your compensation up to the Social Security tax base (587,000 in 2003) plus • Death. 10% of your compensation over that tax base. Benefits If You H ave Attained Age 40 Before the First Day If you are vested when you retire or leave H arvard, of the M onth-10% of your compensation up to the accumulated contributions, plus earnings (if any), the Social Security tax base, plus 15% of your can be paid to you in a lump sum, as a lifetime compensation over that tax base. income under various forms, or under other pay- ment arrangements available from the investment 1 vendors. EFTA00729325 Retirement Income Plan for Teaching Faculty Eligibility • Persons who were former participants in this Plan, the 1950 Plan, the 1946 Plan, or the You are eligible for this plan if you are employed Trustees' Plan, who returned to H arvard on at at H arvard and: least a half-time basis after a break in service • You hold an appointment as a professor, of less than 50 months or less than the period associate professor or assistant professor or of prior participation in one or more of the as president or provost of the University or foregoing plans and any other H arvard plan. • As determined by the appropriate dean, you • Visiting professors and certain other persons hold as your primary appointment the title of holding visitors' appointments for at least a instructor, lecturer, critic, tutor, fellow, visiting full term of instruction. scholar or preceptor, and your combined You are not eligible for this plan if you: appointments amount to at least a half-time employment status. • Are a temporary or leased employee; Also eligible for this plan are: • H ave an appointment without salary; • Persons who were transferred to this plan, • Are a H arvard C ollege degree candidate; effective July 1, 1989, from the Retirement Plan • Area full-time graduate degree or Extension for Officers of Instruction and Administration, School degree candidate who has not completed 1950 (the "1950 Plan") and have continuously the degree requirements; held officer appointments. T hat transfer, prompted by tax code changes, applied to • Are in an in-training status and receiving a T IA A -C REF participants whose total H arvard stipend; or compensation between July 1, 1988, and • Are accruing a benefit under another June 30, 1989, exceeded $75,000. University retirement plan. • Persons who were transferred to the plan Loss of Eligibility effective January 1, 2000, from the Section 403(b) Plan for Trustees for H arvard Participants who lose their teaching faculty status University (the "Trustees' Plan") or who will lose eligibility for this plan with the exception were participants in the Trustees for H arvard of those non-teaching participants who were in the University Retirement Plan for Officers of 1950 Plan, 1946 Plan or Trustees' Plan and qualify Instruction and Administration (1946) (the on the basis of the provisions described above for "1946 Plan") on June 30, 1976 and have contin- non-faculty participants. uously held such an appointment as an officer. • Persons who have continuously held officer appointments with the University since June 30, 1973, who would have been enrolled in the 1950 Plan, except for the fact that it was closed to new members on July 1, 1973. 2 EFTA00729326  Participation Contributions Waiting Period As a participant, the University makes monthly pension contributions on your behalf to the fund(s) You will be eligible to participate in this plan you have selected. If you became a participant after on the first of the month after you complete six six months of qualifying service, you also receive months of qualifying service, provided you are retroactive contributions for your six-month waiting at least age 21. "Qualifying service" includes period. Contributions are based on your age and half-time or greater service in an eligible status your University compensation. described above and service as a regular, benefits- eligible staff employee For this purpose, "compensation" includes base salary, Summer School, Extension School, summer You would also become eligible to participate in research salary, merit bonuses and additional com- the Plan upon completion of a year of service pensation for special projects. Compensation does during which you are credited with at least 1,000 not include housing allowances, mortgage subsidies, hours of service. For determining whether you prizes, awards, honoraria, severance payments, have been credited with 1,000 hours of service in imputed income from interest-free or low4nterest a year, the University will initially consider the loans, or benefits under any other U niversity benefit 12-month period beginning with your date of hire; plan. Compensation does include any amounts that thereafter, the University will base its determina- would have been included in compensation but for tion on each calendar year that begins after your an election under a cafeteria plan described in date of hire. Internal Revenue Code section 125, a qualified You are credited with an "hour of service" for each transportation fringe benefit program described hour you work for the University for pay. You also in section 132(f) of the Internal Revenue Code, a earn "hours of service" for certain periods during section 403(b) plan (such as the T DA Plan), or a which you are absent from the U niversity by reason section 457(b) plan. of military duty and for certain family and medical Contribution Rates leaves, as well as for hours (not in excess of 501 hours for any absence) for which you are paid by As a participant, the University will make monthly the University while away from work for certain contributions to the plan on your behalf based on other reasons: vacation and holidays, illness and the following contribution rates: disability, layoff, leaves of absence, and jury duty. If You H ave Not Attained Age 40 Before the First In general, hours credited for an absence from Day of the Month: 5% of your compensation work will be based on your regularly scheduled until your compensation for the calendar year has work hours. reached the Social Security tax base, plus 10% of any additional compensation for the year. 3 EFTA00729327 If You H ave Attained Age 40 Before the First Day If you are not subject to Social Security taxes, of the Month: 10% of your compensation until you will receive contributions of 10% of your your compensation for the calendar year has compensation if you have not attained age 40 before reached the Social Security tax base, plus 15% the first day of the month. If you have attained age of any additional compensation for the year. The 40 before the first day of the month, you will receive Social Security tax base is adjusted each year. For contributions of 15% of compensation. 2003, it is $87,000. Maximum Contribution If you attain age 40 during a month, your contribu- Federal law limits the compensation base on which tion rats will increase to 10% and 15% at the start pension contributions can be made to $200,000 a of the following month. year. T his amount is adjusted from time to time. The following examples show contributions on a Annual Limit on Total Retirement calendar year basis, using the 2003 Social Security Contributions tax base of $87,000: In addition to the above limits, the Internal Revenue If you are under age 40, with a 530,000 Code imposes an overall limit of $40,000 for University salary: each calendar year on the following retirement 5% x $30,000 = $1,500 contributions made by you or for your benefit: Total 2003 Harvard contribution = $1,500 1. H arvard's contributions under this plan; If you are under age 40, with a 590,000 2. Your contributions under H arvard's T DA Plan, University salary: other than special "catch-up" contributions; 5% x $87,000 = $4,350 3. Your contributions under any Keogh plan you 10% x $3,000 = $ 300 maintain with respect to outside, sdf-employment lbtal 2003 Harvard contribution = $4,650 income; If you are over age 40, with a 535,000 salary: 4. Any other contributions under a 403(b) retire- 10% x $35,000 = $3,500 ment plan maintained by another tax-exempt employer; and lbtal 2003 Harvard contribution = $3,500 5. Any contributions (your own or your employer's) If you are over age 40, with a 590,000 salary: under a qualified retirement plan maintained 10% x $87,000 = $8,700 by a corporation or a partnership in which 15% x $3,000 = $ 450 you have more than a 50% interest. Total 2003 Harvard contribution = $9,150 4 EFTA00729328  H arvard monitors compliance with the $40,000 Investment Changes and Fund Transfers limit to the extent it has a record of your You may change how U niversity contributions are contributions. It is your responsibility to notify the invested at any time. Changes among the funds University of any contributions in addition to those offered by an investment vendor can be made under (1) and (2) above. IRS regulations require by calling that vendor. If you want to change the that 403(b) contributions—that is, contributions investment of contributions from one investment described in (1), (2) and (4) above—are reduced vendor to another, you must notify the University. first to satisfy the limit. Accordingly, to the extent Generally, you may transfer funds without restriction necessary to meet the IRS limit, H arvard will cut among the accounts offered by the various investment back your contributions to the T DA Plan first and vendors. Transfers out of the T IAA Retirement then the contributions made for you to this plan. Annuity can generally be made only over a ten-year Sabbatical Leaves and Unpaid Leaves period in substantially equal payments. During sabbatical leaves, the University makes The plan is intended to constitute a plan described contributions for you upon your return, based on in section 404(c) of the Employee Retirement the H arvard salary paid to you during the leave, Income Security Act (E R I SA), and Title 29 of the and makes no contributions during an unpaid leave Code of Federal Regulations Section 2240.404c-1. of absence. T he plan offers you and your beneficiaries the opportunity to exercise control over the assets con- tributed and accumulated on your behalf under the plan by allowing you to choose, from a broad range Investment 0 ptions of investment alternatives, the manner in which these assets will be invested, and by providing you with The investment vendors currently available to you information necessary to make informed decisions under the plan are listed under Investment/Annuity with respect to the investment options under the Companies. For information about specific funds plan and the incidents of ownership that arise from contact the investment company or the Benefits those investments. T he fiduciaries of the plan Services Group staff at (617) 496-4001 or the (including the investment vendors) are obligated benefits Web site at www.atwork.harvard.edu. (with certain limited exceptions) to comply with The University reviews the investment options from these instructions. As a result, fiduciaries of the time to time, and reserves the right to add or delete plan are generally relieved of liability for any losses funds as it deems desirable. With respect to contri- which are the direct and necessary result of invest- butions made during a period that a participant has ment instructions given by you or your beneficiary. not signed any annuity or mutual fund application, or has otherwise failed to provide investment instructions, the U niversity also has the authority to select one or more "default" investments. 5 EFTA00729329 T here may be commissions, sales charges, redemp- • Copies of any prospectuses, financial statements tion or exchange fees, or other transaction fees and reports, and of any other materials relating or expenses which directly affect your annuity to the investment options available under the contracts and custodial account under the plan. plan, to the extent this information is provided Additionally, the funds underlying many of the to the plan; annuities and the custodial account may themselves • A list of assets comprising the portfolio of pay certain fees to thdr investment advisors or other each investment option which constitutes service providers. Any such fees or expenses, plan assets within the meaning of E R I SA whether deducted directly from your contracts regulations; or account or paid indirectly by the investment vendors or the underlying funds, effectively reduce • Information concerning the value of shares or the return on your contracts and account. For more units in each investment option, as well as past specific information, please consult the investment and current investment performance of such information (including prospectuses) provided to alternatives, determined, net of expenses, on a you for and by each investment vendor or contact reasonable and consistent basis; and the investment vendors directly. • Information about how to obtain the value of If any voting rights, tender rights, or other similar shares in an investment option held for your rights are incidental to your interest in any annuity benefit. contract or custodial account under the plan, such rights may be passed through to you. For specific information with respect to an annuity contract or custodial account, please consult the investment Benefits information provided to you for and by each investment vendor or contact the investment The plan provides various forms of income benefits vendors directly. —annuity income, installment withdrawals, and lump-sum payments. Annuity income is available You may obtain the following additional information from T IAA -C REF. Accumulations with other concerning the investment options available under investment vendors can be taken in a lump sum, the plan by contacting the investment vendors: installments or under other payment arrangements • A description of the annual operating expenses approved by the vendors. At T IAA -C REF, lump- of each designated investment option (e.g., sum withdrawals from CREF are possible. T IAA, investment management fees, administrative however, generally limits withdrawals to substantially fees, transaction costs) which reduce the rate of equal payments over a ten-year period. return to participants and beneficiaries, and the Vesting Requirements aggregate amount of such expenses expressed as a percentage of average net asePts of the Your right to a benefit depends on whether you designated investment option; are vested under the plan. If you have satisfied the vesting requirements, you have a non-forfeitable right to receive benefit payments when you leave U niversity employment. Faculty employed before July 1, 1995 are not subject to any vesting requirement 0 nce enrolled 6 in the plan, they are fully vested. EFTA00729330  Faculty employed on or after July 1, 1995 will be If you choose an annuity, you should read carefully fully vested in their retirement benefit upon the the provisions of your annuity contact(s). Restrictions first to occur of the following: in addition to those described in this plan description may apply. • Completion of three years of vesting service with the U niversity or certain other employers Single Life Annuity affiliated with the University; The single life annuity provides a monthly income to you for life. Because it is paid for your lifetime • Attainment of age 65 while an employee of the only, it provides a higher benefit than any of the U niversity or one of certain other employers joint annuities. T his form is generally chosen affiliated with the University; by participants who are not married. If you are • Onset of total disability; married, your spouse must consent to this form of payment. • Death; or You can choose a guaranteed payment period (eg., • Termination of the plan. ten, 15 or 20 years). The amount of your benefit Vesting service is generally credited for each month would be reduced to pay for this guarantee. If you die in which you are employed (but not on an unpaid before the guarantee period has ended, continuing appointment) by the U niversity in any position, payments in the same amount would be made to regardless of the number of hours completed. your named beneficiary for the balance of the period. Joint and Survivor Annuity A joint and survivor annuity provides a lifetime Forms of Benefits benefit to you, and upon your death, continuing lifetime payments to your spouse or designated survivor. You can choose continuing payments of Annuity Income at least 50% but not more than 100% of the benefit An annuity pays you a lifetime income The you receive. amount of annuity income depends on your age, the form of payment and the total accumulation in By law, if you are married, you must choose a your account(s) at the time benefits begin. The survivor annuity for your spouse of at least 50% younger you are when payments begin, the smaller unless your spouse consents in writing to another the monthly benefit. Monthly benefits that begin form (see Spousal Waiver Provision). at an older age will be greater because your life Guarantee periods also are available under the joint expectancy will be shorter. annuities. If you and your joint annuitant die before the guarantee period has ended, payments would continue to your designated beneficiary. 7 EFTA00729331 Installment Payments and Lump-Sum T his is done by filing with the University a waiver Withdrawals of the benefit signed by you and your spouse and witnessed by a notary public or plan representative. Instead of taking an annuity, you can withdraw your accumulated funds in one sum or in For retirement benefits, the waiver of the joint and installments. Mutual fund balances and CREF survivor annuity can be made only during the 90 accumulations can be taken in a lump sum. After days prior to the start of your benefits. T he waiver the initial election, your accumulation in a T IAA also may be revoked during that period; it may not contract generally cannot be taken in a lump sum; be revoked after the annuity begins. however, it can be withdrawn in equal installments For death benefits, your spouse's right to waive over a ten-year period. If you are married, your entitlement does not begin until the first day of the spouse must consent to any installment or lump plan year (see Other Important Information) in sum withdrawal (see Spousal Waiver Provision). which you reach age 35, or if earlier, the date you Possible Tax Implications of Receiving leave Harvard's employment. If you should die before Distributions age 35, at least 50% of the full current value of your The rules concerning federal and state income annuity accumulation is payable automatically taxation on payments from the plan are complicated to your spouse in a single sum or under one of the and you are Jfrongity encouraged to seek professional income options offered. tax advice before receiving any payments or selecting any payment option. For example, if your benefit or any portion thereof is paid in a lump sum, the W hen Benefits Are Paid amount paid will generally be subject to 20% federal income tax withholding (and an additional 10% federal penalty if you have not yet attained age Retirement, Death or Other Termination 591,2). Lump-sum payments may be eligible for a of Employment tax-free rollover to an individual retirement account Except as described below, you cannot be paid (IRA) or to certain other types of plans. You may or withdraw amounts from any annuity contract elect to transfer such a distribution directly to an or mutual fund custodial account prior to your IRA or other eligible retirement plan that accepts retirement, death, total disability, or other rollovers. Contact the Benefits Services Group or termination of employment with the University. the investment vendors directly for more information on these transfers. Benefits Paid While Employed After Your 65th Birthday Spousal Waiver Provision If you are age 65 or older and are employed by If you are married, by law, your spouse has certain the University on a half-time or less basis, you can rights to your retirement and death benefits. If you receive payments from the plan. choose to take your retirement benefit in a form that does not provide at least a 50% survivor Minimum Distributions After Age 701/ 2 income to your spouse, or you name someone By law, you are required to receive minimum other than your spouse as your beneficiary for distributions from your pension accumulation by death benefits, your spouse must consent in writing. the April 1 following the calendar year in which you attain age 701/2, if you are retired. 8 EFTA00729332  Qualified Domestic Relations Order After Payments Begin (QDRO) If you choose a joint annuity form of retirement All or part of your pension benefits may be income, your joint annuitant is entitled to continuing assigned to another person (alternate payee) if lifetime payments following your death (see Forms a qualified domestic relations order has been issued of Benefits). The amount depends on the percentage by a court. Any such distribution of benefits to an option you elected. Under a single life option with alternate payee (usually your ex-spouse) must a guarantee period, your beneficiary would be be in a form permitted under the plan, but may be entitled only to any remaining payments under the paid at a time that benefits are not available to you. guarantee. N o death benefit would be paid if you Arrangements for this distribution must be made took out your benefit in a lump sum or as a single with the Benefits Services Group. You may obtain life annuity. from the Benefits Services Group, without charge, a copy of the program's procedures for determining whether a domestic relations order is a qualified domestic relations order. Disability If you become disabled and receive total disability benefit payments under the H arvard University D eath Benefits Flexible Benefits Plan, pension contributions, based on the salary in effect at the onset of your disability, Pre-Retirement Death Benefits will continue to be paid on your behalf. If you die before your benefit payments begin, The amount of the pension contribution will not the full amount of your retirement accumulation is be adjusted for changes in the Social Security wage payable to your beneficiary. The law provides that base after you become disabled, but it will increase if you are married at the time of your death, your at age 40 when the contribution rates change surviving spouse is entitled to a benefit of at least from 5%-10% to 10%-15% as described in 50% of the full current value of your annuity Contributions. Plan contributions will continue accumulation unless prior to your death your