Human Resources

The Indiana University Board of Trustees initially adopted the 18/20 Retirement Plan in 1959, with amendments in 1974, 1977, 1986, and October 1988 when the Board adopted the current Plan provisions

1. One year to six months before the intended date of retirement, the employee should contact IU Human Resources (UHR). The 18/20 Plan Administrator will prepare an estimate of potential 18/20 Plan benefits at that time.
2. The employee’s home department should be notified of the intention to retire well in advance of the effective date. Recommended notice periods are one semester’s notice for academic employees and three months notice for staff employees.
3. Approximately three months prior to the effective retirement date, if known by UHR, the potential 18/20 Plan participant will receive an email with an attached application and personal deduction form to complete and return to UHR. You can also download the forms.

Both Interim Benefits and Continued Contributions end at whichever of the following occurs first:

• 60 months of payments,
• Death, or
• Age 70

Go to the Employee Center, login, and change your direct deposit information.

The 18/20 Plan provisions include two distinct benefits, monthly Interim benefits paid to the participant and monthly Continued Contributions paid to the participant’s IU Retirement Plan account at TIAA or Fidelity.

The Interim benefit is the “paycheck” piece of 18/20. Interim benefit payments are based on a hypothetical single life annuity calculation, not to exceed a participant’s terminal base salary.

No, the 18/20 Plan does not include any residual benefits paid to a beneficiary, survivor, or estate. 18/20 Plan benefits are paid to the Plan participant only.

• Have at least 18 years of participation in the IU Retirement Plan 15% level
• Have at least 20 years of continuous full-time service
• Retire from IU on or after 64th birthday (see below for 10-pay employees)
• As an administrative practice, IU requires that you must be in a paid status for a minimum of a semester prior to retiring and being eligible for benefits under this retirement plan.

Yes, academic sabbaticals do count for service at IU. Sabbaticals do not constitute an interruption in service.

Faculty with a 10-pay academic-year appointment may initiate 18/20 Plan benefits just prior to age 64 on (assuming the other 18/20 criteria above have been met):

• January 1st, if their 64th birthday falls during the following Spring semester or
• July 1st, if their 64th birthday falls during the following Summer or Fall semesters

Yes, you can still receive 18/20 Retirement Plan benefits if you opt to retire after age 64. If benefits are initiated after age 65, the participant will receive less than 60 months of benefit payments. For example, initiating benefits at age 68 will result in the participant only receiving 24 months of 18/20 benefit payments.

Payments are made until the first occurance of 60 payments, age 70, or death.

If you decide to retire at age 70 or after, you will not receive any 18/20 Plan benefit payments.

No portion of the 18/20 Plan benefits will be paid in the event that an 18/20 eligible employee dies prior to age 64.

Annual Terminal Base Salary is the participant’s average budgeted base salary for the five 12-month periods immediately preceding retirement, divided by 5.

No, budgeted base salary does not include any supplemental payments, such as summer pay.

Prior to January 1, 1989, only one interruption in service of not more than two years is allowed, after that date, no interruption in service is allowed. Interruption in service means termination from IU. Leave with or without pay does not constitute an interruption in service. Periods of leave without pay do not count toward calculating years of full-time service, except for leave for an IU-approved prestigious fellowship.

Continued contributions are the monthly contribution to the participant’s IU Retirement Plan account at the 15% level. The annual continued contributions are based off of the following calculation:

• Eleven percent (11%) of the first $7,800 of Terminal Base Salary and fifteen percent (15%) thereafter.

Gainful employment by Indiana University and agencies or governmental units funded by the State of Indiana includes such entities as the IU Foundation and Purdue University. Gainful employment does not include voluntary services at Indiana University.

A monthly payment based on a retirement account balance at age 70 (or the end of the 18/20 benefit period, whichever is sooner), where account accumulations are based on:

• Actual IU Retirement Plan contribution dollars during the participant’s career at Indiana University and
• Investment performance assuming contribution dollars were at an allocation of 50 percent allocation to CREF stock and 50 percent to TIAA Traditional Annuity funds.

Terminal Base Salary is a maximum amount that can be received under the 18/20 Plan, not a guarantee. The most common factors as to why a person may not be at the terminal base salary maximum include:

• Disproportionately high base salary increases during the later years of employment
• CREF stock unit value at the time of retirement is lower than historical performance
• Annuity conversion factors used by TIAA applicable at the time of the participant's retirement
• Plan participant has only a number of years in the IU Retirement Plan at or close to the minimum required for 18/20 Plan eligibility, with both a smaller total amount of IU contributions and a shorter period of compounding investment returns.

University Human Resources (UHR) makes a number of assumptions when calculating benefits, including:

• Your specified anticipated retirement date
• All IU Retirement Plan contributions are split 50% TIAA and 50% CREF stock fund
• Investment performance is based on actual TIAA earnings and the most recent month end value of the CREF stock fund
• Annuity calculations are based on current TIAA factors applicable at the time of retirement
• Future fund earnings are based on a six percent (6%) factor
• Annual Interim benefit may not exceed the lesser of:
  • Terminal Base Salary
  • Hypothetical Single Life Annuity Amount

Final 18/20 Retirement Plan benefits are calculated at the end of the month you retire, and use the most up to date information available from TIAA.

To get an estimate, please contact IU Human Resources at . We will need to know who you are as well as an anticipated retirement date, and will gladly complete an estimate of your 18/20 benefits. The estimate will be emailed to you in a PDF file, once it is completed. Estimates will not be calculated in the last month prior to retirement.

University Human Resources (UHR) can project 18/20 Plan benefit estimates up to two (2) years out from your retirement date.

Yes, estimated benefits are subject to change because investment earnings, conversion factors, and monthly salaries used to prepare the estimate are subject to change.

Yes, 18/20 Interim benefits are considered taxable income and are subject to federal, state, and local income taxes. However, the interim benefits are not considered earned income and are not subject to FICA or employment taxes.

Yes, you may change your income tax withholding through One.IU (Federal � Indiana)

You will receive a W-2 from IU for your interim benefit. This form will need to be included for your income tax preparation.

Yes, upon retirement, a participant is considered to have terminated from Indiana University and has access to accumulations in the associated retirement account.

No, your own investments of your IU Retirement Plan account benefits do not have any impact to your 18/20 Plan benefits. In theory, you could do much better or much worse than the 50/50 split model that is used to calculate 18/20 Plan benefits.

No, once you retire, you are ineligible to contribute to the TDA or Retirement Savings Plan.

Gainful employment by Indiana University and agencies or governmental units funded by the State of Indiana includes such entities as the IU Foundation and Purdue University. Gainful employment does not include voluntary services at Indiana University.

For each month in which a participant is “gainfully employed” by Indiana University or any agency or government unit funded by the State of Indiana, he/she will forfeit both the Interim Benefit and Continued Contribution Benefit payments for that month.

Yes, every January and July for the previous 6 months, 18/20 Plan participants must file a Gainful Employment certification with IU Human Resources (IU HR). Failure to file this statement will delay benefit payments until UHR receives the statement.

18/20 Payments are made at the end of each month, with the exception of December, where no payment is made and thus, there will be both a beginning and end of January payment will be made. Please note that the 18/20 payments follow the same pay schedule as active monthly employees.

No, once you retire onto 18/20, you will be paid 12-times per year.

You will continue to retrieve your pay advice each month through the Employee Center, just as you do as an active employee.

Yes, you will receive a W-2 tax statement from IU each year to use when filing your income taxes.

Yes, the Interim benefit will be reduced by the Terminal Pay Amount, excluding any payment for Staff Honorary Leave. The reduction will be applied to the first monthly Interim Benefit payment and will continue until the total “reduction” is satisfied. However, the Terminal Pay reduction will not apply to continued contributions.