Human Resources

A supplemental retirement plan is a tax-qualified plan sponsored by Indiana University that enables an employee to save more beyond the base retirement plans. Contributions can be made on a pre-tax or after-tax (Roth) basis.

You may enroll in a supplemental retirement plan at any time throughout the year. If you are eligible, you may contribute to both plans or choose among them. You can also change your contribution amounts and allocations at any time.

Supplemental retirement plan options at IU include the Tax Deferred Account (TDA) Plan and the IU 457(b) Retirement Plan.

To begin making contributions to the IU TDA Plan or IU 457(b) Retirement Plan submit a Salary Deferral Agreement (available below) to IU Human Resources or submit an Optional Benefit Change online through the Employee Center. Once you have enrolled you will also need to establish a plan account through Fidelity NetBenefits, then select your investments and beneficiaries. 

• TDA Salary Deferral Agreement
• 457(b) Salary Deferral Agreement

At least once a year, or after any significant life event. It is important to keep your beneficiary designations up to date because named beneficiaries on insurance policies and retirement plans usually supersede instructions in wills. By periodically reviewing your beneficiary designations for your IU-sponsored benefit plans, you can rest assured that your assets will be distributed according to your wishes Follow the instructions to learn how to update your retirement plan beneficiaries.

Yes. The following types of pre-tax eligible rollover distributions can be accepted into the IU TDA and 457(b) plans: 401(a), 401(k), 403(b), Governmental 457(b), and IRA. After-tax Roth amounts from another employer retirement plan can also be rolled into the TDA and 457(b) plans. Roth IRAs can only be rolled over to another Roth IRA, therefore cannot be rolled into the IU plans.If you have 457(b) from a private university or college, it is classified as a non-governmental 457(b), which cannot be rolled into any of the IU plans. It is important to also note that there may be restrictions on the types of accounts certain assets may be moved into. Follow these instructions to initiate your rollover (PDF).

Yes. Participants may make after-tax Roth contributions to the Tax Deferred Account (TDA) and IU 457(b) Retirement Plans. When you contribute after-tax dollars to these plans, qualified distributions you take at a later time are tax-free. However, the entire contribution amount is included in your gross income so there is no tax savings during the year it is deducted from your paycheck. You can make your TDA and/or 457(b) contributions as tax-deferred, after-tax Roth, or any combination of both. Learn how to setup after-tax Roth contributions.

As a dually employed faculty member, you are eligible to make contributions to both IU supplemental retirement plans. However, we do not recommend participation in the IU TDA because it is a 403(b) and aggregates with your IU Health Physicians 401(k). Learn more about IRS contribution limits.

If you are eligible for more than one retirement plan, there is a limit on the amount that may be contributed through salary deferrals which must be aggregated (combined) for certain plans. The Internal Revenue Service (IRS) sets these limits annually and strictly enforces them.

See the Retirement Plan Contribution Limits page for current IRS limits. Use the 403(b) or 457(b) Contribution Calculators to help you determine your maximum allowed contribution.

Participants within a certain number of years of normal retirement age are eligible to contribute additional amounts to certain retirement accounts.

IU Tax Deferred Account (TDA) Plan
Participants who are at least age 50 before the end of the calendar year are eligible to contribute an additional amount for that calendar year. See the Retirement Plan Contribution Limits page for the current amounts.

IU 457(b) Retirement Plan
Participants who are at least age 50 before the end of the calendar year are eligible to contribute up to an additional amount per calendar year. Participants age 62, 63, and/or 64 may be eligible to increase their salary deferral contribution limit to twice the salary deferral limit, per year for one or more of the last 3 calendar years before attaining normal retirement age. This is a calculation of an employee’s under-utilized amount and not all employees are eligible. See the Retirement Plan Contribution Limits page for the current amounts.

Limitations may apply. Review th IU 457(b) Retirement Plan – Plan Document (PDF) for terms and conditions. NOTE: A participant may not make both age 50 or older catch-up contributions and age 62, 63, or 64 catch-up contributions to the plan in the same year.

The need to save more money for retirement years has never been greater. The rising cost of living, including healthcare expenses and increasing life expectancy, has dramatically increased the amount of savings a person will need during retirement years. Whether retirement is 30 years away or only a few years away, significant progress can be made toward accumulating more money for retirement years by starting now. Contributing even small amounts to an IU-sponsored supplemental retirement plan can help boost retirement savings.

For help with maximizing your retirement savings and other financial goals, meet with a Fidelity Workplace Financial Consultant for a one-on-one, on-site investment counseling session. IU participants also have access to attend events or webinars, and use of the resources found on the retirement education and guidance page.

Vesting is a legal term that means to give or earn a right to a present or future payment, asset, or benefit. In the context of retirement plan benefits, once a participant is fully vested, they own the balance of their plan account, and the employer cannot forfeit or take it back for any reason. Contributions to IU-sponsored supplemental retirement plans are always 100% vested and non-forfeitable.

Contributions to the supplemental retirement plans can be made on a pre-tax or after-tax Roth basis. Contributions can be a flat-dollar amount or a percentage of pay, but cannot exceed the IRS annual contribution limits. Use the 403(b) or 457(b) Contribution Calculators to help you determine your maximum allowed contribution.

To change your contributions at any time, submit a Salary Deferral Agreement(available below) to IU Human Resources or submit an Optional Benefit Change online through the Employee Center.

• TDA Salary Deferral Agreement
• 457(b) Salary Deferral Agreement

No. Employment taxes are deducted from your compensation before contributions are made to the plan. Therefore, making contributions to the plan will not reduce your compensation for purposes for calculating Social Security benefits.

It depends on the type of contribution you are making: pre-tax or after-tax Roth.

If you make pre-tax contributions, you will pay income tax on contributions and earnings only when they are distributed from the plan. These contributions are not included in your income reported to the federal, state, or local governments for income tax purposes when they are made to a plan. However, you and the university must pay employment taxes (i.e., Social Security taxes) on contributions when they are made to the plan.

If you make after-tax Roth contributions, the entire contribution amount is included in your gross income, but any qualified distributions taken at a later time are tax-free. A distribution is considered to be qualified when made after a 5 year holding period and are either made on or after the date you attain age 59½, made after your death, or attributable to your being disabled. The five-year holding period begins on January 1 of the year you make your first Roth contribution.

An after-tax Roth contribution will reduce your take-home pay more than if you made an equivalent tax-deferred contribution because the Roth contribution is subject to income tax when deducted from your paycheck.

Roth qualified distributions are tax-free when made after a 5 year holding period and are either made on or after the date you attain age 59½, made after your death, or attributable to your being disabled. The five-year holding period begins on January 1 of the year you make your first Roth contribution.

Below are some general statements that may help you decide if after-tax Roth contributions are right for you. Because everyone’s tax situation is unique, it is recommended that you speak to an investment advisor or a Fidelity Workplace Financial Consultant before making any significant changes to your retirement savings.

You might benefit from Roth contributions if you:

• Want qualified tax-free distributions in retirement.
• Cannot have a Roth IRA due to IRS income restrictions, but want a pool of tax-free money to draw from in retirement.
• Want to pass on assets tax-free to heirs.
• Have a long retirement horizon that will allow time to accumulate tax-free earnings

You might benefit from tax-deferred contributions if you:

• Want to lower your current taxes.
• Are close to retirement, expect to start taking distributions, and don’t have several years to wait for compounding of Roth contribution earnings to make up for the tax liability paid when Roth contributions are deducted from your paycheck.
• Don’t think you will meet the criteria for Roth distributions to be tax-free (for example, if the account won’t be open for at least 5 years and you won’t be at least age 59½ or disabled or deceased when a distribution is taken, then the earnings will not be tax-free).

Download Fidelity’s Roth Option Flyer for additional information and considerations.

No. IU only allows deferred contributions directly from your paycheck.

No. Deferrals cannot be made while on an unpaid leave of absence.

No. IU only allows deferrals directly from a paycheck. We do not permit contributions to be made for the previous year.

Yes. For information and to set up deferment your separation pay to the IU supplemental retirement plans, contact  30-60 days prior to your last day of employment.

IU Retirement Plan and Retirement & Savings Plan
Indiana University partners with Fidelity Investments to offer investment services for the IU retirement savings plan options. IU’s investment menu is designed to make it easier for you to build a diversified, lower-cost investment mix that matches your personal tolerance for risk. Investments are grouped into four tiers: Target Date Funds, Passively Managed Funds, Actively Managed Funds, and a self-directed brokerage account. You can create a tailored retirement strategy by investing in one or more options from any of the tiers. Explore IU’s investment menu.

PERF
PERF offers several investments options for participants to choose to invest money held in their Defined Contribution (DC) account. The default investment for all new participants is the PERF age appropriate target date retirement fund. For further information on the self-directed investment options, PERF's investment activities, and fund performance, visit the investments section of the PERF website.

Investment elections and beneficiary designations must be made separately for each plan you are enrolled in directly with the vendor. You may login to your plan account at any time to change your investment allocations, update your beneficiaries and more.

Vanguard Target Retirement Funds offer a diversified portfolio within a single fund that adjusts its underlying asset mix over time. The funds provide broad diversification while incrementally decreasing exposure to equities and increasing exposure to bonds as each fund’s target retirement date approaches. The funds continue to adjust for approximately seven years after that date until their allocations match that of the Target Retirement Income Fund. Investors in the funds should be able to tolerate the risks that come from the volatility of the stock and bond markets.

An employee picks the Vanguard Target Retirement Fund with a target retirement date closest to when the employee wants to retire and money managers at Fidelity Investments will do the rest. Learn more about each target date fund by clicking on the ticker symbol of the appropriate fund on the Investment Options page.

The following are common fees and expenses assessed by Fidelity. Information on a fund's current and historical investment performance, as well as a breakdown of the fees assessed by Fidelity for their funds, may be found in each fund’s prospectus. A fund prospectus may be requested by calling 800-343-0860 or by logging in to Fidelity NetBenefits.

• Annual Recordkeeping Fee: Annual fee for recordkeeping, flat-dollar amount billed quarterly and automatically deducted from your account(s).
• Investment Management Fees: Fees for the fund(s) a participant has elected to invest in.
• Transaction Fees: Fees for loan initiation and maintenance or for full distributions
• BrokerageLink® Fees: Commission charges (view the Commission Schedule (PDF))

At this time, no new fees will be imposed on any legacy TIAA annuity accounts. However, TIAA will continue to assess an asset-based fee that covers the investment management and administrative recordkeeping costs of these assets.

Participants should contact their investment company directly for more information about fees.

If you do not make any investment elections, your funds will be placed into the plan’s default investment option – a Vanguard Institutional Target Retirement Date Fund based on the year you turn age 65.

Yes. Distributions can be taken from your Tax Deferred Account (TDA) and IU 457(b) accounts held at Fidelity while still employed by the university after you reach age 59½.

Federal law requires participants to begin receiving at least a partial distribution of tax-deferred retirement account funds by April 1 of the calendar year following the year he/she reaches age 72, or upon retirement/separation, whichever is later. Failure to withdraw the required minimum distribution annually by the applicable deadline can result in substantial tax penalties.

A participant may choose to receive a distribution of their Plan account in any one of the following forms or combination of forms:

• Single sum distribution of cash
• Annuity
• Installment
• Any legally permissible form of distribution permitted by an authorized investment company

It depends if you made pre-tax or after-tax contributions to the plan.

Retirement contributions that are made with pre-tax dollars will be subject to Federal income tax requirements when you take a distribution from your account. Plan distributions are generally subject to a 20% mandatory federal income tax withholding rate. This mandatory withholding will reduce the amount you actually receive upon withdrawing funds from the plan. However, the amount withheld will be credited against any taxes you owe for the year when you file your annual tax return. There are exceptions to the mandatory federal income tax withholding rule, including receiving the Plan distribution as a life-time annuity payment or directly rolling over the Plan distribution to an eligible retirement plan (e.g., an IRA).

Distributions of after-tax Roth contributions to the Tax Deferred Account (TDA) and 457(b) plans are tax-free when they are a “qualified” distribution. A distribution is considered qualified if it is made after a 5 year holding period and is either made on or after the date you attain age 59½, made after your death, or attributable to your being disabled. The five-year holding period begins on January 1 of the year you make your first Roth contribution.

Roth qualified distributions are tax-free when made after a 5 year holding period and are either made on or after the date you attain age 59½, made after your death, or attributable to your being disabled. The five-year holding period begins on January 1 of the year you make your first Roth contribution.

A direct rollover of an eligible rollover distribution may be made at the participant's election. A direct rollover is a payment of an eligible rollover distribution from the Plan directly to another eligible retirement plan, such as a 401(a) plan, 403(b) plan, 401(k) plan, governmental 457(b) plan, or IRA. However, certain types of distributions, such as life-time annuity payments, are not eligible for direct rollover treatment.

No. Hardship distributions are not allowed to be taken from any IU-sponsored retirement plan.

Yes. A loan may be available from your IU supplemental retirement plan accounts (IU TDA or 457(b)). You are limited to one loan across all of your IU supplemental retirement plan accounts held at Fidelity.
Before you make the decision to take a loan from your account, consider the following:

• Loans are subject to both federal tax code and investment company rules and regulations.
• In most cases, you don’t pay taxes or penalties on a loan but you do repay the loan with after-tax dollars plus interest and there may be additional fees.
• Fidelity On-Demand Workshop: Understanding Plan Loans

To request a loan, contact Fidelity at 800-343-0860 or log in to your Fidelity NetBenefits account and select ‘Loans or Withdrawals’ from the Quick Links menu next to the plan name.

If you pass away, your account balance will be distributed to your designated beneficiary(ies). You may designate any person or entity as a designated beneficiary.

No. You must contact the investment vendor directly to coordinate your distribution.

A participant is not required to cash-out or transfer their Plan account upon termination of employment. Upon termination of employment, a participant may:

• Leave accumulations in the Plan account and continue to manage investments;
• Withdraw all or a portion of Plan account accumulations (subject to income taxes and/or penalty taxes); or
• Roll over all or a portion of Plan account accumulations to an eligible retirement plan (e.g., an IRA).

After terminating employment with Indiana University, most transactions related to a participant's Plan account are handled directly by the participant with the applicable investment company.

If you retire from IU and begin taking distributions from an IU retirement plan, you may be re-employed by IU as long as the IRS rules of a bona fide separation have been followed. A bona fide separation consists of the following requirements: 1) a 30-day break in employment and 2) no verbal or written arrangements for re-employment can be made prior to, or as a part of, retiring from IU. 

The only exception to this rule is if you are at least age 62 and meet the eligibility retirements for IU Retiree Status upon separation. Employees who meet these requirements can return to employment without a break in service and also access their IU retirement funds. However, the department must process a termination eDoc due to retirement and rehire the individual into a different position, such as hourly, adjunct, etc.

To confirm IU retiree status and bona fide status eligibility, contact .