Skip navigation

IONA College Logo | Go to Home Page

Tax Deferred Annuity Plan: Contributions & Vesting

  • What amount can I contribute to the Plan?

    Deferrals

    You will be able to contribute a portion of your Compensation as a pre-tax Deferral unless you are a member of one of the excluded classes listed previously. The maximum dollar amount that you can contribute to the Plan each year is $16,500 for 2009 and includes contributions you make to certain other deferral plans (e.g., other 401(k) plans, salary deferral SEP plans, and 403(b) tax-sheltered annuity plans). This amount will increase as the cost of living increases. Deferrals (and the related earnings) are always fully vested and cannot be forfeited. So if you were to leave your Employer, you would be entitled to the full Deferral balance (plus earnings).

    The amount of your Compensation that you decide to defer into the Plan generally will be contributed on a pre-tax basis. That means that, unlike the compensation that you actually receive, the pre-tax contribution (and all of the earnings accumulated while it is invested in the Plan) will not be taxed at the time it is paid by your Employer. Instead, it will be taxable to you when you take a payout from the Plan. These contributions will reduce your taxable income each year that you make a contribution but will be treated as compensation for Social Security taxes.

    EXAMPLE: Assume your Compensation is $25,000 per year. You decide to contribute five percent of your Compensation into the Plan. Your Employer will pay you $23,750 as gross taxable income and will deposit $1,250 (five percent) into the Plan. You will not pay federal income taxes on the $1,250 (plus earnings on the $1,250) until you withdraw it from the Plan.

    Catch-up Contributions

    Age 50 Catch-up Contributions - If you are eligible to make Deferrals and you turn age 50 before the end of any calendar year, you may defer up to an extra $5,500 each year (for 2009) into the Plan as a pre-tax contribution once you meet certain Plan limits. The maximum catch-up amount may increase as the cost of living increases.

    Special 403(b) Catch-up Contributions – If you have worked at least 15 years for the Employer, and the Employer is a qualified organization, you may make a special catch-up contribution equal to the smallest of the three amounts listed below:

    1. $3,000
    2. $15,000 minus the amount of Special 403(b) Catch-Up Contributions made in prior years
    3. ($5,000 times the number of years you have worked for the Employer) minus (the total amount of Deferrals made while you worked for the Employer)

    These catch-up contributions will be eligible for Matching Contributions from your Employer (if any.)

    If you qualify for both the age 50 catch-up contributions and the special 403(b) catch-up contributions, your catch-up contributions will be allocated first as special 403(b) catch-up contributions. Catch-up contributions (and the related earnings) are considered Deferrals and are always fully vested. So if you were to leave your Employer, you would be entitled to the full catch-up balance (plus earnings.)

  • How do I start making contributions?

    To begin deferring a portion of your Compensation into the Plan, you must follow the procedures established by your Employer.

  • What if I don't make a specific election to contribute some of my Compensation into the Plan?

    You are not required to defer a portion of your Compensation into the Plan. If you elect 0% or you simply fail to follow the procedures established by your Employer for making a Deferral election, you will not be enrolled in the Plan as a deferring Participant (i.e., 0% of your Compensation will be deferred into the Plan.)

  • Can I change my contribution rate or stop making Deferrals after I start participating in the Plan?

    You may change the amount you are deferring into the Plan or stop making Deferrals altogether at the times determined by your Employer. Generally, once you stop your Deferrals, you will not be able to reenroll in the Plan and begin making Deferrals again until the first day of the next Plan Year, or the first day of the seventh month of the Plan Year, unless your Employer decides to allow more frequent re-entry.

    Example: Assume the Plan Year is the calendar year and you are enrolled in the Plan and deferring 6% of your Compensation into the Plan as a pre-tax Deferral. On October 1 you decide to stop making Deferrals. You will not be able to re-enter and begin making Deferrals again until January 1.

  • What if I contribute too much to the Plan?

    If you contribute too much to the Plan as a Deferral, you must take the excess amount (plus any earnings on the excess) out of the Plan by April 15 of the year following the year the money was contributed to the Plan. You must notify your Employer, in writing, of the excess amount by March 1 and request that it be removed. The excess amount is taxable to you in the year you contributed it to the Plan. If you do not remove it by the deadline, additional taxes will apply.

  • If I have money in other retirement plans, can I combine them with my accumulation under this Plan?

    Your Employer may allow you to roll over dollars you have saved in other retirement arrangements into this Plan after you become eligible to participate in the Plan. Your Employer will provide you with the documents or other information you need to determine whether your prior plan balance is qualified to be rolled into this Plan.

    The Plan will accept amounts rolled over from the prior plan to this Plan if the prior plan was a:

    • qualified retirement plan (e.g., 401(k) plan, profit sharing plan, money purchase pension plan, target benefit plan)
    • 403(b) tax-sheltered annuity plan
    • government 457(b) plan
    • Traditional IRA

    Rollover contributions are always 100 percent vested and nonforfeitable.

  • Are there any limits on how much can be contributed for me?

    In addition to the Deferral limit described previously, you may not have total contributions (including Deferrals) of more than$49,000, plus any age 50 catch-up contributions, in 2009 or an amount equal to 100% of your Compensation, whichever is less, allocated to the Plan for your benefit each year. The $49,000 limit will be increased as the cost of living increases, and is the total amount that can be contributed across all retirement plans sponsored by your Employer.

  • Will contributions be made for me if I am called to military service?

    If you are reemployed by your Employer after completing military service, you may be entitled to receive certain make-up contributions from your Employer. If your Plan permits Deferrals or Nondeductible Employee Contributions, you may also have the option of making up missed employee contributions and receiving a Matching Contribution, if applicable, on these contributions.

    If you are reemployed after military service, contact your Plan Administrator for more information about your options under the Uniformed Services Employment and Reemployment Rights Act (USERRA).