DEFINED CONTRIBUTION RETIREMENT PLAN AND TAX DEFERRED ANNUITY PLAN
This summary is intended only as an outline of the Plan's major features, and does not discuss every plan provision. The Plan document, and not this summary, will govern if there is a difference between the Plan and this summary. Please contact the SAO Benefits Office if you have questions pertaining to the Plan.
Tax Deferred Annuity Plan
You can elect to defer a percentage or dollar amount of your salary to a Tax Deferred Annuity Plan by completing a Salary Reduction Agreement entered into between you and Smithsonian Institution. However, there are overall limits on the amount you can contribute (see Section II below).
You pay no state or federal income tax on the amount of your deferral or any investment gains until the time you take a distribution from the plan.
Defined Contribution Retirement Plan
If you meet the eligibility requirements and complete the proper enrollment forms, the Smithsonian Institution will contribute an amount into the Plan on your behalf up to specified limits set forth in Section II. It is the employee's responsibility to use the eligibility criteria guidelines noted below to monitor their eligible trust service, and complete the enrollment form for this plan.
You are immediately vested in all contributions made to the Plan on your behalf.
You will pay no income taxes on the amount contributed on your behalf until you take a distribution from the Plan.
When you take a distribution from either plan, the amount will be included in your taxable income. You may also have to pay a ten percent (10%) early withdrawal penalty in addition to applicable income taxes to the Internal Revenue Service for distributions from your retirement account before retirement, except in limited circumstances.
Participant Salary Reduction Contributions to Tax Deferred Annuity (TDA)
Upon being hired, you will be eligible to make salary reduction contributions to the Plan after you execute a Salary Reduction Agreement.
This agreement authorizes Smithsonian Institution to withhold from your base salary the percentage of your salary or dollar amount you have elected to contribute to the Plan. You may begin having amounts withheld from your paycheck on your entry date, which is the first day of the first pay period beginning after you have submitted an accurate and fully completed Salary Reduction Agreement to the SAO Benefits Office. You may change the amount you elect to defer throughout the year, and you can discontinue your contributions at any time.
Employer Contributions to the Defined Contribution Retirement Plan
To be eligible for employer contributions to the Smithsonian Defined Contribution Plan, you must meet the following criteria:
A. If age 35 or older, the employee must either:
- Be serving in an indefinite appointment with a tour of duty of at least 40 hours per pay period; or
- Be serving in a temporary appointment of one year or greater (or an aggregate series of appointments that total one year or greater) and a tour of duty of at least 40 hours per pay period.
B. If under age 35, the employee must either:
- Be serving in an indefinite appointment, with a tour of duty of at least 40 hours per pay period, and have two years of prior qualifying service with the employer; or
- Be serving in a temporary appointment of one year or greater (or an aggregate series of temporary appointments that total one year or greater), with a tour of duty of at least 40 hours per pay period, and have two years of qualifying service with the employer.
For purposes of this section, qualifying service shall mean (i) an indefinite appointment and a tour of duty of at least 40 hours per pay period in a non-civil service position; or (ii) a temporary appointment of one year or greater (or aggregate series of temporary appointments that total one year or greater) and a tour of duty of at least 40 hours per pay period in a non-civil service position. If a break in service occurs, the appointment and tour of duty criteria must be met at rehire in order to participate in the plan. Any prior qualifying service will be counted toward the requisite total.
Note: Intermittent service or part-time service less than 40 hours per pay period does not count toward the two years of eligible trust service. Employees in this category are not eligible to receive the SI contributions and SI contributions will end on the last day of the pay period in which the status change occurs.
IMPORTANT: You will not receive Smithsonian contributions for any period during which you are eligible to participate, but for which completed enrollment forms have not been received by the SAO Benefits Office. Because of the voluntary nature of this plan, no retroactive contributions will be made.
Smithsonian contributions can begin the first day of the pay period following receipt of accurate and fully completed enrollment forms from an otherwise eligible employee. Employees are responsible for monitoring their eligible Trust Fund service and ensuring their enrollment forms have been received and processed, including verification of contributions made on their behalf to TIAA-CREF.
Prior Trust Fund employees who have been re-employed will have their prior time counted toward the two-year requirement. Also, if you were previously a Trust Fund employee and were receiving the Smithsonian contribution, you will need to submit a new application in order to receive the contribution again.
What is the Employer Contribution?
For employees hired before January 1, 1988: Regular Salary (up to a maximum of $7,800) x 12%, plus Regular Salary (in excess of $7,800) x 17% up to a maximum salary of $265,000 (in 2015)
For employees hired on or after January 1, 1988: Regular Salary (up to the Social Security Wage Base in effect for the Year of Participation) x 12%, plus Regular Salary (in excess of the Social Security Wage Base in effect for the Year of Participation) x 17% up to a maximum salary of $265,000 (in 2015).
II. CONTRIBUTION LIMITS
Salary Reduction Contributions and Limitations
You can make salary reduction contributions in an amount equal to a percentage of your base salary or a specific dollar amount reduced from your base salary. However, there are limitations on the amount you can contribute based on the Internal Revenue Code.
Your salary reduction contributions are subject to a number of Internal Revenue Code limitations. As a general rule, you cannot contribute more than $18,000 in 2015; however, employees who attain age 50 in 2015 may contribute up to $24,000 to the Plan as salary reduction contributions. Also, your salary reduction contribution plus the employer contribution cannot exceed $53,000 ($59,000 if you are age 50 or over) or 100% of your annual includable compensation, whichever is less. The additional contributions that an employee who is age 50 or over may make toward the Plan are referred to as "catch-up" contributions.
If you begin employment or move from a federal to a trust position at SI after the first of the year, you must not exceed the cumulative amount listed above for all current and previous employers in this calendar year. If you exceed any of these limits, Smithsonian Institution may be required to cease your contributions before the end of the year or may be required to refund any excess contributions you have made on an after-tax basis.
III. PLAN RECORD KEEPER
The record keeper for the SI Defined Contribution and the SI Tax Deferred Annuity Plan is the Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF). You may select where to invest your salary reduction contributions and employer matching contributions from among the family of funds provided by TIAA-CREF, which are available under the Plan.
The Plan is maintained primarily to provide you with retirement income. It is designed to make payments over your lifetime and the lifetime of your spouse or other beneficiaries, once you retire. You are entitled to receive retirement benefits at any age subject to the limitations described in this Section IV.
Separation from Service
If your employment with Smithsonian Institution is terminated, you may be permitted to take a distribution from the Plan pursuant to the terms of your TIAA-CREF contract. Contact TIAA-CREF at 1-800-842-2273.
Minimum Required Distributions
Under the Internal Revenue Code, you must begin taking distributions from the plan if you are no longer working at age 70-1/2. You will have to pay a fifty percent (50%) excise tax if you fail to take these distributions timely, so it is important to keep in contact with the plan administrators with which your 403(b) funds are invested so that they will know where to send your minimum distribution.
Death benefits under the plan(s) after retirement depend upon the annuity income benefit option you have chosen. Contact TIAA-CREF at 1-800-842-2776 for more information about death benefits.
If you take a distribution from the Plan, the amount of the distribution will be included in your taxable income. Distributions may be subject to certain restrictions imposed by TIAA-CREF.
If you experience serious financial hardship, you may receive distributions from the Tax Deferred Annuity retirement plan subject to the conditions as required by the plan summary. Contact TIAA-CREF at 1-800-842-2776 for additional information on hardship withdrawals and/or loans.
V. YOUR PLAN RIGHTS
Your benefits under the Plan(s) are limited to the contributions you make, any contributions made by Smithsonian Institution and any earnings or losses on those contributions. The Plan does not guarantee that you will receive a specific amount at retirement and does not guarantee any specific rate of return (earnings) on the contributions made.
Your benefits under this Plan are not guaranteed or insured by the Pension Benefit Guarantee Corporation (PBGC).
ADDITIONAL RETIREMENT RESOURCES
TIAA-CREF has developed an online seminar for Smithsonian Trust Fund employees entitled, Retirement Plans 101. This brief seminar is especially useful for newly hired Smithsonian employees, but it can also serve as a refresher for longer service Trust employees. Check out this online seminar at your convenience.
The TIAA-CREF Bookstore offers many free booklets in PDF format for download, or booklets may be ordered online.
Upon separation of employment, please contact the SAO Benefits Office for details on applying for retiree benefits that may be available to you. These benefits might include retiree medical insurance coverage and retiree life insurance coverage. Eligibility for these benefits will be based upon your age at separation, length of service, and insurance plan coverage and participation history. See Retirement Benefits.
For enrollment materials and assistance, please contact the SAO Benefits Office at (617) 495-7371.