UTSaver Deferred Compensation Overview
Below are the important features about your Plan. This website is intended to be a summary of the plan provisions. In the event that a conflict exists between the information contained within this website and the plan document, the plan document provisions prevail. For more information, please contact your local representative.
The UTSaver Deferred Compensation Plan
Whether you are in the Teacher Retirement System or the ORP, you can enjoy the benefits of systematically saving pretax dollars by contributing to the UTSaver Deferred Compensation Plan (UTSaver DCP). The UTSaver DCP is a voluntary supplemental retirement savings plan authorized under Section 457(b) of the Internal Revenue Code. Contributions to a 457(b) Deferred Compensation Plan will reduce your currently taxable income.
Under this program, you may choose to contribute under either a 457(b) variable annuity contract, issued by Voya Retirement Insurance and Annuity Company, or a 457(b) mutual fund program, offered through Voya Financial Partners, LLC.
Highlights of the UTSaver DCP include
Both the annuity contract and mutual fund option provide you with the following:
- Choices and control of your investments
- Tax-deferred investing - Under the Internal Revenue Code, with a 457(b) plan, you are taxed only when you begin taking distributions, at which time you may be in a lower tax bracket.
- Portability of your account - If you terminate employment with the University of Texas System, you can take your vested account balance with you.
- Personalized, prompt account services
- Retirement information and services that continue even after you retire
- A variety of payout options at retirement
- Declared interest rate on the Voya Fixed Plus Account II (only available under the annuity contract offered through Voya Retirement Insurance and Annuity Company)
- Unlimited transfers between variable investment options via Internet, phone, or in writing, subject to Voya’s policy on market timing and excessive trading.
How does the UTSaver DCP work?
You decide, within certain Internal Revenue Code (IRC) limits, how much of your income you want to invest. You and your employer agree that this amount will be automatically deducted from your salary. The employer will remit the money to Voya for investment into your UTSaver DCP 457(b) variable annuity contract, or your UTSaver DCP 457(b) mutual fund program. No current federal income taxes are withheld from the amount deducted from your salary, and any earnings on your investment are not taxed until you receive them.
Service Options Available
There are two service options available to you under the UTSaver Deferred Compensation Plan:
Mentor Model for the UTSaver DCP 457(b) annuity contract – if you would like assistance in determining amounts to save and if you desire education regarding your retirement plan program, you can elect to work with an Voya Representative under the Mentor Model. Your Voya Representative will provide you with the following services:
- One on one enrollment assistance including assistance with enrollment paperwork and submission to Voya.
- Counseling in determining amounts to save and appropriate asset allocation strategies.
- Periodic account reviews to ensure you remain on track to meet your investment objectives.
There is a mortality and expense risk charge of 0.45% on all variable assets in the 457(b) annuity contract charged under this option during the accumulation phase.
Please contact your Voya representative for more information on the Mentor Model Service Option.
Direct Access Model – under either the UTSaver DCP annuity contract or mutual fund option, you can enroll directly through online enrollment available through this website. You will choose how to invest your contributions without one on one counseling from a local Voya representative. No mortality and expense risk charge (M&E) is assessed under the annuity contract during the accumulation phase. No M&E or advisory fee is assessed under the 457(b) mutual fund program.
The Internal Revenue Code provides that the maximum deferral amount for each year, and provides for two “catch-up” options - the Age 50 and Over Catch-up, and the Special Catch-Up, which provide for additional deferral amounts. Your local representative can help you calculate how much you can contribute to the UTSaver DCP each year.
Your employer will forward your contributions to Voya for investment in your choice of options. You will receive a quarterly account statement, which will summarize your account's financial activity.
Does the UTSaver DCP affect the benefit calculations of my TRS, ORP or Social Security?
No. Your total gross pay, including amounts that are deferred, is used for the calculation of benefits for those programs.
Does the UTSaver DCP affect my Employee’s Retirement System of Texas Texa$aver plan?
Yes. If you currently contribute to the Texa$aver plan administered by the Employees Retirement System of Texas (ERS), you may continue to do so until the ERS transfers the plan assets of U. T. System employees from Texa$aver to the UTSaver DCP. As of the date of the transfer, your participation in Texa$aver will be discontinued, and you will be required to enroll in the UTSaver DCP no later than the institution’s payroll cutoff date in the month prior to the transfer unless you choose to cease participation.
No employee may begin participation in the Texa$aver plan administered by ERS on or after the date on which the UTSaver DCP begins.
What happens if I change employers?
Your account is portable and can be continued on a tax-deferred basis if your new employer sponsors a retirement plan that allows rollovers of such funds. You can also choose to leave your account in the UTSaver DCP, as long as your account value is greater than $1,000 (or a greater amount as adjusted by the UTSaver DCP Plan Administrator in accordance with the Internal Revenue Code).
Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
Loans are available under the UTSaver DCP annuity contract, and to participants who are employees and have not yet commenced benefit payments with an account value of at least $2000. You may borrow up to 50% of your UTSaver DCP account value, not to exceed $50,000. All applications for loans must be submitted to the U.T. System Office of Employee Benefits for approval. The interest rate is 6% - 2.5% is retained by Voya Retirement Insurance and Annuity Company with the remaining 3.5% credited to the participant’s account. The maximum term for all loans is 5 years; unless the loan is used to acquire your principal residence, in which case the maximum loan term may be extended to 20 years. Loan repayments are made quarterly. Please note: loans will reduce your account balance, may impact your withdrawal value and limit participation in future growth potential. Other restrictions may apply.
Assets are eligible for distribution when you leave employment, at retirement or, upon your death, to your designated beneficiary. Distributions must begin on or before April 1st of the calendar year following the latter of the calendar year in which you reach age 72 or the calendar year in which you retire.
The 10% federal penalty tax does not apply to withdrawals from the UTSaver DCP. You can separate from service at any age and withdraw monies without penalty. However, income taxes will be due upon withdrawal.
Under the UTSaver DCP annuity contract, you may choose from several disbursement options including:
- Lump sum withdrawal;
- Partial withdrawal;
- Systematic withdrawal by specifying a percentage, a dollar amount, or a time period;
- Payments guaranteed for your lifetime or for as long as either you or your beneficiary are alive. Guarantees are based on the claims-paying ability of ILIAC. A 1.25% M&E applies to payments made on a variable basis during annuitization
- Under the UTSaver DCP mutual fund option, you are limited to lump sum and partial withdrawals from your account. There are no systematic or guaranteed payment programs available.
Subject to approval by the Plan Administrator, you may receive a distribution due to an unforeseeable emergency prior to retirement or other severance from employment. An unforeseeable emergency is a severe financial hardship, resulting from a sudden and unexpected illness or accident of the participant, the participant’s spouse, or of a dependent; a loss of the participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the participant’s control.
A distribution will not be made to the extent that such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise; by liquidation of the participant’s assets, to the extent liquidation of such assets would not itself cause severe financial hardship; or by cessation of deferrals under the plan.
All applications for distributions due to unforeseeable emergency must be submitted to the U.T. System Office of Employee Benefits for approval. If the request is approved, the distribution will be made within sixty days. Deferrals to the UTSaver DCP will be suspended for six months and will be automatically restarted unless the participant files the appropriate form to terminate participation in the plan.
Voluntary In-Service Distributions
A participant may elect to receive a lump-sum in-service distribution of all or a part of their benefit under the UTSaver DCP if the following requirements are met:
- The total amount of the benefit, including any rollover contribution amounts, under the plan does not exceed $5,000 or such other amount as adjusted by the Plan Administrator in accordance with the Code,
- The participant has not previously received an in-service distribution of any portion of the participant’s benefit under the plan, and
- No amounts have been deferred under the plan with respect to the participant during the preceding two-year period ending on the date of the in-service distribution.
All applications for voluntary in-service distributions must be submitted to the U.T. System Office of Employee Benefits for approval.
Required Minimum Distributions
You must begin to receive Internal Revenue Service Required Minimum Distributions on or before April 1 of the calendar year following the later of (a) the calendar year in which you turn 72, or (b) the calendar year in which you retire.
What if I die before I retire?
Your named beneficiary will receive the total current cash value of your account, or may select a settlement option. For the Mentor Model for the 457(b) annuity contract only, a guaranteed death benefit is available. If the beneficiary requests a lump sum payment or an annuity payout option within six months of the participant's death, the death benefit is guaranteed to be greater of: a) the account value minus any outstanding loan balances, or b) total contributions made to your account minus any loans, withdrawals or annuitizations. Guarantee based on the claims paying ability of Voya Retirement Insurance and Annuity Company.
You should consider the investment objectives, risks, and charges and expenses of the variable product and its underlying fund options; or mutual funds offered through a retirement plan, carefully before investing. The prospectuses/prospectus summaries/information booklets contain this and other information, which can be obtained by contacting your local representative. Please read the information carefully before investing.
Variable annuities and mutual funds offered through a retirement plan are intended as long-term investments designed for retirement purposes. Money distributed from the 403(b) Plan and the 457 Plan will be taxed as ordinary income in the year the money is received. Withdrawals taken from either the 403(b)(1) variable annuity or the 403(b)(7) custodial/trust account prior to age 59½ will be subject to a 10% federal penalty tax. This IRS premature distribution penalty tax does not apply to 457 plans. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.
For 403(b)(1) fixed or variable annuities, employee deferrals (including earnings) may generally be distributed only upon your: attainment of age 59½, severance from employment, death, disability, or hardship. Note: Hardship withdrawals are limited to employee deferrals made after 12/31/88. Exceptions to the distribution rules: No Internal Revenue Code withdrawal restrictions apply to '88 cash value (employee deferrals (including earnings) as of 12/31/88) and employer contributions (including earnings). However, employer contributions made to an annuity contract issued after December 31, 2008 may not be paid or made available before a distributable event occurs. Such amounts may be distributed to a participant or if applicable, the beneficiary: upon the participant's severance from employment or upon the occurrence of an event, such as after a fixed number of years, the attainment of a stated age, or disability.
For 403(b)(7) custodial accounts, employee deferrals and employer contributions (including earnings) may only be distributed upon your: attainment of age 59½, severance from employment, death, disability, or hardship. Note: hardship withdrawals are limited to: employee deferrals and '88 cash value (earnings on employee deferrals and employer contributions (including earnings) as of 12/31/88).
Not FDIC/NCUA/NCUSIF Insured | Not a Deposit of a Bank/Credit Union | May Lose Value | Not Bank/Credit Union Guaranteed | Not Insured by Any Federal Government Agency
Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) Voya Retirement Insurance and Annuity Company ("VRIAC"), Windsor, CT. VRIAC is solely responsible for its own financial condition and contractual obligations. Plan administrative services provided by VRIAC or Voya Institutional Plan Services LLC ("VIPS"). VIPS does not engage in the sale or solicitation of securities. All companies are members of the Voya® family of companies. Securities distributed by Voya Financial Partners LLC (member SIPC) or third parties with which it has a selling agreement. Custodial account agreements or trust agreements are provided by Voya Institutional Trust Company. All products and services may not be available in all states.