Recap of NU Plan

August 8, 2022

The University of Nebraska provides three different retirement plan options for employees. It is important to understand the features of each plan and when they should be used. Below is a recap of each plan:

401(a) BASIC RETIREMENT PLAN

This is the basic plan of the University. Employees that are eligible can elect to choose a Tier on the amount of their contribution and the University’s.

Employee University

Contribution Contribution Total

Tier 1 3.5% 6.5% 10.0%

Tier 2 5.5% 8.0% 13.5%

This is a great benefit provided by the University. The contribution by the University is higher than what most private employees receive at their workplace. Employees should strive to get to the Tier 2 and receive a match of 8.0% (Tier 1’s match of 6.5% isn’t bad either, but 8% is better). A 10% or even 13.5% total contribution will definitely put an employee on the right path towards having enough to retire some day. It may not get you all the way there, but it will be a good start.

The employee’s contributions are pre-tax so that will save on taxes today. More than likely you will need to pay taxes when you take the money out during retirement. Also, any money that the University puts in is immediately vested which means it is yours even if you leave the University.

You cannot roll a retirement fund from a previous employer’s plan into the University of Nebraska’s 401(a) plan. You can transfer funds from one provider (TIAA or Fidelity) to another.

403(b) SUPPLEMENTAL RETIREMENT PLAN

Eligibility requirements are not as restrictive as the 401(a).

There is no University match. All contributions come from the employee and you are immediately vested in the balances. The limit for those contributions this year are $20,500 if under the age of 50 and $27,000 if over 50. Contributions can go to either provider (TIAA and Fidelity). However, there are two different types of contributions that can be made:

Traditional 403(b) contributions are made on a pre‐tax basis and are not included in current taxable income. The pre‐tax contributions and any earnings will be subject to income taxes when withdrawn. Similar to the 401(a).

Roth 403(b) contributions are made on an after‐tax basis and are included in current taxable income. The distributions from the ROTH option will be tax free if they are part of a “qualified distribution” under current tax laws.

New for 2022 - Employees will be able to do a Roth In-Plan conversion. Meaning you have the opportunity to convert pretax assets such as those currently in the Traditional 403(b) plan or rolled-over from a former employer’s plan into a designated Roth account. You definitely want to understand the tax implications before you do this.

Employees can rollover previous employer retirement plans to the 403(b) including individual IRA and ROTH accounts.

457(b) PLAN DEFERRED COMPENSATION

The 457(b) plan is an opportunity to make additional contributions for your retirement. You must first max out the contribution limits of the 403(b) then you are able to contribute up to $20,500 if under the age of 50 and $27,000 if over 50.

As with the other plans, contributions can be made into either provider (TIAA and Fidelity) and are immediately vested.

Employees may rollover funds only from another governmental employer’s Deferred Compensation Retirement 457(b) Plan to the university's Deferred Compensation Retirement 457(b) Plan.

There are nuances of each plan that employees should understand the advantages and when to participate. This is only a short recap. More information about eligibility, loans, access to funds can be found at https://nebraska.edu/faculty-and-staff/retirement-benefits