OAKLAND, CALIFORNIA -- At their May 19-20 meeting, UC Regents approved a new voluntary savings plan that effectively doubles the amount of money UC faculty and staff may put into tax-advantaged retirement savings. In addition to the Tax-Deferred 403(b) Plan UC currently offers, this new plan will give employees even greater opportunities to save for retirement and enjoy the valuable benefits of tax-deferred savings. Plan implementation will occur as soon as is administratively feasible, and is contingent upon the successful search for an external firm that can provide the required record-keeping and investment education services.
The new plan, defined as a 457(b) plan by the Internal Revenue Code (IRC), currently has the same contribution limits as the 403(b) Plan; however, the contribution limits set by the IRC for each plan do not offset one another. For example, an employee who already contributes the maximum amount permitted to UCís 403(b) Plan ($13,000 in 2004) could also put up to $13,000 annually in tax-deferred savings in the new 457(b) plan. Employees will have the choice to enroll in either or both plans.
Last year, more than 50,000 employees voluntarily contributed to the 403(b) Plan, with 12,000 employees at all compensation levels contributing the maximum amount permitted by law. The State of California, the California State University, and many local cities and counties also offer employees a 457(b) plan as one of their retirement savings options.
Like the existing 403(b) Plan, the new 457(b) plan is designed to be self funded at no cost to the University or the retirement system. Ongoing administrative or record-keeping expenses incurred will be borne by the 457(b) planís participants only.
The University is currently reviewing bids from several firms to implement and administer the new plan, and to provide record-keeping and investment education services. Selection criteria include a demonstrated ability to deliver premier financial services and state of the art technology in a cost-effective manner. When the bid has been awarded, the University will announce the results and the effective date of the new 457(b) plan.