The UNC Policy Manual
300.7.1.1[R]
Adopted 02/05/99
I. Background. Administrative
Memorandum Number 387 reported the Board of Governors decision that persons
occupying positions officially designated, pursuant to board policies and
procedures, as Senior Academic and Administrative Officers (SAAO) are eligible
to elect enrollment in the Optional Retirement Program (ORP). Administrative Memorandum Number 391 refined
that guidance concerning eligibility by reporting that having concurrent
faculty status is not a prerequisite to ORP enrollment of persons occupying
such administrative positions. As
anticipated in Administrative Memorandum Number 391, the following should be
followed in providing ORP enrollment opportunities for two categories of
incumbent employees:
A. SPA employees who now occupy
positions that were designated as SAAO by the Board of Governors on November
13, 1998, and who elect to convert from SPA to the exempt SAAO category.
B. Other incumbent employees who now
occupy positions previously designated by the Board of Governors as SAAO[1] but who in
the past were not offered an opportunity for ORP enrollment. (An individual who previously was appointed
to an eligible position, who was offered an opportunity to enroll in the ORP,
but who declined such enrollment may not be afforded a renewed opportunity to
elect participation in the ORP.)
Persons
appointed to eligible administrative positions after the effective date of this
memorandum shall be offered opportunities for ORP enrollment in the customary
manner, e.g., election or declination of ORP participation within 30 days of
their appointment.
II. Senior
Officers Electing To Remain in TSERS. Senior officers who elect to remain
enrolled in the Teachers’ and State Employees’ Retirement System (TSERS)
continue to contribute to TSERS and retain all benefit entitlements provided
under the provisions of this program. An
election to remain in TSERS is a lifetime irrevocable election. An election to decline an offer to enroll in
the ORP should be duly recorded and retained in the senior officer’s personnel
file.
III. Senior
Officers Electing to Enroll in the ORP. Senior officers who elect to enroll in
the ORP have the following options available:
A. A senior officer may elect to leave
his or her contributions in the Retirement System and retain all TSERS benefit
entitlements towards age and service requirements and eligibility for the
Disability Income Plan of North Carolina.
(This means that a senior officer who has at least five years of TSERS
service as a contributing member is entitled to a retirement benefit once he or
she meets the early or service retirement age/creditable service
criteria.) The Survivor’s Alternate
Benefit and Death Benefit are in effect only for 180 days following the last
day the employee is paid as a TSERS contributing member. (Refer to pages 6 and 7 in the “Your
Retirement Benefits” handbook for more information about the Survivor’s
Alternate Benefit and the Death Benefit.)
B. A senior officer may elect to
withdraw his or her TSERS employee contributions (plus statutory interest, if
the officer has at least five years of service as a contributing member) but
forfeit any membership credits earned towards age and service requirements and
eligibility for the Disability Income Plan of North Carolina, even if these
contributions are rolled over to the ORP.
For example, if TSERS contributions are withdrawn, under the Disability
Income Plan a senior officer must have at least one year of participation in
the ORP earned within the 36 calendar months preceding disability to be
eligible for short-term disability benefits, and five years of ORP
participation earned within the 96 calendar months prior to the end of the
short-term disability period to be eligible for long-term benefits. Credit towards vesting of ORP employer contributions
begins at the time of enrollment in the ORP.
A refund of
TSERS employee contributions that is eligible for rollover can be taken in two
ways. The taxable portion of the payment
can be (1) paid as a direct rollover to an IRA or other qualified plan (such as
the ORP) or (2) paid directly to the employee.
If a direct
rollover is chosen, the employee is not taxed on the payment until it is later
withdrawn from the IRA or other qualified plan.
If the refund is paid directly to the employee, it is subject to 20
percent income tax withholding and also taxed in the year in which the employee
receives it unless, within 60 days, it is rolled over to an IRA or other
qualified plan that accepts rollovers.
An employee may roll over up to 100 percent of the eligible rollover
distribution, including an amount equal to the 20 percent that was
withheld. If 100 percent is rolled over,
the employee must find other money within the 60-day period to contribute to
the IRA or qualified plan to replace the 20 percent that was withheld. Alternatively, if only 80 percent that is
received by the employee is rolled over, the employee will be taxed on the 20
percent that was withheld. If the refund
is not rolled over, a 10 percent penalty charge is imposed on the taxable
portion of the refund, which is made prior to death, disability, or the
attainment of age 591/2. The employee should consult his or her
accountant, attorney, or other financial counsel with regard to tax treatment
on these distributions.
IV. ORP
Enrollment Window
A. A former SPA employee who elects to
convert to exempt SAAO status, under I.A. above, and who holds a permanent
three-quarter time or more position within the University, has 30 days from the
effective date of his or her election to convert to SAAO status to enroll in
the ORP.
B. Other incumbent employees, under I.B.
above, must elect to enroll in the ORP by no later than March 31, 1999.
V. ORP
Enrollment Process. The process for electing ORP is effected by doing both of
the following:
A. The senior officer completes an
“Election of Optional Retirement Program The University of North Carolina,”
Form ORP-1A. The institutional
representative transmits this form to the State Retirement System, with a copy
sent to the office of the Associate Vice President-Finance and University
Benefits Officer, UNC General Administration.
B. The senior officer completes an ORP
enrollment form that is submitted to the appropriate ORP carrier(s) through the
institutional representative.
If the
employee elects to withdraw his or her TSERS contributions, he or she must
complete an “Application for Refund of Retirement Contributions,” Form 5. This form is sent to the State Retirement
System, through the institutional representative, and should include (1) the name
of the IRA sponsor (usually a financial institution) or ORP carrier or other
qualified plan carrier (such as the ORP) to whom the refund check should be
made payable, (2) the employee’s address, and (3) his or her account number if
the employee elects to have a direct rollover.
(The payment is actually sent to the employee for transmittal to the
appropriate sponsor or qualified carrier.)
VI. Effect
on Other Benefits
A. Supplemental Disability Insurance
Benefits. A senior officer who falls under I.A. or I.B. above, who elects to
enroll in the ORP, is also eligible to enroll in the TIAA Disability Income
Plan. To avoid the burden of furnishing
evidence of insurability satisfactory to TIAA, such senior officer must enroll
in the TIAA Disability Income Plan during the applicable ORP enrollment window
referenced in IV., above.
An ORP
participant is not eligible to continue disability coverage under the Liberty
Mutual Disability Plan and must cancel that coverage through his or her
institutional representative immediately upon enrolling in the ORP.
B. Sick Leave. Only members of TSERS are
eligible to have sick leave credit converted to creditable service upon
retirement. For ORP participants, any
unused sick leave balance at termination or retirement is forfeited.
[This is a rewrite of Administrative
Memorandum #393.]
[1]By action of the
Board of Governors, senior officers consist of the President, vice Presidents,
chancellors, vice chancellors, provosts, deans, and such other officers of
equivalent rank and responsibility as may be designated by the Board of
Governors (November 14, 1986); associate and assistant vice chancellors,
associate and assistant deans, and specific other officers of the University
having significant administrative responsibilities and duties as may be
designated by the President and subject to confirmation by the Board of
Governors (October 12, 1990 and as augmented on January 9, 1998 and November 13, 1998).