Benefits Checklist Supplement: How Benefits are Affected by Indefinite Layoff
[collapse all] [expand all]
Retirement Plan Options and Decisions
If you are NOT "vested": If you have less than five years of University of California Retirement Plan (UCRP) service credit, you are not eligible now or in the future for monthly retirement income or a lump-sum cashout. However, if you have a Capital Accumulation Provision (CAP) balance and terminate University employment, you must take a distribution of your CAP balance and any UCRP contributions you may have. If you later return to the University, you can re-establish the service credit you currently have on record so that these years will count in your total.
If you ARE "vested": If you have five or more years of UCRP service credit, you have the option of becoming an inactive member (by leaving all UCRP/CAP contributions on deposit) or starting monthly retirement income now (if you are at least age 50) or later. IF YOU ARE AGE 50 OR OVER, SEE BELOW FOR POSSIBLE RISKS INVOLVED IN POSTPONING RETIREMENT INCOME.
Benefits are based on your Service Credit, Age Factor, and Highest Average Plan Compensation (HAPC), which is your highest average monthly salary rate over any consecutive 36-month period.
Employee age 55 with 10 years of service credit and full-time monthly rate of $3,000
10 x .0180 (at age 55) = .18 (18%) of ($3,000/month) = $540/month
(If you are covered by Social Security, first subtract $133 from your HAPC.)
The plan also provides continuing income to eligible survivors, payment options to contingent annuitants, disability, and death benefits. Instead of monthly retirement income, a lump-sum cashout is also available; however a lump-sum cashout eliminates eligibility for annuitant insurances and conversion of sick leave into retirement service credit. If you become an inactive member, you may be required to leave your CAP balance on deposit until you draw benefits.
If you are vested and are age 50 or over:
Annuitant Insurance: If you retire within 120 days of your date of separation, you may also be eligible for continued medical and dental insurance as an annuitant. See the UC Retirement Handbook (PDF) for eligibility requirements. For information on how to continue your insurance coverage, refer to the Insurance Options section below. Your coverage must be continuous until the retirement date (through COBRA or payroll).
WARNINGS: If you do NOT retire within 120 days of your date of separation, and do NOT receive another benefits-eligible position at the University, you can still begin retirement income later but WITHOUT annuitant insurance. Also, if you take a lump-sum cashout, you lose eligibility for annuitant insurance.
If you have a service credit buyback in process: You may not continue buyback payments. However, you will receive proportional retirement service credit, or if the service credit is needed for vesting, you can pay off your balance. Note: At the November 2008 meeting, the Regents approved new repayment provisions for buyback of UC Retirement Plan (UCRP) service credit for leaves of absence and redeposit of contributions by active employees. They also approved other changes to expand the election period and the amount of leave time that can be purchased. For questions, contact your assigned retirement analyst.
Agreements with other retirement systems: UCRP and the California Public Employees' Retirement System (CalPERS) have a reciprocal agreement that provides continuity of benefits for employees who change employers and transfer between the two retirement systems under certain circumstances. Whether vested or not, if you obtain CalPERS-covered employment within 180 days of leaving your UC position, you can elect reciprocity by becoming an inactive member of UCRP and later retiring on the same day under both systems. The advantages are: 1) Combined service credit counts toward vesting in both systems (for example, two years in one retirement system plus three years in the other makes you vested in both); and, 2) Your highest salary will be used to calculate benefits in both systems. For more information, refer to the UCRP/CalPERS Reciprocity Factsheet (PDF).
In addition, UCRP has a concurrent retirement agreement with the California State Teachers' Retirement System Defined Benefit Program (CalSTRS). For more information, refer to the UCRP/CalSTRS Concurrent Retirement Factsheet (PDF).
UC Retirement Savings Program Options and Decisions
Defined Contribution Plan and Tax-Deferred 403(b) Plan: If your balance in each plan is at least $2,000, you can leave it on deposit. Distributions paid directly to you are taxed as ordinary income in the year it is received. Distributions are also subject to mandatory 20 percent federal tax withholding unless you arrange to directly rollover the money to an IRA or another employer-sponsored plan that accepts rollovers. Further, distributions taken before age 59-1/2 may be subject to early distribution penalties. Exception: If you terminate employment at UC during or after the year you turn age 55. For assistance, call Fidelity Retirement Services (formerly FITSCo) at 1-866-682-7787, Monday through Friday between 5:00 a.m. and 9:00 p.m., PT.
Outstanding Loan Tax-Deferred 403(b) Plan: Loans must be paid in full or, if you elect monthly retirement income, you can arrange for monthly payments. Contact Fidelity Retirement Services at 1-866-682-7787, Monday through Friday between 5:00 a.m. and 9:00 p.m., PT.
457(b) Deferred Compensation Plan: If your balance in this plan is at least $2,000, you can leave it on deposit. Distributions paid directly to you are taxed as ordinary income in the year it is received. Distributions are also subject to mandatory 20 percent federal tax withholding unless you arrange to directly rollover the money to an IRA or another employer-sponsored plan that accepts rollovers. There are no early distribution penalties except for amounts attributable to rollovers into the Plan from a 403(b), 401(a), or 401(k) plan.
Flexible Spending Accounts (FSA): (DepCare FSA and Health FSA): Claims for reimbursement for eligible expenses (those incurred while covered) must be filed before April 15 of the year following your participation. For questions, contact CONEXIS, the FSA Administrator at 1-800-482-4120.
Insurance Options and Decision
Coverage that can be continued through Consolidated Omnibus Reconciliation Act (COBRA): You and/ or your eligible family members may be eligible to continue your University-sponsored medical, dental, vision, and Health FSA through COBRA continuation. For more information, visit our COBRA page. Note: Laid-off employees eligible for COBRA may switch from their current medical plan to the CORE Medical plan at the time of the COBRA Continuation election. Also, all payments while on COBRA, including those for the Health FSA, are with after-tax dollars; you must apply by the deadline listed in your COBRA packet.
Coverage that can be maintained for four months by paying, then converting if desired: You may continue your Supplemental Life, Dependent Life and Accidental Death & Dismemberment insurance for up to four months after the month your layoff begins. To make arrangements, contact the Central Payroll Office at email@example.com or (510) 642-1336.
Coverage that can be converted or carried over: When you leave UC employment or retire, you can continue life insurance benefits. You have different options depending on the plan.
Basic or Core Life Insurance benefits can be converted to an individual Whole Life plan with Prudential, UC's life insurance carrier.
Supplemental Life Insurance benefits can be converted to a whole life plan or carried over to the Prudential Portability group term life plan. Group term life insurance plans have lower premiums than individual whole life plans.
Dependent Life Insurance coverage also has both the portability and conversion options. However, portability is available only if you also elect portability of your Supplemental Life Insurance Plan.
For more information about your options, contact HR Benefits.
Coverage that stops: Group disability insurance, Business Travel Accident, and Workers' Compensation coverage stops on your last day at work.
If You Return to UC Employment
Re-enrolling in benefits: If you are rehired into an eligible appointment within 120 days, enrollment is limited to previous plans and coverage. If you are rehired following a break of 120 days or more, your enrollment in any plans is treated like a newly eligible employee. For more information, speak to your new DBC.
If you obtain a Limited Appointment: If your limited appointment starts during your preferential rehire period, remind your new department to code your employment records as a UCRP member. Note: Insurance eligibility is based on your title code, percent of time, and duration of appointment; however, if you have 1,000 eligible hours in the payroll system at the time of rehire, you are immediately eligible for Full Benefits. To meet the ongoing eligibility criteria and maintain your insurance benefits, you must maintain the minimum Average Paid Time requirement of 17.5 hours per week.
If you return after starting UCRP retirement income: Read the Returning to UC Employment after Retirement Factsheet (PDF). Whether or not you are receiving monthly retirement income or you received a lump-sum cashout, your department must obtain approval before you can be reappointed.
If you have your insurances as a retiree, you may continue to receive these benefits in addition to your salary. However, if your temporary appointment qualifies you for University-sponsored medical insurance, you will need to "opt out" of this insurance since your insurance will be continuing as a retiree. If you return to career employment or Full Benefits status, you will need to suspend your UCRP retirement income and enroll in benefits as an employee.
Note: If you return to work after retirement and you or a family member(s) are eligible for Medicare, your retiree medical insurance benefits and premiums may be affected, if your appointment is 43.75 percent time or more. You will be required to change your Medicare health plan coverage to either employee coverage or retiree coverage with Medicare as a secondary payer. For more information, contact the Health Care Facilitator.
If you became a UCRP member before January 1, 1990: If you obtain a UCRP-eligible position through preferential rehire, OR within the preferential rehire period, ask the HR Benefits Unit about documenting your UCRP records so that you retain eligibility for annuitant insurance under the more generous pre-1990 rules, as long as you are enrolled in the insurance at the time you retire.
Rehired Retiree with a previous Lump Sum Cashout (LSC): If you have previously retired from UC and taken a LSC, when you are rehired you are subject to the limitations in employment required by the Rehired Retiree Policy. You can find out the complete details from our Rehired Retiree page.
Steps You Need to Take
- Read the Indefinite Layoff Benefits Checklist (PDF).*
- Review general COBRA information*. You will automatically be sent a COBRA packet by CONEXIS, the University's COBRA administrator. If you have questions about COBRA or you do not receive a packet within 4 weeks of your layoff date, contact firstname.lastname@example.org or 642-7053.
- View your personalized UC Retirement Estimates and CAP Balances on the At Your Service website.
If you are a vested member of UCRP and are age 50 or over and want to learn more about your retirement options:
- Read the UC Retirement Handbook (PDF) and review your retirement estimates.
- If you are ready to retire, complete the Request for a Retirement Initiation Kit (PDF) form and submit it to the HR Benefits Unit.
- If you have any retirement questions, contact the Retirement Administration Service Center - Office of the President at (510) 987-0900, Monday-Friday, 8:30am to 4:30pm, PT.
- Contact a Fidelity Retirement Services Specialist at 1-866-682-7787, Monday through Friday between 5:00 a.m. and 9:00 p.m., PT to obtain information about your UC Retirement Savings Program accounts.
- If you move, change your home address with the department or on the At Your Service Online website.
*Ask your Department Benefits Counselor for these publications and handouts if you are unable to download them.