Benefits of Participating in a Roth
- Allows you to increase your retirement income through regular, planned investing.
- Designate elective deferrals as after-tax Roth contributions to your plan
- Enjoy tax-free distributions, provided distribution is made five years after the participant first made Roth contributions to the program and:
- is age 59-1/2 or older;
- or distribution is made on account of your disability or death (distributions may be subject to plan provisions)
- Receive tax-deferred growth on any earnings (if the tax-free distribution conditions are not met)
- Transfer your retirement assets income tax-free to your beneficiaries
- Potentially reduce the taxability of Social Security income benefits
- Participating in before-tax contributions lowers your federal and state taxable wages (this does not apply to Social Security or Medicare taxable wages).
Eligibility to Participate
All faculty and staff (regular employees, including house staff members, postdoctoral research scholars and interns, and temporary staff) whose wages are subject to tax withholding can enroll in a voluntary retirement plan to make pre-tax contributions.
Review Your Voluntary Plan Options - VRSP 403(b) & 457(b)
You can contribute to one of these plans or maximize your savings using both.
If you elect to participate in both the VRSP and the 457(b), the VRSP deduction will occur first, followed by the 457(b) deduction.
VRSP and 457b
Determining if the Roth 403(b) is right for you
The Roth option may be attractive to:
- younger savers in lower tax brackets
- savers who currently have Roth individual retirement accounts who desire additional after-tax savings growth
- savers wishing to maximize flexibility when drawing on retirement savings in the future
- highly compensated employees
- savers wanting to diversify the potential taxes in the future
Everyone's tax situation is different. Therefore, you should educate yourself regarding your options.
| 403(b) Voluntary retirement savings program (vrsp) | |
|---|---|
| Approved Companies |
Six vendors to choose from.
|
| Contributions | Participants can make pre-tax or after-tax contributions up to the IRS limit. |
| Catch-up | Catch-up contributions are allowed. |
| UI Contributions | No, the University does not contribute to voluntary plans. |
| Required Participation | No, only voluntary participation. |
| Enrollment | Enroll with the selected vendor of choice and then complete your enrollment in Employee Self-Service. |
How much can you contribute?
Our 403(b) permits employee pre-tax or after-tax (Roth) contributions up to the IRS limit. There is no employer contribution to this plan.
Your Roth after-tax contributions are included in your maximum contribution limits, plus any catch-up limits, if applicable. Your plan's Roth 403(b) option offers the same benefits, rights, and features currently in your retirement plan, including investment choices. In addition, your contributions and any accumulations you have are tracked separately to ensure that they are not co-mingled with any pre-tax or employer contributions you may have.
The 457(b) is a tax-deferred compensation plan available to all eligible employees (those with income subject to tax withholding). It allows you to make additional contributions, up to the IRS limit, toward your retirement apart from any mandatory contributions to a retirement plan.
How does participation in the 457(b) plan affect your VRSP?
You can participate in the Voluntary Retirement Savings Program (VRSP), the 457(b) plan, or both.
- For 2024, the maximum allowable contribution is $23,000 for each plan or $46,000 for both programs.
If you elect to participate in both the VRSP and the 457(b), the VRSP deduction will occur first, followed by the 457(b) deduction.
| 457(b) deferred compensation plan | |
|---|---|
| Approved Company |
One vendor is available.
|
| Contributions | Participants can make pre-tax or after-tax contributions up to the IRS limit. |
| Catch-up | Catch-up contributions are allowed. |
| UI Contributions | No, the University does not contribute to voluntary plans. |
| Required Participation | No, only voluntary participation. |
| Enrollment | Enroll with TIAA first and then complete enrollment in Employee Self-Service. |
Enrollment
Enrollment or changes will take effect the following month, depending on the timing of your elections. For example, if you submit your enrollment and modifications before the payroll processing cutoff, which is always five business days before the last day of the month, you should see your new elections on the next paycheck.
All regular faculty, staff, and house staff members should complete their enrollment and changes within Employee Self-Service. Bi-weekly employees who wish to enroll in the VRSP plans should contact University Benefits at benefits@uiowa.edu for the link to the workflow form.
How to Enroll Instructions
VRSP 403(b) Account Enrollment
This accordion item will walk you through enrolling in the Voluntary Retirement Savings Program (VRSP), a 403(b) account through your Employee Self Service.
Companies or Agents Available
The University offers six different companies or agents that have been approved for eligible employees to set up a VRSP 403(b) account with the following:
- AMERIPRISE FINANCIAL
- AMERITAS
- FIDELITY INVESTMENTS
- VOYA RELIASTAR
- PACIFIC LIFE
- TIAA
Once you have determined who you will be saving extra with, complete the following steps:
Step 1:
Contact the approved vendor you have chosen and proceed by opening your account with that vendor.
If you are selecting TIAA as your VRSP 403(b) approved company, please follow these initial instructions:
- Visit the TIAA website.
- Select "Ready to Enroll" (even if you have previously set up an online account with TIAA)
- Enter your existing password or create one. Follow any additional instructions given. Don't forget to update your address and name beneficiaries.
(Continue to Step 2)
Step 2:
Log in to Employee Self-Service and proceed to the "Benefits & Wellness" tile, select the "Retirement" link, and then select the "Voluntary Retirement Saving Program (VRSP) 406(b)" link.
Step 3:
Select the "Add New Retirement Account" button and choose the box next to the approved company that you have opened a VRSP 403(b) account with and select the green "Continue to My Monthly Contributions" button.
Step 4:
Elect your monthly contribution amount. Follow any additional instructions given.
Deferred Comp Plan 457(b) Enrollment
The 457(b) is a tax-deferred compensation plan available to all eligible employees. It allows you to make additional contributions toward your retirement up to the IRS maximum, apart from any mandatory contributions to a retirement plan.
TIAA is the only Deferred Compensation 457(b) plan vendor.
How to Enroll in the TIAA Deferred Comp 457(b) plan
If your TIAA account is not set up, your contributions will not be applied to your 457(b) account.
Step 1:
Create your 457(b) account on the TIAA website first.
- Select "Ready to Enroll" (even if you have previously set up an online account with TIAA).
- Enter your existing password or create one. Follow any additional instructions given. Don't forget to update your address and name beneficiaries.
Note: If TIAA is asking you to enter an access code, please use: 407892
Step 2:
Once your TIAA 457(b) account has been created, you may now enroll online through Employee Self-Service.
- Select the Benefits and Wellness tile >> Retirement >> 457(b) Deferred Compensation Plan.
- Select the "Add New Retirement Account" button and choose the TIAA box, select the green "Continue to My Monthly Contributions" button.
- Elect your monthly contribution amount. Follow any additional instructions given.
Bi-Weekly Employees
For employees who are paid on a bi-weekly basis and wish to enroll, please get in touch with our office at benefits@uiowa.edu for the link to the workflow form to complete your request.
2024 Contribution and Maximum Amounts
- The maximum employee contribution amount is $23,000.
- The catch-up contribution for those aged 50 and older is $7,500 (no change in amount in 2024).
| Voluntary Account type | 2024 Maximum limits |
|---|---|
| VRSP 403(b) Contribution Maximum | $23,000 |
| 457(b) Contribution Maximum | $23,000 |
| If you are enrolled in both 403(b) and 457(b) accounts | $46,000 |
VRSP
There are limits to the amount you may defer to the Voluntary Retirement Savings 403(b) account. Our VRSP system uses calculations that are based on the salary that is paid monthly and does not include compensation paid for short-term appointments (such as temporary summer appointments) outside of your "normal" salary.
How does participation in the 457(b) plan affect your VRSP?
You can participate in the Voluntary Retirement Savings Program (VRSP), the 457(b) plan, or both. For 2024, the maximum allowable contribution is $23,000 for each plan or $46,000 for both programs. The system will take your VRSP contribution first and then your 457(b) deduction.
Savings Bonds through Payroll Deduction
The University of Iowa Payroll Office permits employees to invest a portion of their earnings in Savings Bonds using TreasuryDirect.
A service of the U.S. Department of the Treasury, TreasuryDirect enables employees to create their accounts for purchasing and managing Savings Bonds directly from the United States government. More information is available from the TreasuryDirect website.
How to Participate
- participants need to open a TreasuryDirect account first. You will receive a TreasuryDirect "account number" that you will need to provide to UI Payroll Services.
- Once your account is established, log in to Employee Self-Service >> "Time & Pay" tile >> "Giving" >> "Savings Bond Enrollment" to develop your monthly payroll deduction in any amount you choose.
- The amount specified will be deducted from your monthly check and transferred to your TreasuryDirect account.