UW Voluntary Investment Program
Save beyond your mandatory UW retirement plan by enrolling in the UW Voluntary Investment Program (VIP), a tax-advantaged 403(b) retirement plan that offers an array of mutual funds and annuities.
You choose your funds and how much you want to contribute. While contributions aren’t matched by UW, they are tax advantaged. And because the VIP is optional, you can start or stop contributions at any time.
Plus, get help when you need it from Fidelity Investments, the VIP administrator and the nation’s largest investment management firm.
If you’re looking for even more ways to maximize your retirement savings, you can also enroll in the Washington state Deferred Compensation Programs.
Enroll in VIP
Enrolling in the VIP is optional. It’s another way for you to save in addition to your primary UW retirement plan. Even if you aren’t participating in another UW plan, you can still enroll in the VIP.
All UW employees are eligible to participate (unless you receive a stipend or you are a nonresident alien who doesn’t receive income from a U.S. source).
Once you enroll, your contributions are automatically deducted from your paycheck. You can contribute up to 75 percent of your salary or as little as $15 per paycheck. You can change your contribution amount at any time.
To choose your funds and start making contributions, enroll through Fidelity Investments.
Investment and tax options
What’s your approach to investing for retirement? Would you rather avoid taxes now and pay later, during retirement? Or would you prefer to pay taxes now so you don’t have to later?
Answering these questions depends both on your preferences and your situation. Luckily, you don’t have to be a financial professional to answer them because, with the VIP, you get expert advice from Fidelity Investments, the nation’s largest investment management firm and provider of workplace retirement plans.
Your investment options include an array of mutual funds and annuities. Whether you’re a hands-on investor or you prefer a simpler target-date fund, you’ll find a VIP funds that matches your investing approach.
Your tax options include making either pretax contributions or Roth after-tax contributions. With pretax contributions, you defer paying taxes until retirement and your investments grow tax-free. With Roth after-tax contributions, you pay tax now but potentially withdraw your investment gains tax-free at retirement.
IRS contribution limits
A big part of successfully saving for retirement is knowing how your retirement plan affects your taxes. Each year, the Internal Revenue Service (IRS) sets contribution limits for 403(b) retirement plans. While these limits are generous, make sure your UW VIP contributions don’t exceed them.
If you have both a UW VIP (Pre-tax and Roth) account and a UWRP account, which are both 403(b) plans, make sure the combined total of all contributions to both accounts don’t exceed the IRS “annual limits.” In addition to the summary below, see the section “limit on annual additions” and “employee elective salary deferrals” on the IRS page for contribution limits for 403(b) retirement plans.
The current year annual additions limit allowed under the IRC 403(b) is:
• $57,000 for tax year 2020
The annual additions limit is a combination of both Employer and Employee contributions to all of your 403(b) accounts. An additional catch-up contribution is allowed if you are age 50 or greater as described in the “Catch-up Contributions” section below.
In addition to the annual additions limit, there is also an elective employee contribution limit which can limit how much you can contribute to the VIP. Depending on which other retirement plan you participate in, your VIP limit can be affected as summarized below:
PERS/TRS/LEOFF participants, or those with no retirement plan:
|2020||$19,500||Less than 50|
|$26,0001||50 or greater|
UW Retirement Plan participants:
|2020||$19,500||Less than 50|
|$26,0001, 2||50 or greater|
1- The VIP maximum contribution amount shown above includes the Age 50 “Catch-up Contribution” of $6,500 for 2020 as described in the “Catch-up Contributions” section below. UWRP participants with higher compensation may find this limit reduced further due to the IRS limit on annual additions.
2- Minus your optional 2.5% UWRP contribution amount
*Contributions under other employer plans may also count towards theses limits as do certain individual plans. If you have contributed to a plan with another employer in the same tax year, please notify your tax adviser and the UW Benefits Office immediately so that your limit can be evaluated.
The IRS allows what is called an “Age 50 Catch-up Contribution”, a contribution in excess of the general IRS contribution limit for 403(b) plans. This catch-up is available to employees who have reached age 50 during the calendar year. The catch-up contributions are $6,500 for tax year 2020.
Rollover your old retirement plan
If you have retirement savings in another employer’s plan or in an individual retirement account (IRA), you can transfer it to your VIP account in most cases. Doing so makes it easier to manage your savings and plan for your retirement. For details about rolling over your old accounts, contact Fidelity Investments.
Loans and hardship withdrawals
Though your VIP funds are intended for retirement, you can take out a loan from your account. If you need more than a loan, certain substantial expenses qualify you to take a hardship withdrawal. Both options have tax implications and require you to follow plan rules for accessing the money.
If you want to take out a loan or apply for a hardship withdrawal, contact Fidelity Investments or TIAA. Rules for both options are defined in section 6 of the UW VIP Plan Document.
Though your VIP funds are intended for your retirement, you may borrow from your account for any reason. You’re allowed to borrow up to 50 percent of your account balance with a minimum loan amount of $1,000 and a maximum of $50,000.
The cost to initiate a loan is $75, and you pay $6.25 each quarter (of the calendar year) to maintain the loan. After you initiate the loan, you pay the money back into your account, plus interest, using automatic deductions from your bank account. You can have only one loan at a time.
You don’t pay income tax or the early withdrawal penalty on loans. But if you fail to repay your loan, it will be considered in default, and you’ll have to pay taxes, per IRS rules.
If you have an immediate and substantial financial need, you can apply for a hardship withdrawal, which allows you to pay for the expense using your VIP funds.
You must provide documentation verifying the expense, and only certain expenses qualify including:
- Medical expenses that aren’t reimbursable
- Home purchase expenses (for only your primary residence )
- College and post-secondary education expenses for you, your spouse, or your dependent (for only the next 12 months of expenses)
- Expense that prevent your eviction or foreclosure of your primary residence
- Burial or funeral expenses for your deceased parent, spouse, or dependents
- Expenses for repairing damage due to a major disaster (per section 165 of the IRS code)
- Expenses relating to damage incurred by a federally declared disaster (flooding, wild fire, hurricane, etc.)
Once you take out a hardship withdrawal, you must pay income tax on the money plus the early withdrawal tax, per IRS rules.
Fund review committee
The UWRP Fund Review Committee is a standing committee defined in the plan document and authorized by the UW Board of Regents. The Committee has a fiduciary role in regard to UW retirement plans and is charged with operating exclusively in the best interests of the participants. Learn more about the Fund Review Committee responsibilities and membership.