May 28, 2020

FAQ: Retirement Contribution Suspension

Posted May 28, 2020 – Updated July 31, 2020 – may be amended as necessary 

Fiscal Impact on Employees
President Byerly’s May 28 Message  |  FAQ: Compensation Reductions  |
FAQ: Furloughs

The College is implementing two significant changes to the employee retirement plan for the period July 1, 2020 through June 30, 2021. The College is:

  • Suspending its 2020-21 retirement plan contributions, which are set at 9.5 percent of an eligible exempt/salaried employee’s salary and 8 percent of an eligible non-exempt/hourly employee’s salary.
  • Suspending the requirement that exempt/salaried employees contribute 5 percent of their salary above $15,000 to their retirement.*

* Waiving the employee-contribution requirement allows those who wish to offset the impact of their reduction in pay to do so by reducing or eliminating their pre-tax payroll retirement contribution. Alternatively, others might choose to increase their personal voluntary retirement contribution to help offset the loss of the College’s contribution and mandatory contribution.

For those employees who are members of the union, we will be negotiating the union’s participation in these changes before they become effective.

Retirement Contribution Suspension FAQ

Will the change in retirement contributions go beyond the coming year?

The College expects to be able to resume retirement contributions July 1, 2021, though those decisions will be contingent on the economic climate at that time.

How do I decrease or increase my voluntary contributions to the retirement plan?

Please contact the Human Resources Office at hroffice@lafayette.edu. 

Do I need to complete a new contribution form as a result of the changes in the College’s contribution?

If you need assistance with a contribution change, contact the Human Resources Office at 610-330-5060 or email hroffice@lafayette.edu. 

If I am an exempt/salaried employee who had elected to contribute the maximum voluntary amount allowed under federal law and also was contributing the mandatory amount, do I have to reduce the amount of my current voluntary contribution now that the mandatory contribution has been suspended? (limit is $19,500; additional $6,500 if age 50 or older)

You do not need to decrease your voluntary contribution. Although the mandatory plan of the College is suspended effective July 1, 2020, any contributions made to this mandatory plan during the first half of the 2020 calendar year are still permitted for calendar year 2020.

Why should I consider increasing my voluntary contribution?

The suspension of the College’s contributions, as well as the suspension of the mandatory retirement plan contributions for exempt/salaried employees, will decrease the contributions to your retirement plan for the next year. Recognizing that the value of continued contributions is still important, you may wish to consider increasing your voluntary contributions to your retirement plan.  By contributing to your retirement plan, your earnings are compounded over the years. Review this TIAA Resource or this Fidelity Resource to understand more about the importance of investing and other tools that can help you with your retirement goals.

Whom do I contact if I need help in making a change to my voluntary contributions or understanding these changes to the retirement plan?

If you would like to make a change or need assistance, contact the Human Resources Office at 610-330-5060 or email hroffice@lafayette.edu. New contribution forms will be available June 1, 2020 on the Human Resources site. 

What options are available through our retirement plan if I am experiencing financial challenges due to COVID-19?

If you are experiencing financial challenges due to COVID‐19, there are withdrawal provisions and other elements related to your retirement plan that you may want to be aware of. Please review this information from the CARES Act, which was passed by Congress to ease some of the financial impact of the COVID-19 crisis. It is strongly recommended that you take the time to understand the impact of any withdrawal before taking money out of your retirement account.

What resources are available to help me with my 403(b) retirement plan and other investment decisions?

The following resources are available to help employees with retirement and investment decisions:

TIAA Resources
The Web Resource Center provides information, insights and expert analysis to help guide you through turbulent times. Speak with a representative from TIAA at 800-842-2252 to discuss your account or learn about specific options that you may have through the CARES Act if you are in need of financial relief.

Fidelity Resources
The NetBenefits® homepage can immediately address reassurance needs to help understand what is happening with the market. There is a message at the top of the NetBenefits homepage to provide immediate tips to participants. Speak with a representative from Fidelity at 800-343-0860 to discuss your account or learn about specific options that you may have through the CARES Act if you are in need of financial relief.

Will the Human Resources Office be offering financial education sessions regarding changes to the retirement plan?

Yes, you will receive notification regarding these sessions in June.

If I have additional questions regarding furloughs, salary reductions or the changes to the College’s retirement plan, who should I contact?

You can find information on the Human Resources website, call the Human Resources Office at 610-330-5060 or email us at hroffice@lafayette.edu.

How did my take-home pay go up if I had a salary reduction?

If you are in the salaried retirement plan that required a 5% mandatory contribution and you did not utilize the new contribution form to offset the loss of the mandatory contribution by increasing your voluntary contribution, the money from your mandatory contribution (after taxes) went back into your take-home pay.