Boston College's basic retirement plan is a qualified 401(k) Plan with a one-year service requirement for participation. Qualified plans are subject to strict IRS regulations and, consequently, Boston College is not able to waive, for any reason, the one-year waiting period for enrollment in the plan.
It is not uncommon for colleges and universities to waive the retirement plan service requirement for employees (particularly faculty) who come directly from other institutions of higher education. Recognizing this common practice, Boston College established the Retirement Plan Equivalency Payment. Under this policy a new employee may be eligible to receive an after-tax payment equal to "8%" of his/her annualized starting salary ("8%" represents the level of the University's contribution to the 401(k) Plan).
The rationale for making these payments is that a person could receive the after-tax amounts in lieu of 401(k) Plan contributions and, at the same time, make equivalent, tax-deferred contributions under the University's voluntary 403(b) Retirement Program. There is no requirement that 403(b) contributions be made, however.
Eligibility
New full-time employees must have at least one year of immediate, prior, full-time
service at a non-profit, tax-exempt institution of higher education AND must
have been participating in that institution's primary retirement plan, receiving
employer contributions. (Voluntary "employee-only" 403(b) plans do not qualify.)
Documentation
Verification (on employer letterhead) attesting to the prior service
and specific plan participation (as noted above) must be received by the Benefits
Office no later than sixty days after hire date, or payment will be forfeited.
The following must be supplied by the former employer:
- Dates of employment and confirmation of full-time status
- Verification of retirement plan participation with employer contributions
Amount of Payments
The total payment will be "8%" of the employee's annualized starting
salary; any subsequent increase in pay (e.g., Probationary Review, Annual Review)
will not affect the amount of the Retirement Equivalency Payment.
Timing of Payments
If administratively possible, periodic payments will begin in the
month following receipt of the appropriate documentation. Normally, the amount
of the payments will be determined by dividing the total Equivalency amount
by the number of months (weeks) remaining in the employee's first year of service.
Taxability
These payments will be included in the employee's regular salary payment and
will be taxed accordingly.
Tax Deferral Option
An employee can participate in the University's Voluntary 403(b) Retirement
Program while Equivalency payments are being received and may contribute a like
amount to the program (subject to IRS limits), effectively deferring taxes on
the Equivalency amounts.