Staff Handbook

Staff Pension Plan and Retirement Savings

Staff Pension Plan

The New York University Staff Pension Plan helps provide a financial foundation for your retirement. Whether or not you are working for NYU at the time you retire, if you have worked for NYU for at least five years and have met the eligibility requirements outlined in the Summary Plan Description, the plan pays you a benefit based on your earnings and the number of years you worked for NYU.

NYU pays the full cost of this pension plan. You make no contributions.

Eligibility

You become eligible to participate in the NYU Staff Pension Plan when you are at least 21 years old and have completed one year of service during which you worked at least 1,000 hours.

Vesting

Not everyone will stay with NYU until retirement. However, you may have a permanent legal right to a pension benefit even if you leave the University before retirement. This is known as being vested. You are vested in the NYU Staff Pension Plan if you have completed five calendar years of employment in which you received credit for 1,000 hours of service with the University in each year.

How Your Pension Is Determined

Your monthly pension benefit is calculated based on the following formula:

• Average annual base pay during the highest consecutive 36 months of participation in the plan out of the last 120 consecutive months before your retirement multiplied by:
• Your Credited Years of Service (maximum 35 years credit) multiplied by:
.014 for years 1-9
.017 for years 10-35
• This result is divided by 12 to obtain the monthly benefit, payable at age 65.

When You Can Collect Your Pension

At retirement, you may receive a monthly income for the rest of your life.

• Normal retirement age is 65. However, even if you are 65 years or older, you must meet the requirements for vesting in order to receive a pension.
• If you are vested, you may begin to collect your pension benefits as early as age 60, or after you have completed 25 years of service, whichever comes first.
• If you continue to work for the University after your normal retirement date, your deferred retirement date will be the first day of the month coinciding with or following your actual retirement.

Survivor Benefits

If you should die before retirement and you are vested in the NYU Staff Pension Plan, a pre-retirement death benefit may be payable to your beneficiary. In the event of your death, your spouse or other designated beneficiary should contact the Benefits Office for assistance. For complete details concerning pre-retirement death benefits and the NYU Staff Pension Plan, see the Summary Plan Description.

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The Supplemental Tax-Deferred Annuity Plan

NYU’s optional STDA Plan gives you a chance to save on income taxes now while saving for retirement. The STDA Plan is intended to help you supplement your retirement savings. All employees are eligible from their date of hire to participate in the Supplemental Plan.

You can decide how much of your salary to invest (usually up to a maximum of 25% of the base annual salary subject to IRS regulations), and how to invest the money.

All income taxes, on money invested and also on earnings, will be deferred until the funds are withdrawn. Withdrawals before age 59½ are subject to a 10% penalty tax. For more information, see the Summary Plan Description, the document that describes the STDA plan and investment options.

Withdrawals During Your Working Years

Generally, withdrawals from your STDA plan are not permitted while you are working for NYU. However, they are permitted in the following special situations:

• you reach age 59½,
• terminate employment at NYU,
• you are certified as permanently disabled,
• you die, or
• you claim financial hardship as defined in IRS regulations. Such withdrawals are subject to a 10% penalty tax. Exceptions to the penalty tax include: a payment under a Qualified Domestic Relations Order (to split assets in some divorces), and withdrawals to cover medical expenses which are deductible on your tax return. Any lump sum withdrawals are subject to 20% withholding.

For additional information see the STDA Summary Plan Description.
Note: all tax-deferred funds are subject to ordinary income tax for the year in which they are withdrawn.

Social Security Retirement Benefits

On your behalf, NYU contributes to Social Security an amount equal to the amount you pay in Social Security (FICA) taxes.

Social Security (FICA) taxes are automatically deducted from your paycheck beginning on the day you start work at NYU. The amount of your FICA deduction is a percentage of your salary, up to a set maximum for each calendar year. Exact amounts change yearly. Contact the Payroll Department for the latest FICA tax rate.

How Social Security Works

During your working years, you and your employer pay Social Security taxes. When your earnings cease due to retirement, total disability, or death, Social Security may pay benefits to you or your survivors to replace part of the lost income.

Social Security retirement benefits are based on your earnings record. To be eligible for Social Security retirement benefits, you must be fully insured, which means that you must have earned quarters of coverage in jobs covered by Social Security.* Depending on the year in which you were born, you may need a minimum of six to a maximum of 40 quarters (the quarters do not have to be consecutive). During this time you and your employer must have paid Social Security taxes on your earned income.**

*A quarter is one three-month period in a calendar year. Quarters begin on the first of January, April, July, and October.

**Earned income is a salary or wage paid to you by an employer.

Retirement Benefits

Generally, the amount of the Social Security retirement benefit is based on the average of your earned income for each year of employment, up to maximum creditable amounts. The amount will also depend on the age at which you retire.

More Information

For more information on how Social Security works, visit the Social Security Administration Web site at www.ssa.gov.

Enrollment and Effective Date

NYU makes contributions to Social Security that equal the contributions you make through payment of Social Security (FICA) taxes.

Social Security (FICA) taxes are automatically deducted from your paycheck beginning on the day you start work at NYU. The amount is a percentage of your salary, up to a set maximum which changes each calendar year. Contact the Payroll Department for the latest FICA tax rate.

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