The Princeton University Retirement Plan (PURP) is a tax-qualified defined contribution savings plan. The University makes contributions to the PURP on an employee’s behalf, and these contributions are invested in the investment options that participants select. Each pay period, the University contributes 9.3% of participants’ compensation up to the Social Security wage base and 15% on the portion of their compensation above the Social Security wage base. Participants choose how they want the University’s contributions to be invested among a variety of investments funds. TIAA serves as the PURP’s recordkeeper. Participants are encouraged to register online with TIAA to establish an account, name beneficiaries, and select investment allocations.
- To be eligible for Plan participation, participants generally must be members of the faculty or staff who are employed at 50% duty-time or more, with such level of duty-time expected for four and a half months or more during a calendar year and who are on the regular monthly or biweekly payroll. Participants are eligible to participate in the PURP on the first day of the month coincident with or next following their date of hire. Please use the Benefits Eligibility Tool to determine eligibility.
- Casual employees become participants on the first day of the month coincident with or next following the completion of an Eligibility Computation Period, defined as the 12-month period beginning on the first day of employment, or reemployment for a rehired employee, and each anniversary thereof, during which the casual employee is credited with 1,000 or more hours of service. In addition, casual employees who previously retired from the University and are eligible for medical coverage under the University’s retiree medical plan become a participant in the PURP, regardless of their hours of service, on the first day of the month coincident with or next following the month in which they are rehired.
- Employees, other than casual employees, who are not eligible to participate in the Plan because they are not employed at 50% duty-time or more, with such level of duty-time expected for four and a half months or more during the year, become participants on the first day of the month coincident with or next following the completion of an Eligibility Computation Period (defined above) during which employees are credited with 1,000 or more hours of service. This assumes the employee is not otherwise excluded from PURP participation. Please use the Benefits Eligibility Tool to determine eligibility.
Participant becomes fully vested in the PURP when they:
- Complete 30 months of service with the University
- Reach normal retirement age (age 65) while still employed by the University
- Become totally disabled, receiving benefits under the Long Term Disability Plan, while an active employee
- Die while an active employee
- Die while engaged in active military service
Participants’ employment with a previous employer may be eligible for credit toward the vesting requirement if:
- The prior employer was classified as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code.
- They were employed by a university, including a university outside of the United States.
- They have their previous employer complete the Princeton University Certification of Prior Employment for Waiver of Service form.
If participants terminate employment before meeting the service requirement, their account balances are forfeited. When individuals are reemployed by the University and at a time their vesting service is restored to them, any amounts that were forfeited from their account (but no earnings on such amounts) are restored to them.
Once vested in the PURP, participants are always vested, even if they leave the University. Participants rehired as eligible employees immediately re-enter the PURP as fully vested participants. For more details about vesting, being rehired, and breaks in service, refer to the PURP Summary Plan Description (SPD).
- Each pay period, the University contributes 9.3% of participants’ compensation up to the Social Security wage base and 15% on the portion of their compensation above the Social Security wage base, available on the Social Security website.
- Contributions are calculated on compensation, which is defined as the base salary or wages paid to employees by the University, including lump sum payments made in place of a regular annual salary increase, temporary disability salary or wage continuation, and military differential wage payments. In addition, compensation includes summer salary, i.e., straight-time pay for hours worked by an employee classified as a 9, 10, or 11 month employee during the scheduled months off. Compensation also includes any pretax deductions taken from the employee’s paycheck.
- The University makes all contributions to the PURP. Participants are not permitted to make voluntary contributions to the PURP. All University contributions are made pretax. Participants are not able to direct University contributions to be made after-tax.
- During a paid leave of absence, the University continues to make contributions based on the compensation a participant is paid during the leave. Since a participant does not receive compensation during an unpaid leave, no contributions are made during the period of an unpaid leave of absence, unless a participant is on military leave, or an approved long term disability leave, or is receiving worker’s compensation benefits.
- If a participant becomes totally disabled while an active participant in the PURP, the University continues to make contributions to the PURP on the employee’s behalf. For purposes of the PURP, a participant is totally disabled if receiving benefits under the University’s Long Term Disability Plan. Contributions are based on a participant’s compensation immediately before becoming disabled. If a participant stops receiving benefits under the Long Term Disability Plan and does not return to work, the University stops making contributions to the PURP on the last day of the month in which the Long Term Disability Plan benefits terminate.
- PURP offers a number of different investment choices, including annuities and mutual fund investment alternatives. If a participant does not choose investments, contributions are defaulted into the Vanguard Target to Retirement Fund closest to the year the participant reaches age 65.
- Participants may change their investments allocation at any time by going online or by contacting TIAA at 1-800-842-2776.
- Participants may change their beneficiary designations at any time prior to the receipt of their benefit payments. If participants are married, their spouses must consent in writing if they elect a non-spouse beneficiary or form of payment other than a joint-life annuity with their spouse as their annuity partner. Special rules apply with respect to designating a beneficiary if a participant dies before the benefits are paid.
- If participants die prior to the payment of their benefit, the beneficiaries that they named receive the amount of their account. If a participant dies before benefit payments begin without having named a beneficiary and is married at the time of the death, the spouse automatically receives 50% of the account, and the estate receives the remaining portion. If a participant is not married and does not designate a beneficiary, the estate receives the full balance.
Withdrawals, Loans, and Rollovers
The Plan does not permit:
- Withdrawals while actively employed except when the participant is receiving benefits under the University’s Long Term Disability Plan
- Rollovers to the PURP
- Payments from the PURP usually begin at normal retirement age which is 65.
- Participants may choose to receive income or otherwise receive a payout of part or all of their account balance after they terminate employment with the University.
Upon termination of employment the following distribution rules apply:
- Vested participants under age 55 with a balance of $75,000 or less are eligible to take a cash distribution or roll their money into an IRA or other qualified plan.
- Vested participants under age 55 with a balance greater than $75,000 are not eligible to take a cash distribution but are eligible to rollover their money into an IRA or other qualified plan.
- Vested participants age 55 or older have no restrictions on distributions; participants under age 59 ½ who take a cash distribution may be subject to a tax penalty in addition to ordinary income taxes.
Participants who continue to work at the University after their normal retirement date are not paid their retirement income until they retire. Other instances when participants may receive a distribution of their vested account while still employed at the University:
- If age 65, they may elect a distribution under any Interest Payment Option that is available for their TIAA investment options.
- If age 55 but not eligible for participation in the Plan, they may apply for a distribution as if they had separated from service; if they retire, but later return to the University as a casual employee, they may apply for a distribution of their account if they otherwise are eligible to participate in the PURP.
- Retired faculty members who later return to the University as non-benefit-eligible employees scheduled to work less than 50% duty time may apply for a distribution if they otherwise are eligible to participate in the Plan and receive contributions under the Plan.
The normal form of payment under the PURP is a single life annuity if unmarried and a qualified joint and survivor annuity if married.
For participants who have terminated employment with the University and are age 70 ½ or older:
- After termination of employment with the University, the law requires participants to withdraw minimum amounts from the PURP each year after age 72. Participants who turned age 70 ½ before July 1, 2019, are required by law to withdrawal minimum amounts each year after age 70 ½.
- Federal law determines the amount of the distribution.
- Participants must begin taking distributions under the Minimum Distribution Option (MDO) by the April 1 following the calendar year in which they reach their minimum distribution age or the April 1 following the year of retirement, if later.
- Participants who fail to satisfy the minimum distribution requirements are subject to a tax penalty equal to half of the entire amount that federal law required for withdrawal.
- Once minimum distribution income has started, participants must take the annual minimum distribution each year by December 31.
Participants can contact TIAA, Princeton’s recordkeeper, at (800) 842-2776 to learn more or access their money. For additional information and/or to review detailed Plan rules, participants may also refer to the Summary Plan Description.
Qualified Domestic Relations Orders
If a participant is involved in a court proceeding that results in a Qualified Domestic Relations Order (QDRO):
- The account is split in accordance with the order, establishing a separate account for the alternate payee.
- The alternate payee account is not available for distribution until the participant is eligible for a plan distribution.
Contact TIAA, Princeton’s recordkeeper, at (800) 842-2776 for assistance with QDRO administration.
If there are any discrepancies between the information in this publication, verbal representations, and the plan documents, the plan documents always govern. Although Princeton intends to continue these benefits, the University reserves the right to amend or terminate these plans at any time.