Voluntary Retirement Incentive Option – FAQ
Who is eligible?
Tenured faculty members, with full or partial tenure, who are eligible to retire under their retirement plan, qualify for partial (40%) reemployment, and have reached age 62 or greater within the VRI retirement window of September 1, 2016 – August 31, 2017, are eligible.
What is a VEBA account?
A VEBA is a tax-free medical expense account that can be used by the retiree, his/her spouse, and other eligible dependents as authorized in the Internal Revenue Code (IRC). Approved uses for the VEBA account include medical / dental insurance premiums, as well as other out-of-pocket health care expenses not covered by insurance.
How is funding calculated?
The VEBA Medical Expense Account (MEP) will receive a one-time lump-sum contribution based on the faculty member’s nine or twelve month tenure backed position. The contribution will amount to 25% of the five-year value of 40% reemployment. This is generally equal to 50% of the faculty member’s annual tenure-back salary. The following contribution limits will apply to 100% tenured faculty members: $25,000 is the minimum and $100,000 is the maximum. Proportional contribution limits will apply to faculty members with partial tenure (e.g. 50% tenured faculty members will have a minimum contribution of $12,500 and a maximum contribution of $50,000).
- Nine-month tenured faculty member, regardless of history of summer funding:
- Base annual salary: $90,000 ($10,000 per month)
- Annual 40% reemployment : $36,000 ($90,000 x .40 = $36,000)
- 5 year value of 40% reemployment: $180,000 ($36,000 x 5 = $180,000)
- 25% of five year value: $45,000 ($180,000 x.25 = $45,000)
- One-time lump sum contribution to VEBA: $45,000
- Twelve-month 50% tenured faculty member:
- Base annual salary: $120,000 ($10,000 per month)
- 50% state funded salary: $60,000
- Annual 40% reemployment: $24,000 ($60,000 x .40 = $24,000)
- 5 year value of 40% reemployment: $120,000 ($24,000 x 5 = $120,000)
- 25% of five year value: $30,000 ($120,000 x .25 = $30,000)
- One-time lump sum contribution to VEBA: $30,000
- Twelve-month tenured faculty member with an A/B salary arrangement
- Base annual salary: $240,000 ($20,000 per month)
- 80% A state funded salary: $192,000
- Annual 40% reemployment: $76,800 ($192,000 x .40 = $76,800)
- 5 year value of 40% reemployment: $384,000 ($76,800 x 5 = $384,000)
- 25% of five year value: $96,000 ($384,000 x .25 = $96,000)
- Calculated one-time lump sum contribution to VEBA: $96,000 exceeds the proportional maximum contribution limit therefore the one-time lump sun contribution to VEBA will be $80,000. ($100,000 maximum limit x .8 percentage of tenure = $80,000)
Will I still be eligible for partial (40%) reemployment after I retire?
Tenured faculty members who retire under the VRI option must waive their vested right to 5 years of state-funded partial reemployment. Retired tenured faculty members who elect the VRI option may still be partially reemployed at the discretion of their department chair, program director, dean, or chancellor, but their reemployment must be supported with locally administered funds.
When must I apply?
Your signed contract (Application, Acknowledgement, and Agreement) must be received by the Office of Academic Personnel by the end of the open enrollment period of September 1, 2016 – February 28, 2017.
When must I retire?
The VRI option is only available to approved applicants who retire within the retirement window of September 1, 2016 – August 31, 2017.
What happens if I qualify for the VRI option but decide later not to participate?
Submission of a Notice of Interest form does not bind you to retire or elect the VRI option.
What happens if I elect the VRI option and decide not to retire?
If approved and upon election of the VRI option, you will be required to enter into a signed written contract, which will be irrevocable after a seven day revocation period. If your contract is not revoked within the stated timeline, you will have no choice but to continue with your retirement plans.
Must I get approval from my chancellor / dean / department chair / program director in order to participate?
You are highly encouraged to contact your chancellor / dean / department chair / program director to discuss your intent to retire; however, your notice of intent form for the VRI option must be filed with Academic Personnel. Your unit will be consulted and notified by Academic Personnel during the eligibility and verification process, but it’s approval is not required if eligibility is verified.
What if I apply within 45 days or less of the February 28, 2017, date?
You have the right to waive the 45-day consideration period; however, the decision to do so is completely voluntary on your part.
Is there any other office I must notify of my intention to retire?
Yes. You must contact the Benefits Office and submit an Application for Retirement.
Can I still apply to participate if I have already made arrangements for my retirement?
If you meet the eligibility requirements for the VRI and are scheduled to retire between September 1, 2016 and August 31, 2017, you may elect to participate in the VRI option upon verification. Since one of the conditions of acceptance for the VRI is that you waive your vested right to (40%) reemployment, in the event you have made plans for partial reemployment after retirement, you must contact your chair, program director, dean, or chancellor to discuss the impact of electing the VRI option on these reemployment plans.
Contact firstname.lastname@example.org for VRI questions.