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, are eligible for and have a vested right to partial (40%) reemployment, and will have reached age 62 or greater within the VRI retirement window of April 1, 2018 – June 30, 2019, are eligible.
What is a VEBA account?
A VEBA (Voluntary Employees’ Beneficiary Association) is a tax-free health reimbursement arrangement 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 reimbursement of medical / dental insurance premiums, as well as other out-of-pocket health care expenses not covered by insurance.
How is funding calculated?
The VEBA account will receive a one-time lump-sum contribution based on the faculty member’s nine or twelve month tenure-backed job. 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-backed 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 the VEBA: $45,000
- Twelve-month 50% tenured faculty member:
- Base annual salary: $120,000 ($10,000 per month)
- 50% tenure-backed salary: $60,000 ($120,000 x .5 = $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 the VEBA: $30,000
- Nine-month tenured faculty member with an 80/20 A/B Salary Arrangement
- Base annual salary: $90,000 ($10,000 per month)
- 80% A tenure-backed salary: $72,000 ($90,000 x .80 = $72,000)
- Annual 40% reemployment: $28,800 ($72,000 x .40 = $28,800)
- 5 year value of 40% reemployment: $144,000 ($28,800 x 5 = $144,000)
- 25% of five year value: $36,000 ($144,000 x .25 = $36,000)
- Calculated one-time lump sum contribution to the VEBA: $36,000
- Nine-month tenured faculty member regardless of history of summer funding
- Base annual salary: $270,000 ($30,000 per month)
- Annual 40% reemployment: $108,000 ($270,000 x .40 = $108,000)
- 5 year value of 40% reemployment: $540,000 ($108,000 x 5 = $540,000)
- 25% of five year value: $135,000 ($540,000 x .25 = $135,000)
- Calculated one-time lump sum contribution to the VEBA: $135,000 exceeds the proportional maximum contribution limit therefore the one-time lump sum contribution to the VEBA will be $100,000.
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 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.
What is the first step to apply?
You must submit a completed VRI Notice of Interest Form to Academic Personnel for verification of eligibility. Submission of a Notice of Interest does not guarantee your participation in the VRI Option, nor does it officially recognize your intent to retire. Upon receipt of your Notice of Interest, a contract will be generated and mailed to you. You will still need to receive, review, and submit a signed VRI Application, Acknowledgment and Agreement prior to the end of the open election period.
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 but decide not to retire?
If approved and upon election of the VRI option, you will be required to enter into a signed written contract (Application, Acknowledgement, and Agreement), 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. The seven-day revocation period cannot be shortened or waived.
Must I get approval from my chancellor / dean / department chair / program director in order to participate?
You are encouraged to contact your chancellor / dean / department chair / program director to discuss your intent to retire; however, your Notice of Interest form for the VRI Option must be filed with Academic Personnel. Your dean or chancellor will be notified by Academic Personnel during the eligibility and verification process, but approval by your chancellor/dean/department chair/program director is not required if eligibility is verified.
Is there any other office I must notify of my intention to retire?
Yes. Separate from electing the VRI, the you must complete the required retirement process and establish the VEBA account. Please refer to the Total Benefits, UWRP: Preparing to Retire, for the retirement application process.
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 April 1, 2018 and June 30, 2019, you may elect to participate in the VRI option upon verification., 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, since one of the conditions of acceptance for the VRI is that you waive your vested right to (40%) reemployment.
Is there additional information that would help me understand my options between my vested right to reemployment and the VRI?
Yes, we will be hosting an in-person information session and will post the link to an online webinar once it is available.
Is there a guarantee of a future VRI offering?
No. The Provost will determine whether and when to offer the Voluntary Retirement Incentive (VRI) option to eligible tenured faculty members. There are no guarantees of future offerings. Eligible faculty members are informed when, and if, a decision is made to offer the VRI.
Contact firstname.lastname@example.org for VRI questions
Contact TotalBen@uw.edu for VEBA questions