The Voluntary Retirement Incentive (VRI) Option program has been suspended as of July 1, 2020. There are no plans to offer it in the foreseeable future.
Voluntary Retirement Incentive (VRI) Option: An Alternative to Five-Year Partial Reemployment for Tenured Faculty Members
The Voluntary Retirement Incentive (VRI) option is an alternative retirement benefit available to eligible tenured faculty members, whereby they elect to forego their vested right to partial (40%) reemployment in exchange for a tax-free health reimbursement arrangement. The faculty retiree and eligible dependents can use the fund for reimbursement of medical expenses after retirement. It is operated in accordance with rules established in the Internal Revenue Code (IRC).
Program Election
The Provost will determine whether and when to offer the Voluntary Retirement Incentive (VRI) option to eligible tenured faculty members. When the availability of the VRI is announced it will include an open election period for a specified retirement period. The open election period is the only time a pre-retiree may elect to participate in the VRI for the announced retirement period. The applications of all eligible pre-retirees will be approved. If approved and upon election, the tenured faculty member will be required to enter into a written contract, which will be irrevocable after a seven-day revocation period.
Eligibility
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, are considered eligible for the VRI option.
Information on the VEBA (Voluntary Employee’s Beneficiary Association)
If the VRI Option is elected, on retirement a VEBA account will be established and receive a one-time lump-sum contribution. Please note that information on the VEBA is maintained by UW Benefits. The most recent information can be found at:
Contribution Calculation
The contribution will be 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. 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).
VEBA Eligible Dependents
Generally, dependents must satisfy the definition of Qualifying Child or Qualifying Relative as of the end of the calendar year in which expenses were incurred to be eligible for benefits under your VEBA plan. These requirements are defined by Internal Revenue Code §152 and summarized below:
- your spouse,
- your dependent children, and
- your other dependents as defined under the IRC.
VEBA Unused Funds
If you have IRS Dependents:
VEBA can be left to your legal spouse or IRS defined dependents, tax-free. They can use it as a VEBA for their eligible healthcare expenses, tax-free.
If you have no legal spouse or IRS dependents:
Funds become available to provide medical reimbursement benefits, on a taxable basis, to a deceased participant’s non-dependent heir(s) or beneficiaries.
Eligible Medical Expenses
IRS-approved uses for the VEBA currently are quite broadly defined and provide access to funds for a variety of insurance premiums as well as expenses not covered by PEBB or other insurances.
Using these tax exempt monies, a VEBA could reimburse some out-of-pocket health-related expenses. Examples include medical insurance premiums, drugs (prescriptions) and medical supplies, and eyeglasses & exams.
VRI Option Approval
The Board of Regents approved the adoption of the Voluntary Retirement Incentive Option policy.
Questions?
Contact vri@uw.edu for VRI questions.
Contact totalBen@uw.edu for VEBA questions