QPP and SPP Plans
Central Texas College maintains two IRS Section 401(a) defined contribution ERISA-compliant qualified pension plans for its employees.
The Employees’ Pension Plan and Trust (referred to as QPP) is for full-time employees (with some exceptions). Eligible employees must satisfy a one-year waiting period for participation in QPP, after which time they are entered into QPP on the next entry date (either March 1 or September 1). Employees contribute a mandatory 6% of their wages to QPP, and CTC contributes a mandatory 7%. Employees may contribute an additional 4% if they wish.
Employees are always 100% vested in their own employee contributions and the associated earnings, but they must satisfy a 6-year vesting schedule in order to become 100% vested in the employer contributions and the associated earnings.
The Employees’ Supplemental Plan and Trust (referred to as SPP) is for part-time employees (with some exceptions). There is no waiting period for SPP participation; eligible employees participate from their first day of employment. Eligible employees contribute a mandatory 3.75% of their wages to SPP, and CTC contributes a mandatory 3.75%. Employees are always 100% vested in both their own employee contributions, and also the employer contributions, and all the associated earnings.
Special rules apply to our “wage-determined” employees. Wage-determined employees are eligible to participate in SPP, but not QPP. Some exceptions may apply, depending on your individual circumstances.
When individuals leave CTC (and are officially and completely terminated/retired from the employer), they can take distribution of the vested balance in their pension account, which consists of: employee contributions, vested employer contributions, and vested accrued earnings. Plan rules mandate that inactive accounts with balances under $1,000 should be distributed as quickly as possible. See Distribution Information section for more information. If your account balance is over $1,000, you may leave your funds in QPP and SPP after you terminate/retire. You will continue to participate in our portfolios, just as you did before you terminated/retired.
PLAN OPERATING EXPENSES
There are always expenses involved in operating pension plans. There are two main types of operating expenses that you will see deducted from your pension account, as follows:
1. Tiaa-Cref Admin Fees: These fees relate to Tiaa-Cref's expenses for administering our accounts, and those expenses include their software costs, their professional staff, their Call Center, our quarterly statements, our confirmation mailings, our individual web accounts, our advisors, and many other services.
2. CTC Operating Fees: These fees relate to the costs of maintaining a Pension Plan Admin Office at CTC, and those expenses include salaries, technology costs, printing, supplies and other costs. These expenses also include costs to support the CTC Pension Plan Trust Committee, charges for our annual audit, and legal fees. These fees are also deducted from our accounts once each quarter, on a pro-rata basis, and are labeled "Non Tiaa-Cref Plan Servicing Fees".
When CTC employees begin to participate in QPP or SPP, our Pension Plan contributions must be placed in an initial automatic "default" asset allocation or "default" portfolio. After those initial contributions, plan members can choose from a variety of other options. They can choose to stay in the "default" portfolio, if they wish, or they can transfer all (or a portion) of their pension funds into other investments. They can re-allocate their funds periodically, subject to published trading policies.
In the past, Pension Plan Trustees had to decide what the initial automatic "default" portfolio would be. The new Pension Protection Act (PPA) of 2006 changed that. The Pension Protection Act and the Department of Labor now dictate what the automatic "default" portfolio should be. We must now use special mutual funds called "targeted retirement date funds" as our automatic "defaults". In our case, we use ten T. Rowe Price Targeted Retirement Date Funds.
These ten T. Rowe Price Targeted Retirement Date Funds are tailored to individuals, based on their estimated future retirement date. They consist of a diversified mix of stocks and bonds, which are automatically reallocated and rebalanced over time by the fund's managers. The funds become more conservative as the individual gets closer to the targeted retirement date. They assume a retirement age of 65 years old. The ten T. Rowe Price funds that are utilized as our new "default" portfolios are as follows:
|T. Rowe Price Retirement 2010 Fund||T. Rowe Price Retirement 2015 Fund|
|T. Rowe Price Retirement 2020 Fund||T. Rowe Price Retirement 2025 Fund|
|T. Rowe Price Retirement 2030 Fund||T. Rowe Price Retirement 2035 Fund|
|T. Rowe Price Retirement 2040 Fund||T. Rowe Price Retirement 2045 Fund|
|T. Rowe Price Retirement 2050 Fund||
T. Rowe Price Retirement 2055 Fund
T. ROWE PRICE RETIREMENT FUNDS FACT SHEET as of 06/30/2014