Voluntary Retirement Program (VRP) Frequently Asked Questions

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1 Voluntary Retirement Program (VRP) Frequently Asked Questions (New) How can I get faster service at SURS? When you call for an appointment, clearly indicate that you are an employee on the Urbana campus who wants to participate in the Voluntary Retirement Program. Have the following information with you: o Unused Vacation Balance; Unused Compensable Sick Leave Balance (get these from your unit) o Copy of academic NOA or copy of Civil Service Appointment Information Form o Earnings statement(s) February 2010 for Civil Service; January and February 2010 if academic subject to furlough Be prepared to request two estimates: 1) the retirement date of your choice; 2) the program end date ( for AP and Civil Service) or ( for faculty and other academics) (New) Questions related to tax-sheltering of lump sum payments The campus Human Resource offices have received several questions related to possible tax-sheltering of lump sum payments, such as through either a 403(b) or 457 plan. Examples of these types of questions include: Can I tax shelter the VRP lump sum amount? Can I tax shelter the vacation/compensable sick leave pay-out? In general, since the VRP payment is not considered earnings, contributions cannot be made to a 403(b) or 457 plan. However, the University Payroll and Benefits (UPB) office advises that the Terminal Benefit Payout for accrued vacation and compensable sick leave that you may receive upon separation is eligible. If you wish to make a contribution to one or both of these plans from a Terminal Benefit Payout, please contact the UPB at least sixty days in advance of your separation date. UPB Benefits Services contact information is (217) or [email protected]. Information about 403(b) and 457 plans is also available through NESSIE: Consult with UPB and/or a tax attorney or other tax professional to get the most accurate and up-to-date information. (New) Can I delay receipt of the voluntary separation/retirement lump sum payment until the next tax year? No. (New) How can I receive the voluntary separation/retirement lump sum payment and/or vacation/compensable sick leave pay-out in time to purchase additional SURS service credit? If you are interested in the VRP program and decide to apply, then please forward to the appropriate campus Human Resources contact (Sandy Jones for faculty, other academic employees and academic professional employees; Corbin Smith for civil service employees) a copy of the information from SURS regarding purchasing the prior credit. If your application is approved and you then sign and do not revoke a Separation Agreement, then HR will note that your lump sum payment should be processed within the 45 days immediately prior to your separation date to facilitate your purchase of the SURS service credit.

2 (New) How does the VRP affect my health insurance coverage? As stated in the program Guidelines, Any other pay and benefits (health, dental, etc.) will terminate or cease upon separation in accordance with the terms of those established laws, policies, plans and procedures. If you resign, your health insurance coverage will terminate as of the effective date of your resignation. If an Academic employee retires on the 15 th of the month and then becomes a SURS annuitant on the first day of the following month, health insurance will remain in effect with no gap in coverage. Academic employees with retirement dates other than the 15 th of the month, should contact the UPB Benefits Services office at (217) or [email protected]. All retiring civil service employees should contact the UPB Benefits Services office. For more information, please refer to: (New) I will miss the SURS age requirement by only a few months on What happens to my insurance coverage if I resign from the University a few months prior to my SURS annuitant eligibility? Contact the UPB Benefits Service office for assistance in answering this question. Their contact information is (217) or [email protected]. (New) If I resign via the VRP offering, will I be eligible for COBRA insurance? Yes, employees submitting resignations due to the VRP are eligible for COBRA. (New) Will I receive the government subsidy on the COBRA cost? The determination for COBRA Subsidy eligibility is made by CMS when they are notified by an agency of an employee s separation. This program has currently been extended through February 28, The possibility of a further extension is unknown as of mid-february. Contact the UPB Benefits Services office for assistance in answering this question. Their contact information is (217) or [email protected]. (New) If I resign via the VRP offering then can t find another job, will I be eligible for IDES unemployment benefits? That determination will be made by the Illinois Department of Employment Security (IDES). The IDES website is: The pamphlet, What Every Worker Should Know About Unemployment Insurance, might also be helpful: (New) What should I do if I apply for the VRP and then decide I do not want to resign or retire? Simply complete the online withdrawal form. (New) What should I do if I apply for the VRP offering and then change my mind about the separation date? Simply complete the online withdrawal form (to withdraw the initial application), and then re-submit a new application indicating the new separation date. (New) If I signed up for a date that is before the end of May, am I still eligible to participate in the program? The program guidelines state that employees will be notified on or about April 23, 2010, as to whether or not their application has been approved. Employees are then entitled to up to 45 days to review the agreement; once the employee signs the agreement, it must be routed to several campus offices for signatures; and then employees have a seven-day revocation period upon receiving a fully signed agreement. Realistically, then, the earliest separation date is likely to be late May.

3 (New) I don t want to sign up for the voluntary program then only receive $500. What does the $500 mean in the Maximum Payment section of the VRP Guideline documents? How will I know if I will not receive the full amount of the VRP lump sum payment? The paragraph regarding Maximum Payment is included in the VRP guideline documents to cover any situations which could arise from an unresolved financial matter between an employee and the University. One example would be an on-going workman's compensation claim. This language would allow the University to withhold all but $ of a VRP lump sum amount in the event such an action would be determined to be necessary. (New) What is the appeal process and timeline? The program guidelines states the following (see the section entitled Disputes Regarding the Application of the VRP ): If for any reason you dispute or disagree with the application of the VRP to your situation, please contact the Associate Provost for Human Resources in writing by hand-delivery or US Postal Service at the address set forth above. The Associate Provost for Human Resources will attempt to resolve any disputes. In order to be considered, any dispute or disagreement you may have must be hand delivered or postmarked not later than thirty (30) calendar days from the date of the occurrence of the matter giving rise to dispute or disagreement or within thirty (30) calendar days after you, through the use of reasonable diligence, could have obtained knowledge of the occurrence of the matter giving rise to the dispute or disagreement. Written disputes or disagreements sent by facsimile, electronic mail, or campus mail will not be accepted. (New) If my application is not approved, will I be told the reason for the denial? Yes. A short explanation will be provided. Who is eligible to apply for the program? Faculty and employees in the other academic category who meet one of the following age and service requirements no later than August 15, 2011: Age 55 with 8 or more years of service credit; Age 62 with 5 or more years of service credit; or 30 or more years of service credit Is this program just for the Urbana campus? Yes. This program is for employees in University of Illinois at Urbana-Champaign campus units only. What is the incentive that is being offered for resigning or retiring? The employee s VRP payment under this program will be fifty percent (50%) of his/her current annual base salary up to a maximum lump sum gross amount of seventy-five thousand dollars ($75,000). Any payment made under this program will be subject to federal and state income tax withholding and, if applicable, federal Medicare withholding. This payment will not be treated as earnings for the purpose of making contributions to the State Universities Retirement System (SURS). What does current annual base salary include? For Faculty and other academic employees, current annual base salary includes the base full-time equivalent (FTE) salary only. It does not include overloads, endowed, administrative, or other stipend amounts. When do I have to sign up for this program? The application period is from February 3, 2010 to April 2, 2010.

4 Should I contact my unit head if I am interested in applying for this program? Yes, employees are encouraged to talk with their unit head or a designated representative. Academic Human Resources staff will also be available to help. Contact Sandy Jones, , [email protected] How and when will my unit head be notified if I apply? All applications will be reviewed by campus Human Resources first. Applications submitted by employees who meet the eligibility criteria will be forwarded to the appropriate college office. The college office will then distribute the information to the unit level. If I submit an application under this program, can I change my mind? Yes, up until the time an agreement has been fully executed. How soon would I have to leave? Faculty and other academic employees must end employment on or before August 15, Who decides the separation date? The application asks employees to propose a separation date. The separation date ultimately must be mutually agreed to by the unit and the employee and must be no later than August 15, Why is this program being offered? The University of Illinois is faced with unprecedented economic uncertainty created by a weak Illinois economy and serious state financial problems. As one response to this challenge, a short-term Voluntary Retirement Program (VRP) is being offered in an effort to reduce the size of the work force and thus, in the long term, save money. How will approvals be determined? The appointing unit(s) will review each application and recommend whether it should be approved or denied based on the following criteria: Unit budget Position s funding source Unit operational needs This program is intended primarily for employees in positions that are state-funded. However, campus units may consider employees in positions funded from other sources (such as state or federal grants) if doing so meets the needs of the unit. The University reserves the right to approve or deny recommended separation agreements in its discretion, based on judgment concerning whether the proposed separation is in the best interests of the affected unit and its ability to fulfill its missions. In addition, each campus unit may establish caps on the maximum amount of funding it will devote to the program, and may deny applications based on cost. How is this program being funded? All costs of the program will be the responsibility of the exiting employee s appointing unit(s). There are no central funds set aside for this program. Do I have to be eligible to retire in order to participate? Yes. You must meet SURS retirement eligibility criteria by the date of separation, which must be no later than August 15, 2011, in order to participate.

5 Will this help me retire early? No. This program does not enhance or change your eligibility to retire from SURS, nor do the monies paid out through this program count as earnings for SURS purposes since the monies would not be for services rendered. However, employees who have questions about purchasing prior service credit should contact SURS. How do I contact SURS? In the Champaign-Urbana area, you may call SURS at ; the toll-free phone number is ASK-SURS ( ). The link to the SURS website is: When scheduling an appointment with SURS, please indicate that you are considering participating in the VRP. If my application is approved, when will I receive the payment? The payment will be made as specified in the agreement, normally within 45 days of separation. Will I have to pay taxes on the VRP payment? Yes. Any payment made under this program will be subject to federal and state income tax withholding and, if applicable, federal Medicare withholding. There will be no SURS withholding from the VRP payment. Will separating under the VRP affect my vacation/sick leave payout? No. The VRP payment is unrelated to any benefit payout due an employee upon separation. Can I revoke this agreement if I change my mind? Each employee will have seven (7) calendar days, from the date s/he receives the fully signed agreement, to revoke his/her separation agreement. Should an employee choose to revoke his/her separation agreement, s/he will be required to notify the University in writing of this decision. Revocations must be hand-delivered or postmarked to the Academic Human Resources. If I separate from the University under the VRP, may I ever return to a job at the university? Employees who retire are subject to the existing policy on re-hiring retirees, which can be found at: If I do this, will it save one of my colleagues from being laid off or issued a notice of non-reappointment? The possible impact of this program on layoffs and notices of non-reappointment will depend on a number of factors, including how many employees participate in the program, units strategic plans, changes in the state s financial health, among others. In some units, participation may be helpful in limiting the number of employees who are laid off or given notices. In other units, this may not be the case. If I submit an application under this program, when might I expect to hear if my application has been approved? Review and approval will take place after the closing date for enrollment period (April 2, 2010). It is anticipated that the review and approval process may take up to three weeks.