Activity: Retention Incentive Pay 18-20 Plan Financial Policy: N/A Related Policies: N/A Additional Forms: N/A Things to Know: Effective July 1999, the University implemented several initiatives to assist in funding
future 18/20 Plan expenses. One of these initiatives -- Retention Incentive Pay -- is an opportunity for departments to retain productive employees who would otherwise terminate and begin receiving 18/20 Plan benefits. (After age 65, an individual accepting a Retention Incentive Pay would, in effect, be forfeiting 18/20 Plan payments for the associated period.) For individuals who would otherwise terminate and receive 18/20 Plan benefits,
Retention Incentive Pay would provide the following value: 1. At age 64, a $5,000 allocation for research or professional development (funded by the employee’s department), and
2. At age 65, a 20% of base salary supplemental payment, in addition to normal base salary (funded from a University Administration account). a. Summary An opportunity for departments to retain productive Academic and Staff employees who would otherwise terminate and begin receiving 18/20 Plan payments. Department-designated individuals, who are potential 18/20 Plan recipients, would receive the following Retention Incentive Pay allocation/payment:
At age 64, a $5,000 allocation for research and professional development – see section C for details. From age 65 to 70, a 20% of base salary supplemental payment – see section D for details. b. 18/20 Plan Eligibility To receive 18/20 Plan benefits, an individual must meet the following criteria: have at least 18 years of participation in the IU Retirement Plan 15% Level, and have at least 20 years of full-time Appointed IU service, and be at least 64 years of age. At age 65, it is possible for an individual to receive a full 60-months of 18/20 Plan benefits. After initiating 18/20 Plan benefits, such payments cease on the earliest of the following dates: after 60 months of benefits, the recipient’s 70th birthday, or the recipient’s death. c. Research and Professional Development Allocation This is a one-time allocation for individuals who would otherwise terminate and receive 18/20 Plan payments at age 64: $5,000 would be allocated by the respective department, for the employee to use for expenses related to research, personal development or other activities that would mutually benefit the department and employee. related expenses would be charged to or reimbursed from department budgets in the same manner as other associated expenses (It is intended that these expenses would qualify as “business expenses” under all applicable internal and external regulations.) the “$5,000 allocation” can be used anytime during the period the employee is receiving Retention Incentive Pay any remaining balance of the “$5,000 allocation” at the time the employee terminates or obtains age 70, is retained by the department funding of the “$5,000 allocation” is the responsibility of the associated department Procedure for Initiation of Research/Professional Development Allocation: STEPS 1. Deans, Department Head or Directors should obtain approval from the respective Provost, Chancellor or Vice President, using email or memo format to document such request and approval. Note that not every individual is eligible for 18/20 Plan benefits at age 64, as other criteria applies – see above eligibility criteria for 18/20 Plan benefits. 2. A copy of the approval from the respective Provost, Chancellor or Vice President should be sent to University Human Resource Services at: University Human Resource Services
ATTN: Retention Incentive Plan
Poplars Building, Room E199
Bloomington Campus This documentation should identify: employee, department/campus and effective date. (University Human Resource Services will use this documentation to maintain University-wide records of this Retention Incentive “allocation” and to prepare institutional reports for analysis and evaluation.) 3. The Dean, Department Head or Director should notify the associated employee of the Retention Incentive Pay “allocation”, after approval is obtained in step 1.
d. Supplemental Pay
This is a monthly payment for department-designated individuals who would otherwise terminate and receive 18/20 Plan benefits between age 65 and 70: 20% of base salary would be paid to the employee as a supplemental payment the “supplemental payment” would be treated as wages, subject to normal income and employment taxes the “supplemental payment” would not impact life, LTD or other insurance plans or IU Retirement Plan contributions; however, the University will make FICA contributions on these payments, as required by federal regulations University Human Resource Services will generate these supplemental payments on a monthly basis, to coincide with base salary payments funding for these supplemental payments will be generated from a University Administration account “supplemental payments” shall be initially approved for up to a 12-month period, with extensions on an annual basis Procedure for Initiation of Supplemental Pay: STEPS 1. Deans, Department Heads, or Directors, should prepare a short memo requesting Retention Incentive Supplemental Pay for a specific individual, including a brief statement that indicates how the department will benefit from that individual’s retention. This memo should also indicate the effective date for the Retention Incentive Pay.
2. The request for Retention Incentive Pay should be directed to the respective Provost, Chancellor or Vice President for review. Upon approval, the request and approval should be sent to University Human Resource Services at: University Human Resource Services
ATTN: Retention Incentive Plan
Poplars Building, Room E199
Bloomington Campus University Human Resource Services will verify the individual’s eligibility for 18/20 Plan benefits, and return confirmation to the respective unit head. 3. Upon receipt of confirmation from University Human Resource Services, the Dean, Department Head or Director should notify the associated employee of the Retention Incentive Pay approval. 4. As it is assumed that the unit head had discussed the Retention Incentive Pay offer with the associated employee prior to submitting a request for approval to the respective Chancellor or Vice President. (University Human Resource Services should be notified of any employee rejections or change of status associated with this Retention Incentive Pay.) 5. University Human Resource Services will generate the appropriate monthly transaction for the employee’s supplemental payment. (Payments will be at the time of normal base salary payments, and will be processed in the same manner as those payments -- direct deposit or paycheck.) 6. After the first 12-month period, the Dean, Department Head or Director needs to inform University Human Resource Services of extensions of previously approved Retention Incentive Pay. These extensions shall be for 12 months at a time, but shall not extend beyond such time as the employee would otherwise qualify for 18/20 Plan benefits. Indication of an extension can be sent to University Human Resource Services by memo or email. Questions regarding these provisions should be directed to: Daniel Rives, Associate Vice President at 855-2239 or drives@indiana.edu.
