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Retirement Plans Frequently Asked Questions

Faculty and Staff Retirement Plan -- 403(b)

The Faculty and Staff Retirement Plan ("403(b) plan") is funded by your voluntary contributions. Eligible employees can participate immediately in the plan upon hire. For more information about participating in the 403(b) plan, please see Enroll / Make Changes.

What is a 401(k) Plan? What is a 403(b) Plan? Which does Duke offer?

  • A 401(k) plan is a type of retirement plan offered by an employer under section 401(k) of the Internal Revenue Code.
  • A 403(b) plan is a somewhat different type of retirement plan, which has many of the same features of a 401(k). Since Duke is a tax-exempt, non-profit organization and educational institution we can offer a 403(b) plan.

What does "pre-tax" mean?

  • The amount that you elect to have deducted for the 403(b) is contributed to the plan before federal and state income tax, therefore reducing your taxable income, which may reduce the federal and state income taxes you pay each year. Deductions do remain subject to FICA. 
  • The earnings on contributions grow tax deferred until you take a distribution. At that time both your contributions and earnings will be taxed as income. 

What does "Roth 403(b) after-tax" mean?

  • Roth 403(b) after-tax refers to the deduction amount that you elect to have contributed to the 403(b) plan after federal and state income tax have already been withheld, therefore it does not reduce your taxable income.
  • The earnings on contributions are eligible to be withdrawn tax free as long as you are age 59 ½ and your withdrawal is made at least five years after your first Roth 403(b) contribution.
  • Click here to learn more about Roth

Does Duke contribute to my retirement plan(s)?

  • Duke offers two different types of retirement plans. Generally, eligibility for participation in these plans is determined by whether you are paid biweekly or monthly. Both plans provide a comparable retirement income.
  • Biweekly paid staff are eligible for two Duke retirement plans - the Employees' Retirement Plan and the Duke University Faculty and Staff Retirement Plan. First, the Employees' Retirement Plan is a defined benefit pension plan paid for entirely by Duke. This plan does not contain individual accounts and the benefit is typically determined on a formula basis considering level of compensation at retirement and years of service. Second, the Duke University Faculty and Staff Retirement Plan is a defined contribution 403(b) plan funded by your voluntary pre-tax or Roth after-tax contributions. Duke does not contribute to this plan for biweekly paid staff.  This plan does provide individual accounts for employees who contribute and this plan places the responsibility on the employee for the investment decisions in this type of retirement plan.
  • Faculty and monthly paid staff are eligible for the Duke Faculty and Staff Retirement Plan. This plan is funded both by your voluntary pre-tax or Roth after-tax contributions and Duke's contributions. Your retirement benefit will be based on 1) the amount you and Duke contribute, and 2) your investment decisions, which will be reflected in the final amount you have accumulated at retirement.

How much can I contribute to Duke's 403(b) retirement plan?

  • For the minimum and maximum amounts that you can contribute to your 403(b) retirement plan, please see How Much Can I Contribute?

What is vesting?

  • Vesting refers to a participant's right to receive a present or future retirement benefit.
  • Monthly paid staff and faculty are always 100% vested in their own voluntary contributions to the 403(b) retirement plan.  Vesting only applies to Duke's contribution.  Once you are vested, you have an irrevocable right to the amount of the Duke contribution in your account adjusted for gains or losses. Employees hired prior to January 1, 2012 are 100% vested in Duke's contribution towards their retirement.  In general, employees hired January 1, 2012 or after will become 100% vested after completing three (3) years of service.  Click here  to learn more about vesting.
  • Biweekly paid staff are immediately vested in their contributions to the 403(b) retirement plan. Biweekly paid staff are entitled to receive benefits under the Employees' Retirement Plan, Duke's pension plan, after completing five years of continuous service.

What investment options are available under Duke's 403(b) retirement plan?

  • The investment options are offered through Fidelity. It is up to you to determine the right mix of investments that meets your needs. Duke offers a tiered approach to investing, based on how hands-on you want to be with your investments. Duke actively monitors funds in Tier 1 and Tier 2. Funds in Tier 3 are available for employees to invest in, but not monitored by Duke. Visit Fidelity to select your investment options. If you need assistance selecting your investment options, contact Fidelity.
  • Please review the Investment Performance and Fee Disclosure Summary information before making your investment selections.
  • Quarterly account statements are mailed to your home address or emailed to you based on your preference to help you monitor your retirement plan assets.

How do I change beneficiary information?

  • You may call the investment carrier(s) directly in order to obtain a form to change your beneficiary (keep a copy for your records).

How do I request a loan from the retirement plan?

  • Loans are only available at Fidelity. Contact Fidelity directly to obtain a loan.
  • You may borrow against your contributions invested at Fidelity.
  • You are simply borrowing money from your retirement plan account. You will repay the loan amount and interest through monthly payments directly to Fidelity.
  • There are no taxes or penalties involved when taking out a loan.
  • If you default on your repayments, however, you will be taxed as if the outstanding balance of your loan was distributed to you and might possibly include a 10 percent penalty, if you are under the age of 59½.
  • The interest you pay on the loan is not tax deductible.
  • For more information, please visit Request a Withdrawal or Loan.

How do I request a withdrawal from my retirement plan and what are the tax consequences?

  • You may request a withdrawal from your 403(b) retirement plan by contacting your investment carrier(s) directly. There are some restrictions on when you are eligible to withdraw the contributions that you put into the plan. Please carefully consider all your options before you withdraw money from your retirement plan.
  • For more information, please visit Request a Withdrawal or Loan.
  • All withdrawals and distributions from the plan are subject to federal and state taxes. You may be subject to a 10 percent federal tax penalty if you make a withdrawal before age 59 ½. In addition, the federal government requires that 20 percent of your withdrawal be withheld as a prepayment of your federal income tax due on the taxable portion of the withdrawal. This 20 percent withholding requirement does not apply to direct rollovers to an IRA or a new employer's retirement plan.

Are there circumstances in which I can withdraw money from the retirement plan without paying a 10 percent tax penalty?

  • There may be some cases where the 10 percent early withdrawal penalty does not apply*:
     
    • Distributions made after you attain the age of 59 ½
    • After separation from service after attainment of age 55
    • Approved disability
    • Distributions made on account of your death
    • Distributions for certain medical expenses may possibly be exempt from the penalty

* You should consult your accountant, tax attorney, or other qualified financial adviser before making a withdrawal from the plan.

When I retire or separate from service, what are my options?

  • You can leave the money in the plan.
  • You can roll over your pre-tax balance and/or your Duke contribution vested account balance into a traditional IRA, Roth IRA or another employer's 403(b) plan, 401(k) plan, 401(a) plan or governmental 457(b) plan. Please contact your future employer to find out if their plan accepts rollovers.
  • You can roll over your Roth after-tax balance into a Roth IRA or another employer's 403(b) plan, 401(k) plan, 401(a) plan or governmental 457(b) plan. Contact your future employer to find out if their plan accepts rollover of Roth after-tax.
  • You can withdraw your vested account balance as cash.
  • Duke does not restrict the types of distribution options you can choose. However, restrictions, limitations and fees may apply. Contact your investment carrier(s) regarding the many options available to you.
  • The options include, but are not limited to: lump sum, systematic withdrawals, non-periodic payments, or annuities.

What is a Required Minimum Distribution (RMD)?

  • The IRS requires that, after a certain point, you begin to withdraw from your 403(b) retirement plan account.
  • If you turn age 72 between January 1, 2023 and December 31, 2032, your required beginning date (RBD) is April 1 of the year following the year you attained age 73 or, if later, April 1 of the year following the year in which you terminate employment with Duke.
  • If you turn age 74 after December 31, 2032, your RBD is April 1 of the year following the year you attained age 75 or, if later, April 1 of the year following the year in which you terminate employment with Duke.
  • If you do not take the required minimum distribution, you may be subject to an excise tax on the amount you should have received in addition to our regular taxes.
  • Contact your tax accountant and investment carrier(s) for more information.

When can I request a rollover from my Duke 403(b) retirement account to another retirement plan, such as, another 403(b) plan, 401(k) plan, or IRA?

  • You may rollover the money associated with your voluntary contributions to a retirement carrier or retirement plan outside Duke's plan once you attain age 59 ½ or you separate service from Duke. Any vested money that Duke has contributed towards your retirement only becomes available for rollover once you separate from service, your attainment of age 67, retirement, death, or disability.

How do I request a rollover?

Can I transfer my account balance to another investment carrier?

  • Transfers to Fidelity - You can transfer money from your Duke Faculty and Staff Retirement Plan 403(b), including any frozen accounts at TIAA or Corebridge Financial (AIG/VALIC) to your Fidelity account. Please note, some annuity products at TIAA and Corebridge Financial have transfer restrictions. Contact Fidelity to request transfer forms.
  • Transfers to TIAA - You can transfer money from your Duke Faculty and Staff Retirement Plan 403(b) to the only investment option available at TIAA: the TIAA Traditional Retirement Account - Retirement Choice Contract. All other accounts and contracts are frozen at TIAA and are closed to transfers. Contact TIAA to request forms to transfer funds.
  • Frozen accounts at Corebridge Financial (AIG/VALIC) and TIAA - You cannot transfer money into frozen accounts at TIAA or Corebridge Financial; however, you may transfer money from these accounts to Fidelity or the TIAA Traditional Retirement Account - Retirement Choice contract. Please note, some annuity products have transfer restrictions.
  • For additional information, visit Transfer of Funds.

What is a QDRO? Where do I get model language for a QDRO?

  • A QDRO, or a qualified domestic relations order, is a legal order which can follow a divorce or legal separation. This type of order splits ownership of a retirement account to give the alternate payee/ex-spouse a share of the assets.
  • Contact your retirement plan investment carrier directly to obtain model language or additional instructions pertaining to a QDRO.

Where can I get more information?

NOTE: These FAQs are Highlights of the Faculty and Staff Retirement Plan. The plan document is available on request and its terms and conditions govern the operations of the Plan.

Employees' Retirement Plan

The Employees' Retirement Plan is a pension plan, designed to provide biweekly with a guaranteed monthly income at retirement, paid entirely by Duke. You automatically will become a member of the plan if you are over age 21 and have completed one year of employment, working at least 1,000 hours. You will be entitled to receive plan benefits after completing five years of continuous service, which is called vesting.

As a biweekly employee, am I covered under a retirement plan? Can you describe the plan to me?

  • You may be covered under a pension plan called the Employees' Retirement Plan, referred to as ERP.
  • You automatically become a plan member after working 1,000 hours in your first 12 months of employment and are at least age 21.
  • After becoming a plan member, each fiscal year you work 1,000 hours or more you will receive a year of credit under the plan. The fiscal year is July to June.
  • This plan is called a defined benefit plan. This means that the benefit you receive from the plan is based on a formula. The factors that determine your benefit are: your years of credit, your average final salary, and your age.
  • You are entitled to a benefit from the plan, or vested, after completing 5 years of continuous service. The plan defines a year of continuous service as completing 1,000 hours or more in a fiscal year.
  • The ERP is one piece of your retirement plan; you are also eligible to make voluntary contributions in the Faculty and Staff Retirement Plan (403(b)).

How much do I have to contribute? Does Duke Contribute?

  • This plan is paid for entirely by Duke. You do not have to contribute to the plan.

What is the earliest I can retire and receive a benefit from Duke?

  • You can draw a reduced benefit from the plan at age 45 with 15 years of credited service under the plan.
  • You receive full benefits at normal retirement, age 65.

How can I get an estimate of what I will receive from the plan?

  • You will generally receive an estimate of your ERP benefit in your Annual Benefits Statement that is mailed to you each spring, or
  • You can generate an estimate online at the Duke@Work website (under My Benefits).

Do I have to meet the Rule of 75 to receive a benefit from the retirement plan?

  • No. The Rule of 75 is only used to determine if you can continue your health insurance, dental insurance, and tuition grant benefits as a retiree. The retirement plan has its own rules.

When I retire will I be paid for my sick pay/COB balance?

  • No. You are not paid for your sick pay/COB balance. If you are an active Plan member paid on the biweekly payroll when you leave Duke, it is used in calculating your final retirement benefit. Your years of credited service are increased by the number of unused hours. [Example: You have 20 years of credited service and 1,000 hours of sick/COB time. When your final calculation is done we would use 20.481. (1000 ÷ 2080=.481) years of credited service.] It is not used to determine your eligibility for early retirement or to help you retire earlier.

I'm leaving Duke. Am I vested? Am I eligible for a lump sum payment?

  • You are vested after 5 years of continuous service. The plan defines one year of continuous service as completing 1,000 hours or more in a fiscal year.
  • To be entitled to a lump sum payment the total value of your retirement must be below $10,000. The value of your retirement is not determined until after you have terminated your employment. If you are eligible for a benefit from the plan, either a lump sum payment or a monthly benefit, you will be contacted through the mail within 120 days after your termination notice is processed. To ensure you receive this information in a timely manner, please notify your payroll clerk of a change of address before you leave.
  • If you are eligible for a lump sum payment and elect to receive the benefit as a lump sum payment, 20 percent federal tax and 4 percent state tax is withheld automatically. If you are younger than 59 1/2, there is a 10 percent penalty for early withdrawal you will pay when you file your taxes. If you rollover the payment, no taxes are deducted and there is no penalty for early withdrawal.

What happens to my retirement if I become disabled? Can I draw my retirement and disability at the same time?

  • If you become disabled, and apply for Long Term Disability at Duke and are approved, you will continue to earn credits under the plan as if you continued working at your same rate of pay and work schedule.
  • You cannot draw retirement and disability at the same time.

What happens to my biweekly retirement if I transfer to a monthly position?

  • When you transfer to a monthly position, you stop earning credit under ERP and may become eligible to receive Duke’s contribution in the Faculty and Staff Retirement Plan. Under the ERP, your service as a monthly employee is used for vesting and eligibility for early retirement, but that time is not used in calculating your benefit amount from the biweekly plan.

Where can I get more information?

This web page is not intended to substitute for an official Plan Document. If there is a conflict between this web page and the official Plan Document, the Plan Document will govern in all cases as the official Plan text and trust agreement govern the operations of the Plan and payment of all benefits.

Benefits