The Optional Retirement Plan at UGA
(for faculty and key administrators only)
Effective July 1, 2008, all exempt benefit-eligible staff are eligible to choose the ORP

Choosing a Retirement Program: TRS or ORP
The University System of Georgia Optional Retirement Program (ORP) is an alternative to the Teachers Retirement System of Georgia (TRS). Both ORP and TRS are designed to provide retirement income along with your personal savings and Social Security benefits. Although you and the University of Georgia share the cost of each plan, you control your investment choices, distribution methods, and retirement goals under the ORP.

Eligible employees have the option to select the TRS, a defined benefit plan as qualified under Section 401(a) of the Internal Revenue Code (IRC), or the alternative ORP, a defined contribution plan as qualified under Section 401(a) of the IRC.

The Board of Regents of the University System of Georgia is responsible for the administration of the ORP and designates the companies authorized to underwrite the investment contracts. The Board of Regents has authorized the following carriers, which provide a variety of investments, services, and benefits:

• American Century
• Fidelity
• TIAA-CREF
• AIG Retirement

The University of Georgia cannot offer advice on retirement plans or guarantee investment returns, interest rates, dividends, or tax advantages. However, the University does recommend careful review of the ORP company fund prospectuses. You may also wish to consult a qualified financial or tax professional for assistance in deciding which of these two plans better meets your retirement goals.

You have 60 days from your date of employment to enroll in ORP. This is an important decision because the choice is irrevocable. Failure to make a decision and turn in the required paperwork to the Employee Benefits Department within 60 days of employment will result in automatic enrollment in TRS. Note: participation in a retirement plan is mandatory; therefore, you will have a TRS deduction from your paycheck until your ORP paperwork is processed. Once you select ORP, the TRS-deducted funds will be transferred to your ORP account.

If you elect to enroll in the Teachers Retirement System, no action is required on your part. If you elect to enroll in the Optional Retirement Plan, complete the ORP election form and an application for each company you select (obtained from individual vendor companies).

Before you make your retirement decision, you should carefully evaluate the distinct features and benefits of each plan. Your participation in either ORP or TRS should lay the groundwork for establishing a financially secure retirement.

ORP: A Defined Contribution Plan
The 1990 session of the Georgia General Assembly passed legislation creating an Optional Retirement Plan (ORP) known in law as the Regents Retirement Plan. ORP became effective October 1, 1990. A copy of the plan document is on file in the Board of Regents Central Office. This information is intended to summarize the ORP in general terms. In all questions of interpretation, the plan document will govern.

The ORP allows portability of accumulated contribution balances and provides flexibility by offering participants a greater choice of investment and distribution options. With an ORP defined contribution plan, the value of your benefit is not based on a predetermined formula. Rather, contributions are made by you and the University of Georgia, resulting in a fund that is used to provide a monthly income during retirement. The amount of your retirement income is based on the account balances you have accumulated throughout your years of employment. This, of course, is determined by the amount of contributions to your plan and the performance of the investment funds you select.

Eligibility
Regular faculty members and other administrative positions, as designated by the President, who are employed at least one-half time in a benefit-eligible postion, are eligible for the Optional Retirement Plan. Only newly hired employees or employees first becoming eligible for retirement benefits are eligible to join ORP. Employees who are promoted to an ORP-eligible position, and were previously covered by the Teachers Retirement System, are not eligible to join ORP.

Effective July 1, 2008, all newly-hired benefit-eligible exempt staff are eligible to choose between the TRS and ORP. (Non-exempt benefit-eligible staff must participate in TRS.) Also effective July 1, UGA temporary employees moving to exempt, benefit-eligible positions may choose between TRS and ORP.

Enrollment
As an eligible employee, you have 60 days from your date of employment to elect to enroll in the ORP. During this period, you must select an ORP carrier and complete certain enrollment forms that are available on the Employee Benefits Web site. You should contact the ORP carrier and request a University System of Georgia Optional Retirement Plan 401(a) application packet.

You must return the following forms to the Employee Benefits department within 60 days of your employment date to enroll in ORP:

• ORP Election Form
• Application for ORP company(ies) selected

Failure to submit the required paperwork within 60 days of employment will result in automatic membership in the Teachers Retirement System, the defined benefit plan.

Before making your investment selections, you should compare the different companies to determine which would best suit your retirement needs. Each ORP carrier offers a variety of investment funds from which to choose. The Board of Regents has approved numerous fixed and variable account investment options for ORP contributions.

Fixed investment contracts usually offer one or more guaranteed rates of return on your investment dollars. The minimum guarantees are usually quite low, but still provide security to you in case of severe economic circumstances.

Variable investment contracts pool your contributions with those of other policy holders to purchase a portfolio of investments, either in common stocks, mutual funds, bonds, money market funds, or a combination thereof. The value of these investments may increase or decrease from year to year, depending on market conditions. The variable contract is often considered to provide the investor with inflation protection. Although variable investment products tend to reflect changes in the price levels over the long term, stock values do not always move in conjunction with living costs. There have been periods when inflation levels were extremely high while stock prices were depressed. Remember, there are no guarantees of principal or interest in variable investment contracts.

Refer to company information for a complete description of the investment funds offered by each ORP vendor:

• American Century
• Fidelity
• TIAA-CREF
• AIG Retirement

The Optional Retirement Plan is a defined contribution plan. There can be no determination of the monthly income you will receive until you actually decide to retire and convert your fund into a monthly annuity income. The amount of the annuity you will receive at retirement will be based on the value of your fund at that time, the type of annuity you select, your age at retirement, and the annuity purchase rates.

When you participate in a defined contribution retirement plan, you bear the risk of future investment returns which can have a significant effect on your ultimate fund balance. Small differences in percentage points of return can significantly affect the accumulated value of your annual contributions. You should carefully review your investment opportunities with the participating companies in an attempt to achieve a high and reliable yield over time.

The ORP allows you to choose your investment company and the type of investment within the selected company. These opportunities provide you with more control over your retirement security; however, they also place a greater degree of responsibility on you to investigate the possibilities and make decisions that are in your best interest.

Any of the participating companies will provide sample annuity purchase rates you may use to estimate your monthly income. When you actually retire, however, your annuity amount will be determined by the annuity rates in effect at the time of retirement.

Vesting
Vesting means ownership of the assets held in your accounts. Vesting does not mean you will have an immediate right to these assets, but merely that you will not forfeit them upon termination of employment. The ORP provides for full and immediate vesting of both employee and employer contributions. Every dollar contributed to your ORP account by the University of Georgia on your behalf remains in your fund for you, even if your employment is terminated.

Account Information
After you become an ORP participant, you will receive a quarterly statement from your ORP company that tells you how your retirement contract investments performed, how much money was contributed on your behalf during the quarter, and the total accumulated value of your fund. If you have an existing account with American Century, Fidelity, TIAA-CREF, or AIG Retirement, your accounts will remain separate and you will receive separate quarterly statements.

Loans
The primary purpose of the ORP is to provide retirement income to University System of Georgia employees upon retirement. Consequently, the plan does not allow participants to borrow any funds accumulated under the ORP.

Contributions
You contribute 5% of your salary before state and federal taxes are applied. The University of Georgia also makes a contribution on your behalf to your ORP account. View a comparision of the TRS and ORP plans.

Contributions are based on gross salary excluding extra compensation. The ORP allows members to allocate both the employee and the employer contributions among the four ORP companies with the following provisions:

• Allocations must total 100%
• If divided, the minimum investment to any one company must be 10%
• All contributions must be a whole number percentage

You may change your ORP company allocations up to four (4) times per calendar year. Your company allocation selection remains in force unless you change it. Investments within a particular ORP company may be redistributed at any time by calling the ORP company represenative(s), although restrictions or penalties may apply for some products. Prior to making your contract selection(s), you should understand any restrictions imposed by the company.

Expense Charges
Participating companies may charge for their expenses in a variety of ways: an annual fixed administrative charge, an annual deposit charge, or an asset management charge. These charges could be a fixed dollar amount each year or a percentage of contributions. These expenses, if any, will be deducted from contributions made to your account. You should request information regarding such charges prior to selecting your retirement contract(s).

Account Distributions
You become eligible to receive distributions from your ORP account when you terminate employment or retire. You should seek the advice of a professional tax adviser or financial planner before making decisions concerning your retirement funds.

Upon termination of your employment with the University System of Georgia you have the following options:

• You may retain the vendor funds you have selected for investment, allowing for possible growth until your retirement.
• You may request a direct transfer of your account to a qualified plan, such as an Individual Retirement Account (IRA). As long as the transfer is made directly from one vendor to another, no taxes will be withheld from your account. Be sure you understand the terms of your ORP contract before you make a transfer. Some accounts impose a surrender fee on an account withdrawal.
• You may elect a cash withdrawal. Effective January 1, 1993, lump sum withdrawals are subject to 20% Federal income tax withholding. In addition to the 20% withheld for Federal taxes, if you are under age 59½, any amount withdrawn would be subject to a 10% penalty due to premature withdrawal of a retirement account.
• You may use your fund to purchase an immediate annuity. If you elect to purchase an annuity, your monthly benefit will be based on the size of your fund, your age, and the annuity purchase rates in effect at that time. As long as the monthly benefit is paid as a series of equal payments over a period of ten (10) or more years, the 20% Federal income tax withholding rule does not apply. Your annuity payments will be considered earned income and therefore subject to taxation. If you are under the age of 59½, any amount withdrawn would be subject to a 10% penalty due to premature withdrawal of a retirement account.

Disability Benefits
There are no specific disability provisions under the ORP. However, because the plan provides full and immediate vesting, you will never lose the value of your fund if you are unable to work as a result of permanent and total disability. You will have the option to receive the fund value in a lump sum or have it converted into a retirement annuity upon your disability.

If you participate in the voluntary Long Term Disability (LTD) insurance program available to University of Georgia employees, and become eligible to receive disability income from the LTD insurance policy, there may be coordination of benefits with your optional retirement income. Please refer to the Long Term Disability summary plan document available the Employee Benefits Web site for more information regarding the terms of the plan.

Death Benefits
In the event of your death, your entire fund will be payable to your designated beneficiary. In some cases, it is possible that your beneficiary may elect to receive your fund value in annuity or installment payments. You should review the death benefit options in the retirement contracts you select.

You designate your beneficiary when you complete your ORP company enrollment application. If there is a need to change your beneficiary, you should contact your ORP company.

Retirement Benefits
Under the ORP, the amount of your retirement benefit is based on the total accumulation in your account(s) including any accumulated interest or dividends, your age, the age of your annuity partner (if applicable) and the income option selected.

Retirement Payment Options
Each ORP carrier makes available optional forms of payments and a variety of retirement payment options designed to allow you to customize your retirement program to meet your financial needs. These may be fixed annuity payments, payments on a variable basis, or a combination thereof.

Retirement Insurance Options
To retain your University of Georgia benefits, you must meet Teachers Retirement System of Georgia (TRS) criteria for retirement:

• 10 years of University System of Georgia service at 60 years of age
• 25 years of University System of Georgia service at any age

“Retirement” for ORP participants is primarily for maintaining University of Georgia benefits as a retiree since your retirement income is determined solely by you and your ORP investment company. You may leave the University of Georgia at any time with your fully vested ORP account, however, your insurance benefits are available to you only if you meet the TRS criteria for retirement as defined above.

As an ORP retiree, you may continue to participate in the health and dental insurance programs at the employee rate. Presently, you are allowed to continue the $25,000 basic life insurance coverage at no cost to you. You may also continue up to $15,000 of your optional life insurance and up to $5000 of your spouse/dependent life insurance coverage by paying the premiums for these coverages.

ORP or TRS: Your Choice
As you make a decision between the two retirement plans, keep in mind your career pattern and personal preferences. Consider factors such as:

• Your willingness to assume investment risk and reward
• Your proximity to retirement
• The importance of retirement plan portability
• Your age and the number of years of service you think you will have as an employee with the University System of Georgia
• Your preference between having your retirement income determined by a specific dollar amount (based on salary) invested in investments of your choice each year, or being guaranteed a retirement benefit based on your highest consecutive 24 months of University System salary, your age, and your creditable years of University System service
• Your concerns regarding death benefits
• The impact of inflation during retirement
• The flexibility of each plan to serve your personal situation during your working years and after retirement

A good way to decide which plan is better for you is to compare retirement benefits from both plans where all assumptions, including years of service, salary, and age, are exactly the same. Even if you keep years of service and age the same, you will have to make an assumption regarding the investment return in the ORP. If your investment assumption is too high, it could significantly overstate expected results. If any of your assumptions vary, the outcome of which plan is “best” for you could change.

For more information on the ORP, you should review the prospectus of the specific ORP carrier(s). You may also wish to contact directly the ORP carrier who can assist you in your decision-making process.

Remember, regardless of whether you elect to participate in ORP or TRS, you may make tax-deferred contributions on a voluntary basis to a variety of investment opportunities being offered through the University of Georgia Tax Deferred Savings program.

Optional Retirement Plan Investment Companies

American Century Investments
4500 Main Street
P. O. Box 419385
Kansas City, MO 64141-6385
(800) 345-3533
www.americancentury.com

Fidelity Investments Tax-Exempt Services Company
Jeff Juday (770) 655-1025
397 Williams Street, MC2E
Marlborough, MA 01752
http://www.mysavingsatwork.com/atwork.htm

TIAA-CREF, Teachers Insurance Annuity Association
Lori Williams (800) 842-2003 ext. 3517
Six Concourse Parkway, Suite 2600
Atlanta, GA 30328-6104
(888) 842-5350 (phone enrollment line)
(888) 842-2888 (info & application line)
http://enroll.tiaa-cref.org/universityofgeorgia/

AIG RETIREMENT
Travis Jackson (706) 549-6884
Jason Parker (706) 215-5592
Bob Inwright (706) 424-2673
100 Ashford Center North
Suite 100
Atlanta, GA 30338
(800) 448-2542
http://www.aigretirement.com/U-of-GA-Home_199_28503.html

Optional Retirement Plan Enrollment Q&A

How long do I have to decide?
You must complete and submit the ORP enrollment form and company application(s) within 60 days of eligibility to the Employee Benefits Department. Your choice to participate in Optional Retirement Plan (ORP) or Teachers Retirement System of Georgia (TRS) is a one time irrevocable option.

Please understand that state law is very specific about ORP enrollment forms that are received in the Employee Benefits Department after the 60 day enrollment period. After 60 days, ORP is no longer an option; the Teachers Retirement System of Georgia is your default selection. This is not negotiable! You must return your completed forms to the Employee Benefits Department within 60 days of eligibility or you will lose your one time opportunity to enroll in ORP.

What forms are required to enroll in the Optional Retirement Plan?
The following forms must be received in the Employee Benefits Department within 60 days of your eligibility date:

• ORP election form
• Company application(s) for ORP company(ies) selected

Information about the four ORP investment companies is available directly from each company. Mailing addresses, telephone numbers, and internet addresses are provided above.

Can I choose more than one ORP company?
Effective January 1, 1997, ORP participants have the option to select a single company or to distribute their retirement contributions among four approved companies:

• American Century Investments
• Fidelity Investments
• TIAA-CREF
• AIG Retirement

Can I change my ORP company selection at a later date?
You may change your ORP investment companies up to four (4) times per calendar year. Changes become effective the month following receipt of your ORP change form and company application(s). It may be possible to redistribute your funds within a particular company by calling your company representative.

Why does my payroll check show deductions for TRS?
The University of Georgia is required to withhold retirement deductions for each paycheck you receive. Therefore, you will have TRS deductions from your payroll checks until you submit ORP enrollment forms to the Employee Benefits Department. When your ORP forms are received, your TRS contributions (as well as the University’s contributions) will be adjusted and sent to the ORP company(ies) you selected. It is advantageous to submit your ORP paperwork as soon as possible so your retirement contributions begin earning interest immediately.

This document has attempted to explain the Optional Retirement Plan in easy to understand language and as accurately as possible. If this summary disagrees with the formal rules and documents that govern the plan or if information is missing, the legal document must be followed.

Revised 5/14/08