When Andrew Bokarius began working at a neuroscience laboratory
this summer, the thought of retirement was distant.
Bokarius took the job to get research experience and explore
what it would be like to work in a research lab. But a career
““ the kind that would hopefully come with retirement benefits
““ was still something that loomed in his post-university
future.
So when the third-year physiological sciences student received a
notice from the University of California last quarter telling him
that he had a small amount of money in a retirement savings
account, he was more than a little confused.
“Am I really planning to be here for so long that there
will be some type of retirement plan for me?” he remembered
wondering when he received the notice.
“Thinking of a retirement plan at my age is not
ordinary,” he said.
UC student employees who carry full course loads do not have
retirement plans, but the UC’s Defined Contribution Plan
automatically enrolls UC student workers if they drop below
full-time status, work more than 20 hours per week for more than
five weeks straight, or earn money while they are not enrolled in
classes.
Bokarius was one of many UC students who received balance
statements last quarter from the Defined Contribution Plan, which
is part of the UC’s retirement savings program. UC officials
couldn’t immediately provide an exact number of student
workers enrolled in retirement plans.
The statements that went out last quarter were the first in more
than two years.
Until July 2005, the UC managed its own retirement accounts, and
it stopped sending paper notifications in 2003 because it was too
expensive to send them to the hundreds of thousands of UC employees
who were covered under the plan, said Sharon Perry, a
representative for UC Human Resources and Benefit Services.
But when they transferred management of the plan to Fidelity
Investments Tax-Exempt Services Company in July, the company
decided to send out statements. The statement for the fourth
quarter of 2005 is currently in the mail, and should arrive in the
next few weeks, said Maria Baklanova, a retirement service
specialist for Fidelity.
The Defined Contribution Plan was established in 1990 to provide
UC employees with a retirement savings account they can take with
them when they leave the university or roll over into other
accounts such as 401(k) plans. All UC employees, except
specifically exempted ones, had to participate.
If students fall below full-time status or work while not
enrolled in classes, they are covered under the plan’s
enrollment criteria, Perry said.
Bokarius questioned whether a student could contribute enough to
the plan to make it worthwhile.
“It’s probably a great idea for people who would be
working for quite a while, but as a student, how much are you
earning?” he asked. “It really doesn’t seem
efficient for students to get it.”
But the money isn’t gone forever ““ students will
have their money refunded when they finish their employment at
UCLA.
Former UC employees can cash out by calling Fidelity or can
choose to have their savings transferred to another retirement
account.
If employees fail to collect their savings upon leaving the
university, they will be sent a notice which gives them the option
of cashing out the money or transferring it to another account. If
an employee does not act on the notice, the university will send
that person a check for their balance after taxes and a 10 percent
penalty.
When some student workers received statements about their
Defined Contribution Plan balances last quarter, they were unaware
of the plan.
This was the case for Iris Cheung, who transferred to UCLA this
year and began working for the BruinCard office several weeks
before fall quarter began.
Near the end of the quarter, when the third-year economics
student received a statement about the balance of her retirement
account, she was confused. But since she had less than $10 in her
account, she soon forgot about it, she said.
“They should send an e-mail after we get hired” to
avoid confusion, she said.
Student employees are informed about the Defined Contribution
Plan, but the details are in the fine print.
The new-hire input form from UCLA Human Resources references the
plan in a section titled “statement concerning your
employment in a university position not covered by Social
Security,” but it is not explained. The plan is defined in
section 311 of the human resources Student Employment Policies
statement, which new Associated Students UCLA employees are asked
to read online.
According to the policy document, nonexempt student employees
pay 7.5 percent of their pretax paychecks into the account.
The money automatically goes into a UC-managed savings account,
which is tax-free. Account holders can choose to shift the money
into mutual funds with Fidelity Investments or one of five
UC-managed investment funds.
ASUCLA’s student employment policies can be found
at
www.asucla.ucla.edu, and Fidelity can be reached at (866)
682-7787.