Human Resources / Payroll

A.  Tenured faculty members, presidents, vice presidents, deans and officers of the institution who are on TIAA/CREF,TFFR or TIRF retirement plans.
 

A.  There are three:  full retirement (tenure or contract purchase), phased retirement or reversible retirement.  The former is the most common form and all comments after this pertain to full retirements.  If you have questions about phased or reversible retirements, please refer to SBHE policy 703.1 or call the Director of Human Resources at 1-8958.

Q: Is there any sort of age/years of service minimum requirement in order to be eligible?

A.  The employee’s age and completed years of service must total a minimum of 70.

Q:  Is any eligible person who asks for a retirement incentive entitled to one?

A.  No.  There must be a benefit to the University, as well as to the employee.

Q: What criteria are used to determine who should be approached?

A.  Early retirement incentives are management tools to help make needed changes.  Those eligible employees whose retirement would help accomplish those changes should be approached.  Early retirement incentives should not be used to avoid cases clearly warranting dismissal.  Employees should not be approached on the basis of age alone.

Q: What are examples of ways these incentives benefit the University?

A. This will differ in every case, but common benefits identified are that a person carrying a high salary will most likely be replaced with a person earning a lower salary; a position will be eliminated and the salary redistributed to address market issues; a different area of expertise is needed than the one held by the retiring employee; or there has been a significant drop in enrollment and NDSU needs to eliminate positions.
 

A. Four or more months in advance is desirable.
 

A. Any incentive offered must be the result of a decision that the employee’s  retirement benefits the University.  The amount to offer will vary in every case, and will also be a factor of funds available.  A starting point would be to measure the employee’s current salary against the probable salary of a replacement.

Q: What is the maximum buy out amount authorized ?

A. Salary - up to 100% of the employee’s final year contract salary (salary they are earning on the date of their retirement).  The norm in recent years has been around 25%.

Q: What are the payment options of a buy out?

A. The payments are in a lump sum, on a regular pay day, and may be delayed into a separate tax year (or two) at the request of the employee if that also works within the department’s budget.  Another option is for the employee to choose to take part of the lump sum (up to a maximum, which differs for each individual, allowed by tax code) as an annuity purchase.  Once the selection of cash or annuity purchase is made, it is irrevocable.  No cash payment under a full retirement may be made until at least 90 days after the date of the early retirement agreement document.

A: No, they are not part of the early retirement agreement, since they are payments made to every departing employee who earns leave.  However, it is important to plan for them in considering budget implications.  Those payments will appear on the employee’s final regular paycheck if so noted on the Form 101.

Q: What is the maximum health and life insurance I am authorized to negotiate?

A. Health and life insurance - single coverage health insurance and basic life insurance up to five years or when the employee becomes eligible for Medicare, whichever occurs first.  Employees become eligible for Medicare the first day of the month in which they turn 65.

A. Funds to cover both salary and benefit payments must be available in the department’s budget.

A. No.  IRS opinions on the taxability of these contributions shifts back and forth over time.  The University System has chosen not to allow such contributions.

A. Yes.  Federal and state withholding are deducted at a 28% rate unless the employee notifies the Payroll office that they wish to choose a different rate.  Social Security taxes are also deducted (although NDSU has a current suit against the IRS on this issue).

A. The VP discusses with the President his/her intent to begin a negotiation.

The VP contacts the Director of Human Resources if s/he has questions about the negotiation details or the process.
The VP/Dean negotiates the terms with the employee.
The VP sends a memo with the negotiated terms (including buy out amount, duration of  any single-coverage health insurance premium payments, date of  retirement and date(s) of buy out payments) and a statement of how the buy out benefits the University to the Director of Human Resources.
The Director produces the Early Retirement Agreement document and routes it for signatures.