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Stanford Report, March 18, 1998

Total Comp - Investing in your future: 3/98

Investing in your future

From your date of hire until you leave Stanford, there are savings and retirement income plans designed to help provide financial security in later years. It is important that you understand eligibility and participation rules in order to maximize your income after retirement. This article briefly reviews available plans and the two most common ways employees fail to realize maximum benefit from participation.

Plans Available

Immediately upon hire, all regular and continuing employees are eligible to participate in the Tax-Deferred Annuity (TDA) retirement Plan. The TDA offers you the opportunity to invest a percentage of your salary on a tax-deferred basis for income at retirement. Investments are made in funds at three investment companies: Fidelity Investments, TIAA-CREF or The Vanguard Group. Contributions and investment earnings grow on a tax-deferred basis until distribution is made after age 59-1/2.

After one year of service, every regular employee becomes an automatic participant in one of the remaining two retirement income plans sponsored by Stanford. These plans are:

How SRAP Participants Can Maximize Retirement Income

Since SRAP participation is fully funded by Stanford and employees do not contribute, even small contributions to the TDA can provide important additional income at retirement. The following example shows the difference TDA participation can make after ten or 20 years of participation. The example is based on an annual salary of $35,000.

When you: