Policy A-13

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18-20 Rule (Early Retirement Plan)

(Approved: Trustees 5/18/59, 4/5/86, 10/14/88, 5/19/92)

The 18-20 Plan is not available to any employee with a commencement date later than December 31, 1988. If a participant has completed 20 years of full-time service at Indiana University, and l8 years of participation in the TIAA-CREF Annuity Plan, and if he or she becomes retired on or after the sixty-fourth birthday and prior to the seventieth birthday, the University plans to pay: To the member: an "interim benefit" which (with benefit then available from Worker's Compensation and Occupational Disease Insurance, if any) will result in a total that is equal to benefits "expected five years from the date of retirement or at age 70, whichever comes first" as defined below.

To TIAA-CREF: annuity premiums for the recipient's account based on terminal salary which is the average annual base salary received during the final five years of employment at Indiana University.

It should be noted, however, that payment by the University of interim benefits and annuity premiums terminates on the earliest of the following dates: (a) the date of the recipient's death; (b) the date gainful employment is resumed, and for the period of such employment; (c) five years from the date of retirement or the recipient's 70th birthday, whichever comes first, at which time TIAA-CREF retirement annuity benefits may begin.

Definition. Benefits "expected five years from the date of retirement or at age 70, whichever comes first," refers to the single life annuity from regular contributions made under this plan, calculated assuming that all regular contributions were divided equally between TIAA and CREF. The assumption regarding the division of contributions, however, does not restrict the retiree from exercising options regarding actual allocations of investments between the fund options available under the TIAA system. Retirees may receive no more than 100% of their terminal base salary from Indiana University.

(Approved: Trustees 5/18/59, 4/5/86, 10/14/88)

Conditions and Procedures

In administering the 18-20 Year Rule, the following conditions and procedures apply.

I. General Conditions

A. An 18-20 Rule Retirement Benefit Application must be filed and duly approved before benefit payments begin.

B. The qualifying period of service must be continuous or with only one interruption of not more than two years, unless otherwise approved with the knowledge of The Trustees.

C. Interim benefits payable to the retiree shall be made monthly, on a 12- month basis, regardless of whether active service appointment was on an academic-year or 12-month basis. Check-mailing will normally commence at the end of the first month of the retirement year, unless there are deductible provisions as described in paragraph D.

D. For persons retiring from academic-year appointment the "retirement year" will begin January 1 for those retiring at the close of the first semester, and on July 1 for those retiring at the close of the second semester.

*NOTE: This presumes that an academic-year appointee becoming retired in a Summer month might have rendered compensable service up to the beginning of the retirement year. Under all other conditions the "retirement year" will begin on the first day of the first month following the last month in which compensable service was (or might have been) rendered, provided that regular and terminal vacation pay (but not staff Honorary Service Vacation pay) up to but not exceeding the amount of the interim benefit shall be deducted from the interim benefit payment for each month or partial month of credited vacation time.

E. The check mailed at the end of the last month before the 70th birthday, five years from the date of retirement, or death, whichever comes first, will be the final interim benefit check. The final TIAA/CREF contribution will be likewise determined.

II. Interpretation of the "Gainful Employment" Proviso of the 18-20 Rule

A. Restrictions on gainful employment will be limited to employment by Indiana University or institutions, agencies, or governmental units that are funded by the State of Indiana.

B. In the event that a retiree is employed by a state supported institution or agency, the payment of all benefits, including TIAA contributions will cease until the gainful employment rule is complied with.

III. Gainful Employment Reporting

A. All retirees will be asked to file a quarterly statement regarding gainful employment.

B. The retiring person who anticipates any gainful employment that will result in a stoppage of the Interim Benefit during the first quarter of retirement should file a Gainful Employment Report before the commencement of Interim Benefit payments to avoid excess payment in the tax year.

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