Glossar y
CHOICE
RE TIREMENT PROGR AM
CHOICE R E T I R E M E N T P R O G R A M
Glossary of Terms
403(b) Plan
A 403(b) plan is a voluntary saving and investment plan designed to help employees
save for retirement. Employees may defer a portion of their pay from their paychecks to
their personal 403(b) Plan accounts on a pretax basis. Income taxes are calculated on the
remaining pay, thus reducing current taxable income. Employee contributions and any
investment earnings are taxed when the money is taken out of the 403(b) Plan and paid
directly to the employee.
Accrued Benefit
In a defined benefit plan, it’s the future pension payment an employee has earned so far,
which is calculated using the plan’s benefit formula. It’s usually the amount the employee
will start receiving monthly or annually at age 65, if paid as a single life annuity (where no
payment continues to a survivor if the employee dies). This term does not apply to defined
contribution plans
Actuary
A person trained in the technical and mathematical aspects of pensions and related fields.
The actuary estimates how much money must be contributed to a pension plan trust fund
each year to support the benefits that will be payable in the future.
Annual Contribution
Limit
The IRS puts an annual limit on the combined 403(b) Plan account contributions from you
and Cedars-Sinai (if any). This limit for 2016 is the lesser of 100% of your annual pay or
$53,000. This number is indexed for inflation and changes periodically. See the last page for
more information.
Annuity
Payment of benefits in regular intervals (usually monthly) over an employee’s lifetime. In
most cases, the DB Plan pays benefits as a monthly annuity.
Beneficiary
Person you name to receive any benefits provided by a Cedars-Sinai benefit plan if you die.
Bond
A certificate of debt (an I.O.U. or promissory note) issued by corporations, states,
municipalities and the U.S. government. Investors make money from bonds because, in
general, the organization that issues the bond:
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Pays a regular interest payment to the investor (who is called the bondholder) and
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Repays the bondholder the amount borrowed when the bond becomes due.
Investors can also lose money from bonds when they go down in value or the organization
that issues the bond does not repay the debt.
Bond Fund
An investment company, like a mutual fund, that primarily holds corporate, municipal or
U.S. Treasury bonds. (See Mutual Fund.)
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Catch-up
Contributions
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Each year, the IRS limits how much employees can contribute to their tax deferred 403(b)
plans ($18,000 in 2016).
The IRS also permits employees to make additional tax-deferred “catch-up” contributions
starting the year they turn age 50. During 2016, these employees can contribute up to an
additional $6,000 (for a total 403(b) plan contribution of $24,000).
These limits increase every year or two. See the last page or visit www.irs.gov for the most
up-to-date information on contribution limits.
Cedars-Sinai.
MyBenefitChoice.com
Cedars-Sinai
403(b) Plan
Cedars-Sinai’s benefit portal where you:
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Have easy access to benefits information
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Can link to retirement websites and other benefit vendor sites from the home page
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Enroll yourself (and family) in healthcare, life insurance and Flex Spending Account
benefits
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See your online total compensation + benefits report
Cedars-Sinai sponsors the 403(b) Retirement Plan (called the 403(b) Plan) to make it
possible for you to save for retirement on a tax-deferred basis. You may contribute up
to $18,000 to your 403(b) Plan accounts during a calendar year. If you are an eligible
employee, Cedars-Sinai matches 50% of what you contribute to the 403(b) Plan, up to
a maximum match of 3% of your annual pay*. To get the maximum match, you must
contribute 6% of pay.
You may enroll anytime, there is no waiting period:
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Enroll online:
Cedars-Sinai.Prepare4MyFuture.com
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Enroll by phone: 800-584-6001
403(b) Plan contributions are invested, with the desired result that a major portion of your
403(b) Plan retirement savings should (hopefully) come from investment returns. You can
invest both your contributions and the Cedars-Sinai matching contributions in a core set of
mutual funds and other mutual funds through a brokerage window (limits apply).
Cedars-Sinai has hired Voya Financial to provide investment education and retirement
planning. Call the CSMC-campus Voya office for an appointment:
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Phone:
310-423-0974
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Website:
Cedars-Sinai.Prepare4MyFuture.com
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Location: CSMC Ray Charles Cafeteria, Suite 1631A
* Up to IRS limits.
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Cedars-Sinai DB Plan
Glossar y
The Defined Benefit Retirement Plan (called the DB Plan) is one of the 2 types of retirement
plans sponsored by Cedars-Sinai from which you can choose to participate.
If selected, the DB Plan pays you a monthly income (a pension) when you retire.
The monthly payment equals:
the total of your pay while you are a DB Plan participant
times 1.7%
divided by 12
(plus any DB Plan benefit earned before Jan. 1, 1991)*
For more information about the DB Plan, read the Choice Retirement Program pages of the
Benefits Reference Guide or the Choice Retirement Guide or visit the Retirement Programs
website (Cedars-Sinai-MyRetirement.com).
*Subject to vesting.
Cedars-Sinai DC Plan
The Defined Contribution Retirement Plan (called the DC Plan) is one of the 2 types of
retirement plans sponsored by Cedars-Sinai from which you can choose to participate.
Under the DC Plan, each quarter that you participate in the DC Plan, Cedars-Sinai deposits
a contribution in your DC Plan account. The amount of the contribution is based on your
eligible years of service and pay*, according to the DC Plan contribution schedule.
One primary difference between the DB Plan and the DC Plan is that DC Plan accounts are
invested and can potentially grow larger with investment earnings. Your account balance
will reflect investment gains and losses (if any) from the investments you select.
You decide how to invest the money in your DC Plan account by choosing among the
mutual funds offered through the plan recordkeeper, Voya Financial. When you leave
Cedars-Sinai employment, you may take your vested DC Plan account balance with you.
If you don‘t make an election during your choice period, you will automatically become a
DC Plan participant and your account will be invested in the medium risk default fund.
*Up to IRS limits.
Cedars-Sinai DC Plan
Contribution Schedule
The longer you’re with Cedars-Sinai, the higher percentage of pay* is used to calculate DC
Plan contributions, as shown in the following schedule:
Years of Eligible Service
Contribution
0 – 4 years
3.0% x pay*
5 – 9 years
4.0% x pay*
10 – 14 years
5.5% x pay*
15 – 19 years
8.0% x pay*
20 or more years
11.0% x pay*
*Up to IRS limits.
Defined Benefit Plan
A retirement plan that pays a monthly pension to the employee during retirement. The
monthly pension payment amount is determined by a mathematical formula using factors
such as years of service and pay.
In defined benefit plans, there are no individual accounts, and fluctuations in the
performance of the plan’s investments do not affect a participant’s benefit. An actuary
calculates how much the employer has to contribute to the plan’s trust fund now in order
to pay for future defined benefit plan benefits.
The Cedars-Sinai DB Plan is a defined benefit plan.
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Defined Contribution
Plan
Glossar y
A retirement plan that provides an individual account for each participant.
A participant’s benefit is largely based on the amount contributed and investment returns
on the contributions. The account balance may fluctuate depending on the investment
gains and losses.
The Cedars-Sinai DC Plan is a defined contribution plan.
Eligibility Date
The date an employee becomes eligible to start participating in a Cedars-Sinai employee
benefit plan under the terms of the plan.
Eligible Job Class
You must be in an eligible job class (as well as meet the eligible service requirements) to
become a DC Plan or DB Plan participant.
All employees are in an eligible job class to participate in the DB and DC Plans except:
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Certain executives, faculty members and chairs who participate in the grandfathered
executive retirement plan
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Per diem employees hired after June 30, 1989
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Physicians-in-training
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“Non-benefited” employees
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Leased, contract or temporary employees
Eligible Service
(or Years of Eligible
Service)
Each calendar year that you are paid for 1,000 hours, you earn 1 year of eligible service for
both the DC Plan and DB Plan. You must earn 1 year of eligible service (and meet the other
eligibility requirements) to become a participant.
Estate
The personal property that has monetary value (like a house, car, savings) and debts of a
deceased person.
Expense Ratio
The expense ratio is the percentage of a fund’s assets paid out in annual operating
expenses – in other words, what you get charged for the fund company’s services.
Expenses include management and investment advisory fees and all fees associated with
distributing shares and literature, in addition to administration of the fund.
FICA
FICA is an acronym for the “Federal Insurance Contributions Act,” a federal government
insurance program to help pay living expenses during retirement or disability. It is better
known as Social Security and is also called OASI, which stands for “Old Age Survivors
Insurance.” FICA tax is the deduction you see on your paycheck.
Additionally, the DC Plan uses years of eligible service to determine the annual
contributions (see DC Plan Contribution Schedule).
Cedars-Sinai also pays FICA taxes on your behalf.
Forfeiture
The amount of money that a DC Plan participant, or the amount of benefit accrual a
DB Plan participant, loses, if leaving Cedars-Sinai before becoming 100% vested.
Frozen DB Benefit
The DB Plan was frozen on December 31, 1990. Frozen means that no new employees
joined the plan after December 31, 1990 and participants did not earn any benefits under
the plan beyond what they had accumulated as of that date. If you have a frozen DB Plan
benefit, that benefit will be paid in addition to any DC Plan or DB Plan benefit you earn. The
DB Plan was unfrozen effective July 1, 2003.
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Glossar y
Gross Pay
For purposes of the retirement plans of Cedars-Sinai, gross pay means directly taxable
income, plus any contributions you make to the 403(b) Plan and the Flex Spending Accounts
(pretax premiums, Health Care Reimbursement Account, Dependent Care Reimbursement
Account).
Individual Retirement
Account or
Arrangement (IRA)
A retirement saving program for individuals, similar to a 403(b) plan or 401(k) plan, but
offered by a financial services company (for example, Voya). Like a 403(b) plan, the money
deposited in an IRA and any investment earnings are not taxed until withdrawn. In most
cases, withdrawal is not permitted without penalty until the individual reaches age 59½.
Employees who leave Cedars-Sinai employment can roll over their DC Plan account balance
(if any) or 403(b) Plan account balance (if any) to an IRA to continue investing and deferring
taxes until retirement.
Investment Returns
Investment earnings or losses on contributions to the DC Plan or 403(b) Plan.
Joint and Survivor
Annuity
An option for retirement plan payments where you receive a joint and survivor annuity is
a monthly benefit paid over your lifetime. If you die before your survivor (who could be a
spouse or someone else), a percentage of your payment (50%, 75% or 100%) is paid to the
survivor for the rest of the survivor’s lifetime.
Legacy
Money or property left to someone in a will.
Life Expectancy
Length of time people of a given age are expected to live. Life expectancy is calculated
by analyzing the life spans of millions of people. From that, actuaries develop mortality
tables showing rate of death at each age. It does not predict the life span of any particular
individual.
Lump-Sum Amount
A single payment of your retirement plan benefit.
Matching
Contributions
When you are a DC Plan or DB Plan participant and contribute to the 403(b) Plan,
Cedars-Sinai will make a “matching contribution” to your 403(b) Plan account on your
behalf. Matching contributions are made each quarter.
Cedars-Sinai matches 50% of what you contribute to the 403(b) Plan, up to a maximum
match of 3% of your annual pay*. To get the maximum match, you must contribute
6% of pay.
*Up to IRS limits.
Mutual Fund
A mutual fund is a collection of stocks, bonds or other investments purchased by a group
of investors and managed by a professional investment company. When an individual
invests in a mutual fund, he or she purchases a share of the collection of investments
owned by that mutual fund. Most mutual fund companies own a variety of different mutual
funds each with its own investment manager, investment plan and goals and portfolio of
investments (such as stocks, bonds, cash, etc.).
Employees who have a 403(b) Plan account or a DC Plan account at Cedars-Sinai can invest
in a variety of mutual funds currently offered through and by Voya Financial. Some of the
mutual funds are Voya-managed funds, and some are managed by other mutual fund
companies.
See also Expense Ratio and Share Classes.
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Pension Benefit
Guaranty Corporation
(PBGC)
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The federal agency charged with administering terminations of defined benefit plans.
Employers pay premiums for every DB Plan participant to the PBGC, which guarantees
some benefits for participants and beneficiaries should a defined benefit plan terminate
without having enough money to pay benefits.
This type of insurance is not necessary for the DC Plan because the benefit (the
contribution) is deposited in your account each quarter.
Plan Assets
Contributions to a retirement plan that have been placed in trust and invested in stocks,
bonds and other investments. Plan assets include amounts contributed by Cedars-Sinai,
amounts contributed by employees (for the 403(b) Plan only) and amounts earned from
investing the contributions, minus plan expenses.
Portable
Means a benefit you may take with you when you leave Cedars-Sinai. Your right to receive a
benefit is subject to vesting.
Generally, account-type plans (like the DC Plan and the 403(b) Plan) are considered portable
because if you leave Cedars-Sinai before retirement, you may take the vested portion of
the account with you.
Generally, pension benefits (like the DB Plan) are not considered portable because if you
leave before retirement, you cannot take the benefit with you. The benefit stays in the plan
and payments are delayed until you reach retirement age.
Pre-tax Salary
Deferrals
Helps you save for retirement with tax-advantages. You can choose to defer a portion of
your pay to your 403(b) Plan account through payroll deductions. Your deferrals (also called
contributions) are made on a pre-tax basis, which reduces your current taxable income.
You can change the amount you defer or stop deferring to your 403(b) Plan account at
any time by going online at Cedars-Sinai.Prepare4MyFuture.com, or contacting a Voya
representative at the Cedars-Sinai onsite office you have any questions. See the last page
for deferral limits.
Qualified Benefits
Qualified Benefits – By conforming to certain IRS rules, a “qualified” retirement plan
is eligible for special tax breaks. For example, employers can deduct retirement plan
contributions made on behalf of eligible employees as business expenses on their tax
return. And employees do not have to pay taxes on contributions until taken from the plan.
The IRS limits the amount of tax-deferred benefits employees can earn each year (see
Annual Qualified Retirement Plan Maximums on the last page).
Non-qualified Benefits – Are taxable when you receive them.
Qualified IRS
Compensation Limit
IRS rules limit compensation used to calculate tax-favored or “qualified” plan benefits. The
annual limit is $265,000 in 2016; it is updated periodically for inflation.
See the last page for more information.
Rollover
When you leave Cedars-Sinai, you can “roll over” or move your vested account balance
from the DC Plan or 403(b) Plan into another “qualified” retirement account, allowing you to
continue to defer taxes on that money and save for retirement.
Types of qualified plans include: rollover IRAs, 403(b) plans, 401(k) plans and 457 plans
sponsored by governmental entities.
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Glossar y
Securities
Document that shows proof of ownership or partial ownership in an investment or
property. In general, the term is used to refer to investments that are traded on a market,
like a stock exchange.
Share Class
Mutual funds frequently offer more than one version of the same fund. Each different
version of a fund is known as a share class. While each share class is invested the same
way, the difference between one share class and the next is the cost of the fund to the
investor.
“Investor” share classes are mutual fund shares usually purchased by individual investors
and tend to cost more, whereas “institutional” shares are only available to investing
institutions and usually require sizable minimum investments, allowing them to offer
slightly lower expenses.
The 403(b) Plan has institutional shares in most of the fund options. The Pension
Investment Committee monitors the plans’ investment options on a quarterly basis for
fund performance, share availability and other important attributes.
Single Life Annuity
An option for retirement plan payments where you receive monthly payments for your
lifetime. When you die, payments stop; no payments are made to a survivor or beneficiary.
If you are not married (and you do not elect a different payment option), you will receive
your DB Plan benefits as a single life annuity. The DB Plan benefit formula is calculated
assuming it will be paid as a single life annuity starting on your 65th birthday. If you choose
a different payment option or start payments earlier, the monthly DB Plan will be smaller
because of the likelihood it will be paid over a longer period.
Single Life Annuity
with 60 or 120 Months
Guaranteed
An option for retirement plan payments where you receive monthly payments for your
lifetime. If you die after payments start but before 60 or 120 payments (whichever you
elect) have been made, the remainder of the 60 or 120 payments is made to the person you
designate as your beneficiary.
Social Security
Benefits
A federal program of old age retirement benefits (and disability and survivor benefits)
covering most US workers and their dependents (see FICA).
Stock
A certificate of ownership in a corporation. A corporation is owned by its stockholders –
typically thousands of people and institutions – each owning a fraction of the corporation.
As a stockholder, the individual can make money if the corporation pays its stockholders
dividends (a portion of its annual profits) or if the value of the stock owned increases in
value from the time bought to the time sold.
Stockholders can also lose money if the value of the stock decreases from the time bought
to the time sold.
When you invest in a mutual fund, you’re buying shares of the mutual fund, and the mutual
fund buys shares of the stock.
Stock Fund
An investment company (like a mutual fund) that primarily holds stock of publicly traded
companies.
Tax-Deferred
Taxes are delayed until benefits are paid to the employee.
Trust Fund
Assets of a retirement plan are placed in a trust account at a financial institution, called a
trust fund. The money in the trust fund is managed by a trustee or board of trustees for
the benefit of another party or parties. Contributions to the Cedars-Sinai retirement plans
are put in the DC Plan or the DB Plan trust fund.
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Vesting
Glossar y
Your right to receive a retirement benefit after a specified time, usually expressed in years.
Cedars-Sinai employees must be paid for 1,000 hours in a year to earn 1 year of vesting.
The DC Plan vests gradually over 5 years:
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Year 1 – 0%
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Year 2 – 25%
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Year 3 – 50%
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Year 4 – 75%
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Year 5 – 100%
The DB Plan vests all at once, after 5 years:
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Year 1 through Year 4 – 0%
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Year 5 – 100%
Annual Qualified Retirement Plan Maximums
IRS Limit
2015
2016
Combined contribution limit
(employee and employer contributions)
$53,000
$53,000
Qualified IRS compensation limits
$265,000
$265,000
Maximum employee contribution
$18,000
$18,000
$6,000
$6,000
$24,000
$24,000
Maximum catch-up contributions
Total salary deferral contributions
(for employees age 50+)
+
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