Time to decide your financial future


Attention all A-3s: You now have a chance to take charge of your retirement savings if you act right away.

In response to requests from weekly-paid staff, the University will allow participants in Penns Retirement Allowance Plan (RAP) to join the Tax-Deferred Retirement Plan (TDR) effective July 1, according to John J. Heuer, vice president for human resources. But to make the switch, employees must notify the Benefits Office no later than June 1.

Each plan has advantages and disadvantages. So which one is right for you?

Thats one of the biggest questions we get, and it is a question we cant answer, said senior benefits specialist Terri Ryan. But there are some issues to keep in mind as you answer this question for yourself, including:

square.gifRisk. The TDR plan has the potential for higher retirement income, but its higher returns come with some risk. The RAP, on the other hand, guarantees a fixed annual payment based on a formula. How much risk is right for you? As a rule of thumb, Ryan said, If it keeps you up at night, you shouldnt be doing it.

square.gifAge. If you have most of your career ahead of you, the TDR plan is probably the better choice, as its stock investment options may offer better returns in the long run. If you have many years at Penn behind you and are considering retirement soon, you may wish to stay in the RAP but, says Ryan, thats when you really should talk to a counselor.

square.gifVesting. To become vested in the RAP, you must complete five years service at Penn, while contributions to the TDR plan both Penns and yours are yours from the start.

square.gifPortability. If you leave Penn before you retire, you must wait until retirement age to receive your RAP benefits, while you have several choices for handling your TDR plan balance upon termination.

If youre not sure which plan is best for you, see one of the free counselors who will be available weekdays from 9 a.m. to 4:30 p.m. through May 26 at the Funderberg Information Center, 34th and Walnut streets, and the Class of 1962 Conference Room in the John Morgan Building, 3620 Hamilton Walk.

Whatever you do, though, do it now. If you do nothing, you will automatically remain in the RAP until you retire, leave Penn or take a monthly-paid position. Theres no chance to rethink this next year, Ryan said.

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Originally published on May 18, 2000