UW News
May 8, 2008
Are some UW benefits underused?
The University of Washington has great benefits but some of us are too busy to take advantage of everything that is offered. Read the checklist below and consider taking advantage of benefits that are available to many faculty, librarians and professional staff. Some of these represent “free money” that you leave on the table if you do not act!
Opt-in to the UW Retirement Plan from your first day of employment at UW. The University matches the contributions of faculty, librarians and professional staff dollar-for-dollar. So when you join, you get an instantaneous 100 percent return on your contributions, and your contribution is removed from your current period taxable income (i.e., taxes are deferred until retirement, when many of us are in a lower tax bracket). This is “free money” — where else can you do this well? Obtain more information here.
Consider purchasing optional Long Term disability insurance. Disability can strike at any age (e.g., consider the possibility of being in a serious accident). The reality is that the University’s basic long-term disability plan pays a maximum of $240 per month, which will not support you or your family should tragedy occur. The good news is that although benefits are capped, the University’s optional long-term disability insurance is reasonably priced (but it is always a good idea to compare to other plans). Obtain information about UW’s plan here.
Take advantage of medical flexible spending accounts. If you have a relatively predictable level of medical and dental expenditures (including orthodontia, eyeglasses, laser eye surgery and non-prescription drugs), put some dollars aside in a flexible spending account and make these medical expenditures effectively tax-deductible. Your tax savings depend on your tax bracket, but you can think of it roughly as a 25 percent discount. This is a “use it or lose it” account. You will need to estimate your predictable expenses for the next tax year. Obtain information here.
Dependent Care Assistance is not just for children. You and a spouse can put up to a combined $5,000 annually into this tax-exempt program to utilize for child and IRS-approved eldercare expenses. Again, this is a “use it or lose it” account, so you need to estimate your predictable expenses for the next tax year. Then you can use the tax-free money in your account to reimburse yourself for your eligible child and eldercare expenses. Obtain information here.
For those in the UW Retirement Plan over 50, opt-in to increase your contributions to the UW Retirement Plan from the mandatory 7.5 percent to the optional 10 percent. More “free money” — the University matches your contributions dollar-for-dollar and your incremental contribution is tax-deferred. Again, where else can you earn a certain 100 percent return on your investment and lower your current period taxes? Obtain information and sign up here.
Become a ‘super-saver.’ In addition to maximizing your contributions to the UW Retirement Plan as described above, consider saving in other tax-deferred investments including the VIP plan and the Washington State Deferred Compensation Plan (WSDCP). Even those who reach their federal limit in the UWRP and VIP plans can invest additional dollars in the WSDCP (because it is a separate plan with its own set of limits). Get used to saving more and you probably won’t miss the money, but you will be glad you did in retirement! Obtain information and sign up here.
Please note that the value of these benefits will depend on your specific situation. You can obtain more detail by contacting UW Benefits and Work/Life at http://www.washington.edu/admin/hr/benefits/index.html.
Robert Bowen is the chair of the Faculty Council on Benefits and Retirement.
