Benefits Human Resources

What’s Changing?

• New benefit-eligible faculty and staff hired on/after January 1, 2026
• Contributions to the 401(a) Plan require a four-year vesting period

Not Affected:

• U of U Health Hospitals and Clinics staff
• Plan H-eligible positions
• Employees enrolled in a retirement plan on/before December 31, 2025

Special Rules:

• Rehired employees return to their prior plan
• Former and current employees not previously eligible for the 401(a) Plan will be enrolled in the 401(a) Plan with vesting
• New hires eligible for URS must submit Irrevocable Election before their first paycheck

Vesting Requirements:

• 14.2% contributions made each pay period
• Fully vested after 4 years (1,460 days) in a benefit-eligible position
• Benefit-eligible service in any University department counts (including Hospitals and Clinics, Plan H)
• No service credit during:
  • Breaks in employment greater than 31 days
  • Time in non-benefited positions

If Employee Leaves Before Vesting:

• Employer contributions and any earnings are forfeited
• If employee is rehired within 1 year the funds will be reinstated
• If employee is rehired after 1 year the funds are not reinstated (prior service may be bridged after probationary period)

If Employee Moves to a Non-Benefited Position:

• Funds remain in your account
• Non-benefited service does not count toward vesting

If Employee is Rehired:

• Forfeited funds reinstated if rehired within one year
• Staff must complete probation, then prior service can be bridged
• Must be reenrolled in the same retirement plan as before

If Employment is Terminated:

• If an employee voluntarily terminates employment prior to vesting, funds will be forfeited
• If employment terminated during probation, for cause, or through disciplinary action funds will be forfeited if not vested
• If employment ends as a result of a reduction in force, end of contract, end of funding, or similar department reason, contributions will be vested if the employee is not able to find another benefit-eligible position with the university within 32 days

Forfeited Funds

• Removed from accounts after non-vested employee’s employment has been terminated for one year
• Applied to reduce future University contributions

Frequently Asked Questions

What is Changing Effective January 1, 2026?

All faculty and staff newly hired into benefit-eligible positions on or after January 1, 2026 will receive the same employer retirement contribution of 14.2% to the 401(a) Plan; however, the employer contributions will be subject to a four-year vesting period.

Rules for public safety officers and dispatchers who are enrolled in the URS Plan will not change. In addition, eligibility rules will not change regarding individuals not eligible for retirement benefits:  employees serving as an exchange employee from outside the State of Utah (such as J-1 exchange visitors) and educational trainees and individuals whose employment is incidental to their educational program (such as F-1 students, including those with OPT and OPT STEM authorization and postdoctoral fellows).

Why is the University Making this Change?

Implementing a vesting period helps support long-term retention by encouraging employees to continue their careers at the University.  The University is making this change to align its retirement program with the Utah Retirement Systems programs and with common practices of other large employers.  At the same time, the University remains committed to providing a highly competitive retirement contribution of 14.2%, which exceeds the contributions offered by many peer institutions and other employers.

Who does the Change Apply to?

This change applies to academic campus faculty and staff and U Health academic faculty and staff hired January 1, 2026 or after.

The change does not apply to:  

• U Health hospitals and clinics employees or employees in positions eligible for Plan H retirement benefits
• GME medical trainees
• Employees enrolled in a retirement plan with the University on or before December 31, 2025
• New hires who are eligible for and timely elect participation in a URS Retirement Plan
• Contributions made to either the 403(b) or 457(b) Plans

Employees who previously worked for the University must be reenrolled in the same plan upon rehire.  Employees who previously were enrolled in the 401(a) Plan without vesting, will continue in that plan and not have a new vesting period. Employees who were not eligible for retirement benefits during prior employment will be enrolled in the 401(a) plan and be required to meet the four-year vesting period.

New hires who were enrolled in a URS plan with another employer and wish to be enrolled during University employment, must complete the Irrevocable Election online before their first paycheck.

What is a Vesting Period?

A vesting period is the amount of time an employee must work in a benefit-eligible position before they fully own the University’s contributions to the 401(a) Plan.  This means:

• The University will begin making contributions to an account in the employee’s name with their first University paycheck. Contributions will continue each pay period.
• If the employee leaves the University before completing four full years of benefit-eligible service, all employer contributions and any earnings on those contributions will be forfeited.
• After four full years of service, employees are “fully vested,” and all employer contributions (plus any investment earnings) are theirs to keep. Plan rules still apply with regard to when an employee can withdraw funds from the plan.

What are the Vesting Requirements and What Counts as Years of Service?

Employees are fully vested in employer contributions after four years (1,460 days) of benefit-eligible employment at the University.  Benefit-eligible service in any University department—including Hospitals and Clinics and Plan H departments—applies toward vesting.

Service does not accrue during breaks of employment longer than 31 days (employees rehired within 31 days are reinstated without break in service) or time worked in a non-benefited position.

Can Employees Transfer Years of Service from Another Higher Ed Institution?

No.  Only years of service with the University of Utah and entities enrolled in University of Utah benefits (including Utah System of Higher Education and my529) count toward the four-year vesting period.

Can Employees take a Loan or Hardship Withdrawal on Non-Vested Funds?

No.  Loans and hardship withdrawals are only available once the employee has completed the four-year vesting period.

What Happens if an Employee Moves to a Non-Benefitted Position from a Benefit-Eligible Position?

Funds are not forfeited until the employee leaves the University; however, time spent in a non-benefited position does not count toward vesting.

What Happens if an Employee Leaves the University Before Completing the Vesting Period?

Employees who leave the University before completing the four-year vesting period forfeit all employer contributions to the 401(a) Plan and related earnings.

What Happens if an Employee is Later Rehired?

• Forfeited funds are reinstated if the employee is rehired within one year.
• Staff must complete any required probationary period before prior service is bridged toward vesting.
• Rehired employees are reenrolled in the same retirement plan they previously had.

What Happens if a Medical Trainee moves from GME to a Faculty Position?

Since GME medical trainees are enrolled in the 401(a) Plan without a vesting requirement, they will not be required to meet a vesting requirement when their contribution is increased to 14.2%.

What Happens if the University Terminates an Employee’s Employment?

If employment is terminated during probation, through progressive discipline, or for cause, and the vesting requirement has not been met, all employer contributions and any earnings are forfeited.

If employment ends as a result of a reduction in force, contributions will be vested if the employee is not able to obtain a new benefit-eligible position with the University within 32 days of separation.

How Will Vesting Work for an Employee Hired into a Position Expected to Last Less than Four Years?

In the event the University makes an offer of employment for less than four years, the end of the employee’s employment will be considered a reduction in force for purposes of retirement plan vesting requirements if the employee fulfills the employment obligations of the employment offer and is unable to find other employment with the University within 32 days.

University Policy defines reduction in force as the “elimination of positions or reduction in FTE (full-time equivalency) due to lack of work, lack of funds, budget constraints, grant expiration, departmental reorganization, or other business reasons.”

Will Forfeiture of Non-Vested Funds Paid Through a Grant Jeopardize Grant Funding?

Contributions from departments, whether made with state funds or non-state funds (including funds generated from clinical activities or grant funds), are charged through payroll in accordance with an established written policy, consistently applied, allocated in proportion to salaries and wages, and limited in accordance with IRS rules.

Once non-vested funds are forfeited, they will be used to reduce the University’s future employer contributions to the plan.  That offset will be applied consistently – and not in a way that disadvantages federally funded activities or advantages highly compensated employees.  As a result, forfeited contributions paid from grants do not need to be returned to grant sponsors and can be applied with other non-vested funds to reduce the University’s costs under the plan.

The Internal Revenue Code requires that in order for the plan to be “qualified” and exempt from taxation, plan funds be held for the exclusive benefit of plan participants and beneficiaries.  Contributions may only be returned to the University for use outside of the plan if the contribution was made by a mistake of fact or law.

How Often are Forfeited Funds Removed from Accounts?

Forfeited funds will be removed from non-vested accounts once the employee has been gone from the University for one year and applied to reduce future University retirement plan contributions.

How will the University use the Forfeited Funds?

Under the direction of the University’s Chief Financial Officer and Chief Human Resource Officer, University savings resulting from forfeited amounts being used to offset the University’s required 401(a) plan contributions will be strategically reallocated for the benefit of University employees.