About one in three 65-year-olds today will live past age 90, and about one in seven will live past age 95.1 UC is introducing Deferred Lifetime Income, a new option designed to turn a portion of your UC 403(b), 457(b) or DC Plan savings into income that lasts your lifetime.
See how the new generation of retirement planning works.
Just as your needs change over time, so do the diversified investments in the UC Pathway Funds—transitioning from growth-oriented to conservative investments as they get closer to their target date.
And now these funds are further evolving. In August, UC will introduce the latest evolution of the UC Pathway Funds: Deferred Lifetime Income—an optional deferred income annuity that lets you convert a portion of your UC 403(b), 457(b), or DC Plan balance into fixed monthly payments beginning at age 78, when you may need it most.
To purchase Deferred Lifetime Income, your assets must be invested in the UC Pathway Fund 2020 or the UC Pathway Income Fund.
If you are eligible, the purchase window for Deferred Lifetime Income is August 16 to September 10, 2021.
What is Deferred Lifetime Income?
Deferred Lifetime Income is a type of deferred income annuity, known as a Qualified Longevity Annuity Contract (“QLAC”).2 Buying Deferred Lifetime Income means you are entering into a contract with an insurance company. You can use a portion of your UC 403(b), 457(b) or DC Plan account to purchase it now, and monthly payments will begin at age 78 and continue for the rest of your life.3
You can purchase Deferred Lifetime Income for yourself, or for yourself and a spouse. Plus, you can choose a beneficiary to receive any money you used to purchase Deferred Lifetime Income (the premium) that has not already been paid to you.
Who is eligible to purchase Deferred Lifetime Income?
You will be eligible to purchase Deferred Lifetime Income if you’re a UC employee or retiree between the ages of 62 and 69 and have a Social Security or tax ID number and a permanent U.S. mailing address. You'll need to be a primary account holder in the UC Retirement Savings Program with a combined account balance of at least $40,000 across the UC 457(b), 403(b), and DC Plans.4
What do I need to know?
There are three key things to know:
- You can purchase Deferred Lifetime Income using pretax money from only one of the three UC Retirement Savings Program plans—the 403(b), 457(b), or DC Plan.
- The Deferred Lifetime Income purchase amount (the “premium”) must be invested in either the UC Pathway Fund 2020 or the UC Pathway Income Fund. The combined balance of the two funds must total enough to complete your purchase.
- The minimum purchase amount is $10,000. The maximum purchase amount is $135,000 or 25% of the vested, pretax balance of the plan you purchase from, whichever is less.
If you want to purchase Deferred Lifetime Income, here are two steps to take now:
- Prepare to have enough of your savings in a single plan to fund your purchase. Consider consolidating your savings into a single plan (i.e., the 403(b), 457(b), or DC Plan) so you have enough in one plan to fund your purchase.
- Prepare to have enough money in a required Pathway Fund to make your purchase. Consider exchanging money into the UC Pathway Income Fund so you’re ready when the purchase window opens.
Transfers are easy. Simply call a UC-dedicated Fidelity Retirement Planner at 1-800-558-9182 for assistance.
Where can I learn about Deferred Lifetime Income?
We encourage you to visit the Deferred Lifetime Income online tutorial.
To explore retirement income strategies, call a UC-dedicated Fidelity Retirement Planner at 1-800-558-9182 to talk by phone, or schedule a phone or Zoom one-on-one.