The UC Regents have approved a new voluntary savings plan that effectively doubles the amount of money that faculty and staff members may put into tax-advantaged retirement savings.

UC currently offers the tax-deferred 403(b) Plan. The new plan, defined as a 457(b) plan by the Internal Revenue Code, currently has the same contribution limits as the 403(b) Plan.

Employees will have the choice to enroll in either or both plans. So, an employee who already contributes the maximum amount permitted under UC's 403(b) Plan ($13,000 in 2004) could also put up to $13,000 annually in tax-deferred savings in the new 457(b) plan.

Last year, more than 50,000 employees voluntarily contributed to the 403(b) Plan, with 12,000 employees at all compensation levels contributing the maximum amount permitted by law. The state of California, the California State University, and many local cities and counties also offer employees a 457(b) plan as a retirement savings option.

Like the existing 403(b) Plan, the new 457(b) plan is designed to be self-funded at no cost to the university or the retirement system. Ongoing administrative or record-keeping expenses incurred will be borne by the 457(b) plan's participants.

The university is reviewing bids from several firms to implement and administer the new plan, and to provide record-keeping and investment education services. Once the bid has been awarded, the university plans to announce the effective date of the new 457(b) plan.