The primary purpose of 403(b) plans, such as the Voluntary Investment Program (VIP), is to help provide you with long-term financial security through a tax-favored savings plan. In exchange for the tax-favored status of this plan, the federal government limits access to these funds while you are still employed. The UW has elected to allow limited access by participants to VIP accounts for loans or IRS-defined “hardships." The IRS rules are strict around both loans and hardships, and you will be asked to provide the UW with appropriate documentation to ensure that you are eligible to access the funds.
In order to comply with new IRS Regulations, effective January 1, 2009, VIP participants must first borrow against their VIP account prior to requesting a "hardship withdrawal" as described in Section 6.3 of the VIP plan document. In other words, you must initiate a loan.
The University of Washington is required to monitor all fund sponsors who offer loans to ensure that the IRS limits are observed and that participants do not exceed the loan limits. In order to reduce the costs of loan monitoring, the UW has elected to permit loans through only one fund sponsor, TIAA-CREF. If you foresee a need for VIP funds and do NOT currently have your UW VIP funds with TIAA-CREF, you will be required to open a TIAA-CREF account and move your funds to that fund sponsor. Please contact the local TIAA-CREF office at 206-529-2601 for assistance with completing your loan request in a timely manner.
VIP limits in-service withdrawals to those required to meet the financial burden of a qualifying hardship of participants and their dependents. If it has been determined that you would not qualify for a loan, you may apply for a hardship withdrawal based on the following IRS withdrawal reasons:
Requests for hardship withdrawals require completion of hardship verification forms. There must be verifiable, immediate, and heavy financial need, and there must not be any other resources reasonably available to you (including loans) to handle that financial need. Your withdrawal will be subject to Federal income taxes, and a 10% penalty may apply. Under IRS rules, employee contributions will be suspended for six months following the distribution.
VIP loan and hardship withdrawals can be complex and have long-lasting consequences to your financial situation. Contact a Benefits Consultant at 206-543-2800 or benefits@u.washington.edu to receive application details and the required forms to ensure that you are eligible to access the funds.
Voluntary Investment Program Overview
Voluntary Investment Program Enrollment
VIP Resources