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The University's Benefits Assistance Program for employees in legacy UMDNJ positions consists of an After-Tax Annuity Option plan and a Supplemental Life Insurance plan. Its purpose is to supplement the existing ABP benefits that have been limited as a result of the Federal Revenue Reconciliation Act's annual cap.
Under the Benefits Assistance Program's (BAP) After-Tax Annuity Option and Supplemental Life Insurance Plans, employees hired on/or after July 1, 1996, who have pensionable earnings exceeding $265,000 may elect to make additional after-tax employee contributions. The employee may contribute 5% on the salary portion that exceeds $265,000 and the University will contribute 8%, both on an after-tax basis.
This benefit is considered as ordinary income and is subject to applicable federal and state taxes. Employee and University after-tax contributions may be applied to a participating Alternate Benefit Program (ABP) investment carrier.
This program helps offset the limited pension and life insurance plans.
The Internal Revenue Code requires employers to calculate imputed income for employees who receive group life insurance coverage in excess of $50,000. The IRS Tax code requires employees to pay taxes on what they consider the value of group life insurance in excess of $50,000. The amount of imputed income is reported annually on the employee's W-2 form.