University Times

The U.S. House of Representatives has passed a reconciliation tax bill that would end TIAA-CREF's tax exemption and would impose a tax of up to 1/2 percent on the pension fund's assets of about $90 billion.

If the bill becomes law, according to TIAA-CREF, the fund could be faced with a tax bill of $250 million to $450 million a year, an amount that would be passed on to faculty and staff enrolled in the plan in the form of a 2-3 percent reduction in annual annuity income.

According to James Edgerton, director of Compensation and Benefits in Pitt's Office of Human Resources, the University's Vanguard retirement plan has been taxed since 1986.

"This is specific to TIAA-CREF because they were excluded back in 1986 from a tax bill that affected all [other] retirement funds," Edgerton said. "This is really focused on the annuity side of TIAA-CREF." Language ending TIAA-CREF's tax exemption is in House Bill 2014, but not in the Senate revision of the tax reconciliation bill. Because the language does not appear in the Senate bill, a joint House-Senate conference committee will have to decide if the language stays or is removed from the final bill.

"It's kind of up in the air at the moment," said Edgerton of the possibility of TIAA-CREF losing its tax exemption.

In hopes of influencing the final bill, University Senate President Gordon MacLeod and Staff Association Council President Brian Hart sent a joint letter this week to Pitt faculty and staff urging them to write their local member of Congress, as well as Senators Arlen Specter and Rick Santorum, expressing opposition to HB 2014.

"We understand that the House-Senate conference decision will likely be made in the next 10 days," the letter notes. "Therefore, we encourage you to send your letters as soon as possible."

–Mike Sajna