Your contributions are deducted from your pay before taxes are withheld. That way, you save money on income taxes today while you save for your future retirement. Your contributions are taxed when paid to you following your retirement or other termination of employment.

University contributions are not taxed as compensation when made to your account. Like your own contributions, the University’s contributions are taxed when paid to you following your retirement or other termination of employment.

Your retirement savings account grows faster because the earnings on your contributions (those you make and those made on your behalf by the University) are not taxed until paid to you following your retirement or other termination of employment.

Example

Tax-deferred dollars can give your retirement savings a big boost. For example, assume that you can set aside $100 for savings each month and are in a 28% tax bracket. If you decide to save through a regular savings account, you will be able to deposit $72 each month after taxes. Assuming an 8% earning rate, you will save $11,650 after ten years after taking into account taxes on the earnings. However, if you decide to save through CRP, you will be able to deposit the full $100 a month to a CRP retirement savings account. Assuming a same earning rate of 8%, you will save $18,300 — $6,650 more than with a regular savings account.