Retirement Planning for University of Arkansas Employees Fayetteville: APERS, 403(b), and What Comes Next

If you're covered by APERS, here are the critical decisions that require attention before you retire:

Get a current benefit estimate. APERS provides member benefit estimates through its member portal. Know your projected monthly benefit at your expected retirement date and at 65. Also check whether you qualify under the Rule of 90. That estimate covers your pension, not any separate supplemental account; if you also contribute to one, employee contributions are 100% vested immediately.

Survivor benefit election. Like most defined-benefit pensions, APERS requires you to elect a payment option at retirement — either a higher single-life benefit that ends at your death, or a reduced benefit with continued payments to a survivor. This election is generally irrevocable. If you're married, model both options carefully before choosing.

Supplemental account coordination. Many U of A classified employees also have supplemental retirement savings — a 457(b) deferred compensation plan or personal IRA. How you sequence withdrawals from these supplemental accounts relative to your APERS pension affects your annual taxable income and, potentially, your Medicare premiums. Arkansas generally taxes pension income from APERS as ordinary income, though there may be partial exemptions. Verify your specific tax situation with a qualified tax professional.

Social Security timing. Because classified U of A employees pay into Social Security, you have a genuine choice about when to claim — and that choice interacts with your APERS pension. Claiming at 62 locks in a permanently reduced benefit; waiting to 70 can increase it by approximately 77% compared to 62. With a pension as an income floor, many APERS-covered U of A retirees are in a strong position to delay Social Security and maximize the lifetime benefit.

If you're a faculty member or professional staff participant in U of A's 403(b) retirement plan, your planning challenge is different: eligible employees may also have access to a 457(b) and can make contributions to both at the same time.

TIAA vs. Fidelity. Many U of A employees have accounts at both TIAA and Fidelity through the university's retirement plan. These may have different investment options, different fee structures, and — importantly for TIAA Traditional — different annuitization options. TIAA's annuity products can provide lifetime income, but they come with tradeoffs around flexibility, cost, and potential estate value. Evaluating whether to annuitize, transfer, or maintain your TIAA account as an investment account is a decision worth analyzing carefully. [For a deeper look at the TIAA rollover decision specifically, see our separate article on TIAA and pension rollover decisions for Fayetteville retirees.] If you opt for a plan loan, amounts may be available from $1,000 to $50,000 per employer. Loan eligibility depends on your account balance and existing loans. TIAA does not offer loans on Roth accumulations. You may be able to complete a rollover to increase the amount available to borrow. Each active loan carries a $25 annual fee.

Arkansas income tax on 403(b) distributions. Arkansas taxes traditional 403(b) and IRA withdrawals as ordinary income. Pre-tax contributions reduce current taxable income, while Roth dollars can grow tax-free. In 2026, Arkansas's top individual income tax rate is 3.9% — lower than neighboring states — but still real money on large distributions. The 2026 elective limit is $24,500, and employees over 50 can make catch-up contributions. Social Security income is exempt from Arkansas state income tax, which is an advantage to factor into your sequencing strategy.

The gap-year Roth conversion window. Faculty and staff who retire before RMDs begin at age 73 have a window for strategic Roth conversions — moving pre-tax 403(b) money into a Roth IRA at potentially lower tax rates. For U of A faculty who retire at 63 or 64 and delay Social Security to 70, that's a 6-to-7-year window where taxable income may be lower than at any other point in adult life. Roth conversions in those years — at the right amount — can reduce lifetime taxes and RMD pressure, and participants can generally withdraw funds at age 59½ or older, subject to plan rules and the calendar year distribution requirements that apply later.

Sequencing with multiple accounts. U of A employees often retire with a TIAA account, a Fidelity account, possibly a personal IRA, and Social Security. The university provides dollar-for-dollar matching contributions up to 10%, where applicable, so employees should determine how much comes from each paycheck accordingly. Deciding which account to tap first, and in what amounts, is one of the highest-leverage tax planning decisions available. The answer is rarely obvious without modeling.

Not requesting a benefit estimate until the year they retire. APERS and the U of A benefits office can provide estimates years in advance. Knowing your pension amount 5 years out changes how you save, when you retire, and how you structure supplemental withdrawals.

Annuitizing TIAA without understanding the tradeoffs. Annuitizing a TIAA account provides lifetime income, but it also typically eliminates the ability to pass the remaining balance to heirs or a named beneficiary and removes flexibility. Small-sum distributions may be available for balances under $2,000, so employees should confirm plan-level distribution rules before defaulting to a broader rollover decision. For some U of A retirees, a rollover to a self-directed IRA with systematic withdrawals provides similar income with more flexibility. For others, annuitization is exactly right. The decision depends on health, other income sources, and estate goals — not on what TIAA's default enrollment assumes.

Ignoring the Medicare income threshold. U of A employees who delay Medicare enrollment (because they remain on university health insurance) and then retire into high-income years can face elevated Medicare IRMAA premiums. A $30,000 Roth conversion in year one of retirement can sometimes trigger a premium surcharge the following year. Sequencing matters.

Failing to coordinate with a spouse's retirement. Many U of A employees have spouses who also work — sometimes at the university, sometimes elsewhere. Coordinating two retirement timelines, two Social Security claims, and two sets of benefit elections is significantly more complex than single-person planning. It also has significantly more leverage.

If you're a U of A employee in Fayetteville between 59 and 67, here's what matters most right now:

1. Identify which retirement system covers you. APERS for classified staff; 403(b) for faculty and most professional staff. Some employees have both, and vesting rules may differ for new employees.

2. Get a pension estimate (APERS) or account balance summary (403b). Know your numbers.

3. Pull your Social Security estimate at ssa.gov. Check benefits at 62, 67, and 70.

4. Understand the Arkansas income tax treatment of your retirement income. Pensions, 403(b) distributions, and Social Security are taxed differently.

5. Talk to a fiduciary financial advisor in the Fayetteville area who understands U of A's specific benefit structures — APERS, TIAA, Fidelity — and can model the full picture, then review retiree health benefits, since some retirees may keep certain coverage and medical benefits can change significantly when you transition to Medicare at 65.

Revolutionary Wealth serves University of Arkansas employees and the broader Northwest Arkansas community. We are committed to helping U of A faculty and staff build retirement income plans that integrate every piece — pension, 403(b), Social Security, and supplemental accounts — into a coherent, tax-efficient strategy. Your goals are our priority, and the first conversation is always complimentary. If you need assistance before retirement, the benefits office or an advisor can help you enroll and decide on contribution amounts.

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