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Topic:
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Calculation of 403B retirement plan deductions
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Effective Date:
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May, 2002
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Current Policy
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Currently, employee deductions for the 403B retirement plan are calculated by dividing the estimated eligible annual salary by the number of pay periods and then multiplying by the required contribution percentage, usually 3% or 5%.
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What's New?
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After May 1, the calculation will be based on a percentage of the actual eligible gross pay (excluding overtime).
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Why?
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This simplified method will ensure that both employee deductions and employee contributions are based on actual earning rather than on estimated earning as in the past.
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Who does this affect?
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Everyone enrolled in a 403B retirement plan. Non-exempt employees will have deductions taken from 52 paychecks rather than the current 48. For employees working less than the full year, deductions will now be taken from all paychecks.
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Benefits
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This simplified method of determining both employee deductions and employer contributions will ensure that retirement plan contributions will be more accurate.
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For more information
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If you have any questions about the new formula for 403B retirement plans please contact:
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