Benefits Plans - Retirement Savings Plans: 403(b) Supplemental Retirement Accounts (SRAs)
403(b) SRA Eligibility
The following groups are eligible to enroll in a 403(b) SRA:
All regular, active faculty or staff members (including Supplemental Instructional, House Officers, Research Fellows, and Graduate Students [GSIs, GSSAs, or GSRAs]) with a 1% or greater appointment of at least four months duration paid by the university. Rehired retirees with funding and effort (including emeritus titles) are also eligible.
Temporary staff and emeritus titles are also eligible to contribute to a 403(b) SRA.
In addition, you must receive earned compensation reportable on an IRS Form W-2 and subject to federal, state, and FICA tax to be eligible.
Stipend and fellowship funding are not eligible to be contributed to a 403(b) SRA. Long-Term Disability participants without an active appointment, including earned compensation, cannot make contributions.
The 403(b) SRA Advantage
If you want to contribute more than the 5% or 4.5% (depending on your eligibility) under the Basic Retirement Plan, you can open a 403(b) SRA. You can contribute an additional amount each pay period, up to IRC annual limits. Use the New Hire 403(b) SRA Calculator (PDF) to determine how much you can contribute to an SRA as a new hire faculty or staff member, or call the SSC Contact Center to get a quote of how much you can contribute. A 403(b) SRA is a great way to save more for retirement and reduce your income taxes.
Since the university does not match your 403(b) SRA contributions, you have more options for accessing the accumulations while you are still employed. These options are not available under the Basic Retirement Plan. See the following sections, 403(b) SRA Cash Withdrawals and Rollovers, and 403(b) SRA Loans.
You can find more detailed information on how your contribution limit for the retirement plan is calculated by reading the booklets available at benefits.umich.ed/plans/retire/maxlimit.html.
403(b) SRA or a 457(b)?
If you want to put away as much money as possible, you could max out both plans, contributing up to $36,000 — or, if you turn 50 or older this year, $48,000. However, if you aren't planning to max out both plans, the following information compares the key features of each plan to help you choose. You can split your contributions any way you prefer.
While you may contribute to both the 403(b) SRA and the 457(b) plans, there are a few differences in features. For a comparison of the two plan types, see 457(b) or an 403(b) SRA?.
You may also be interested in Roth Savings Plans.
The IRC limit on 403(b) contributions for 2015 is $18,000, plus an additional $6,000 if you are age 50 or older. Your limit may be increased by an additional $3,000 once you have 15 or more years of service at the university. The 5% you contribute under the Basic Retirement Plan counts against this limit, with the remainder being the additional amount you can tax-defer to an SRA.
|Your 403(b) limit:||$18,000|
|Your Basic Plan Contribution ($50,000 x 5%)*:||$2,500|
|Amount extra you could contribute to an SRA:||$15,500|
|SRA limit per pay period ($15,000 / 12, assuming you are paid monthly):||$1,291|
*This example assumes you are not subject to Paid Time Off as a U-M Hospitals and Health Centers employee and are eligible for the 5% employee contribution with 10% U-M contribution.
Are You Tax-Deferring Elsewhere?
The IRC limit on elective deferrals to a 403(b) plan applies no matter how many employers and 403(b) plans you have. In addition, elective deferrals to a 401(k) plan must also be taken into account when determining how much you can contribute to the U-M plan. If you are making tax-deferred contributions through another employer’s retirement savings plan, it is wise to consult a qualified tax adviser to make sure that your combined contributions do not exceed Internal Revenue Code limits. This can be especially important if you are new to the university and contributed to another plan this year before coming to U-M. See Your Tax Deferring Limit for more information.
Enrollment for Temporary Hourly Staff
Temporary hourly staff should refer to Retirement Savings Plans: Temporary Hourly Employees for enrollment instructions.
You can withdraw or rollover accumulations from your 403(b) SRA only if you meet at least one of the following triggering events:
As an active employee:
- When you reach age 59 1/2;
- If you incur an IRS qualifying financial hardship. Federal regulations limit hardship withdrawals to contributions only; earnings are not available. In addition, hardship withdrawals are not eligible to be rolled over); or
- If you become disabled according to IRS guidelines;
As a former employee: Your contributions and earnings are available at any age after you have terminated your employment with the university.
You may take a loan from your 403(b) SRA at any time, whether you are an active employee or a former employee. There is no qualifying event you need to meet in order to take a loan.
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.