Michigan Medicine Temporary Suspension of University Contribution to the Basic Retirement Plan

U-M will temporarily suspend the university contribution to the Basic Retirement Plan from July 1, 2020 through June 30, 2021 for all faculty and staff of Michigan Medicine, which includes the U-M Medical School. Faculty and staff who have an appointment at both Michigan Medicine and campus will have the university contribution suspended if the Michigan Medicine fraction is 51% or greater of the total appointment effort. Bargained for staff should refer to their collective bargaining agreement.

This action is part of Michigan Medicine's economic recovery plan to address the financial implications of the COVID-19 pandemic.

If you are enrolled in the Basic Retirement Plan, the suspension of the university contribution and the resumption will occur automatically and no action is required of you. Your 5 percent contribution will continue to be deducted during the university contribution suspension period.

Summary of Changes

  • All university contributions to the Basic Retirement Plan will be suspended from July 1, 2020, through June 30, 2021 for faculty and staff of Michigan Medicine and the Medical School. Contributions will not be retroactively made up at a later date.
  • Your 5 percent employee contribution will automatically continue if you are enrolled in the Basic Retirement Plan.
  • You may cancel your 5 percent contribution, but you must enroll again to receive the match when the suspension period ends.
  • You may still enroll in the Basic Retirement Plan during the university contribution suspension period.
  • The university contribution will automatically resume on July 1, 2021 if you are enrolled in the Basic Retirement Plan and you are eligible to receive university contributions (i.e., you have completed the 12-month waiting period).

Basic Retirement Plan

Which contributions will be suspended from July 1, 2020 through June 30, 2021?
The university’s 10 percent contribution to the 401(a) Basic Retirement Plan will cease during the suspension period for all participants, along with the 5 percent university contribution for compulsory participants under the Reduced Benefit Option.
Will U-M retroactively make up the contribution that was not provided during the suspension period?
No. The university contributions that would normally have been made between July 1, 2020 and June 30, 2021 for plan participants will not be provided.
Will my 5 percent contribution to the Basic Retirement Plan cease if the university is suspending the 10 percent match?
No. Your 5 percent contribution will automatically continue as long as you remain enrolled in the Basic Retirement Plan.
Do I need to take any action regarding the suspension of the university contribution when it occurs or when it resumes?
No action is required of you unless you cancel your 5 percent contribution to the Basic Plan. If you cancel your enrollment, you must restart your 5 percent contribution to receive the university contribution (if you remain eligible) once the suspension period has ended. The university contribution will automatically cease effective July 1, 2020 and will automatically resume for Michigan Medicine faculty and staff who are enrolled in the Basic Retirement Plan as of July 1, 2021 and who have completed the 12-month waiting period.
Why would I want to contribute my 5 percent while U-M suspends its contribution?
You will continue to save for retirement and receive the benefit of making tax-deferred contributions. You will also automatically receive the U-M contribution when it resumes on July 1, 2021 if you are enrolled in the plan.
Does the one-year waiting period to receive the university contribution start over or will it be extended due to the suspension period?
The waiting period does not start over. The following examples illustrate when the university contribution will begin or resume based on when you met the waiting period and if you are enrolled in the Basic Retirement Plan.
When did you complete the waiting period? Are you enrolled in the Basic Plan on July 1, 2021? When will the U-M contribution begin/resume?
Before July 1, 2020 Yes July 1, 2021
Before July 1, 2020 No When you enroll in the Basic Plan
Between July 1, 2020 and June 30, 2021 Yes July 1, 2021
Between July 1, 2020 and June 30, 2021 No When you enroll in the Basic Plan
If I enroll in the Basic Retirement Plan after July 1, 2021, will the university contribution be provided retroactive to July 1, 2021?
No.
Can I increase my contribution beyond 5 percent?
Only 5 percent can be contributed to the Basic Plan, but you may tax-defer more than 5 percent by contributing to the 403(b) SRA and/or the 457(b) on a pre-tax or after-tax Roth basis.
Can I still enroll in the Basic Plan during the suspension period?
Yes. Enrollment in the plan is not frozen. You may enroll between July 1, 2020 and June 30, 2021 to make employee contributions and invest your savings. The university contribution will not be provided during this period.
Can I cancel my 5 percent contribution to the Basic Retirement Plan?
Yes. However, if you cancel your 5 percent contribution, you will not be enrolled back into the Basic Plan until you take action to restart your contributions. You must be making your 5 percent 403(b) contributions to the Basic Retirement Plan to receive the U-M 10 percent when it resumes July 1, 2021. In addition, you will lose the tax benefits of contributing to the plan if you cancel your 5 percent 403(b) contribution to the Basic Plan.
I am a compulsory participant in the retirement plan (age 35 or older, with two or more years of eligible service, and have a 100 percent appointment). Can I cancel my 5 percent contribution?
You can cancel your 5 percent contribution on earnings up to the FICA wage base ($137,700 for 2020). Your 5 percent contribution on FICA excess earnings cannot be canceled, since that portion of your participation is a mandatory contribution.
How do I cancel my 5 percent contribution to the Basic Retirement Plan?
If you are a compulsory participant (age 35 or older, two or more years of eligible service, and you have a 100 percent appointment), call the SSC Contact Center at (734) 615-2000 to request the form, "RD - Basic Retirement Savings Plan - Request to Cancel Participation."
If you are not a compulsory participant, you may cancel your enrollment through Wolverine Access self service. Review step-by-step instructions.
 
To target the effective date of your cancellation to coincide with a specific paycheck, view the deadlines to make your election using Wolverine Access.

403(b) SRA and 457(b)

Can I enroll or change my contributions to the 403(b) SRA and 457(b) plans?
Yes. You may change contributions to these plans throughout the year using Wolverine Access. For information on these plans, visit 403(b) Supplemental Retirement Account and 457(b) Deferred Compensation Plan. Refer to the enrollment deadline tables to target a specific paycheck or see when your elections will take effect.
Does my limit for making contributions to the 403(b) SRA and/or 457(b) change due to the suspension of the university contribution?
No. Contribution limits remain the same.