- $18,000 limit for all 403(b) accounts, including employee 403(b) contributions to the Basic Retirement Plan, any U-M 403(b) SRA, and any other 403(b) plans you participate in
- Plus an additional $6,000 if you are age 50 or older
- Plus an additional $3,000 if you have more than 15 years of service at U-M and average less than $5,000 of contributions per year of service, up to a lifetime cap of $15,000
Viewing Your Limit Online
The Calculate Ret. Contribution panel in Wolverine Access will display your projected 403(b) SRA contribution for the remainder of the current year and can recalculate it for the following year. The panel will display the following fields:
Annual Limit on 403(b) Contributions
This is your total limit for 403(b) contributions. These include your voluntary contribution to the Basic Retirement Plan, and any 403(b) SRA contributions. The U-M match is a 401(a) contribution, which does not count against your 403(b) limit.
This is your base rate of pay; it does not include shift and administrative differential, overtime, shift bonus, incentive pay under the Medical Service Plan, longevity pay, or summer salary for instructional staff. Your contribution and the U-M contribution (if you are eligible) will be provided on all eligible compensation in each paycheck, up to federal limits once you are enrolled.
Basic Retirement Plan
This section projects your contribution and the U-M contribution (if you are eligible) using your current base salary.
Compulsory or Voluntary
You may voluntarily enroll in the Basic Retirement Plan at any time. Participation becomes compulsory upon reaching all three criteria: age 35, 100% full time appointment, and two years of service in an eligible faculty or staff position. The calculation illustrates which plan you are enrolled in and which amounts count against the limit.
How Your Limit is Calculated
Your annual limit on 403(b) contributions is calculated according to Internal Revenue Code (IRC) guidelines. By subtracting your contribution to the Basic Retirement Plan, what remains is the amount you can make in 403(b) SRA contributions.
General 403(b) Limit of $18,000
Your limit is automatically $18,000. If your salary is less than $18,000, your limit is your salary. However, you must still pay the FICA taxes (Social Security and Medicare), contributions for other benefit plans, and deductions such as parking and United Way.
Age 50 or Older Catch-Up
Your limit is increased by $6,000 if you are age 50 or older by December 31, making it $24,000 instead of $18,000.
15 Years of Service Catch-Up
Your limit may increase up to $3,000 per year, with a lifetime catch-up of $15,000. This increase is available only if you meet two criteria:
- You must have at least 15 years of service at U-M. The service must be cumulative years, not calendar years. For example, working two years at a 50% appointment equals one cumulative year. This is not the same as your years of service to retire.
- Your 403(b) elective deferrals to the plan in prior years must average less than $5,000 per year. This catch-up was designed by the IRS for individuals who did not contribute a lot to their employer retirement plans during their early years of service and allows them to make up for it at the 15-year point.
If you have 15 or more cumulative years of service at U-M yet do not qualify for this catch-up, it is because you have contributed more than $5,000 per year on average to the retirement plan. In other words, you are not eligible because you have already made significant contributions to the plan and this catch-up is only available if you have made few contributions. Other reasons you may not qualify or be eligible for only a small increase include the following:
- If your contributions to the plan have been just under $5,000 per year on average, you are eligible for a smaller increase than the full $3,000. This is because your lifetime contributions exceed the average needed to qualify for the full $3,000.
- You may qualify for the catch-up for only a year or two. This is because the catch-up must be recalculated each year and you may exceed the $5,000 per year average as you continue to contribute with each successive year.
- You may have used up the catch-up since it has a lifetime maximum of $15,000 extra that you may contribute. You may have reached the lifetime cap of $15,000 in extra contributions during a previous year.
- You may have carried over part of the $3,000 catch-up from a previous year and have only a small portion available before you hit the $15,000 lifetime limit under this provision.
Sample 403(b) Limit Calculation
Your salary = $50,000
Your 403(b) limit = $18,000
Your Basic Retirement Plan employee contribution = $50,000 x 5% = $2,500
Amount extra you could contribute to a 403(b) SRA = $18,000 - $2,500 = $15,500
SRA limit per pay period (monthly) = $15,500/12 = $1,291
Note: 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.