Contribution Limits

Saving for retirement is one of the most important financial decisions you can make. While it is important to save, keep in mind that there are limits to the amount you may contribute to your retirement savings plans that are established by Congressional act and detailed in the Internal Revenue Code (IRC) and U.S. Treasury Department regulations. The Internal Revenue Service (IRS) sets limits annually and strictly enforces these limits. The following information highlights these various limits and how they might apply to you. Be careful not to exceed the limits and consult with a qualified tax adviser if you have questions. If you contribute too much during a calendar year to one or more of the U-M plans when combined with contributions to an external retirement savings plan, you may need a refund of the excess. For more information, see Tax Matters.

Retirement Plan Contribution Limits

The following is an overview of federal limits on retirement plan contributions. This information is based on the university’s current understanding of highly complex Internal Revenue Code (IRC) and U.S. Treasury Department regulations. It is provided for general informational purposes only. The University of Michigan does not provide tax advice and it is the responsibility of the individual to comply with federal limits. Questions or concerns regarding these limits, including aggregation of contributions with other retirement plans, should be addressed to a qualified tax adviser.

Contribution Limit Guides

Guide to Understanding Your Contribution Limit

This book covers limits for newly hired faculty and staff, all voluntary participants in the retirement plan, and compulsory participants in the retirement plan who are not highly compensated (your pay from the university for the year is less than $160,200 for 2023).

Guide to Understanding Your Contribution Limit for Highly Compensated Compulsory Participants

This book covers limits for compulsory participants in the retirement plan who are highly compensated (your pay from the university for the year is $160,200 or more for 2023. You are a compulsory participant in the University of Michigan Retirement Plan if you are age 35 or older, have a 100% appointment, have completed two years of service as a regular faculty or staff member.
If You Have Another Retirement Plan or an IRA
Elective deferrals you make to another retirement plan in the same calendar year will reduce how much you may contribute to the Basic Retirement Plan and the 403(b) SRA. These include the following types of plans:

Federal Thrift Savings Plan (ex. if you are a VA Rotator)

403(b)

401(k)

408(k)(6) SARSEP

SIMPLE (Savings Incentive Match Plans for Employees)

Contact the SSC at (734) 615-2000 to report contributions you have made through any of the retirement plans listed above during the year. The Benefits Office can enter a contribution limit override so your U-M contributions do not exceed federal limits when combined with those you have made to another retirement plan for the year.

If you have already made significant contributions to these plan types during the calendar year, it is your responsibility to keep track of your total combined contributions. You may need to:

Lower your employee contribution at your other employer

Lower your employee contribution at U-M

Contact SSC to request a refund if you exceed the contribution limits. For details and eligibility criteria, see Tax Matters.

If this is the case, consider the 457(b) as an option to make additional contributions to save for retirement. Also, 457(b) elective deferrals you make at another employer will reduce how much you contribute to the 457(b) at U-M.

IRA Contribution Limits and the U-M Plans

Contributions you make to a traditional IRA (tax-deferred contributions), as well as to a Roth IRA (after-tax contributions), do not reduce how much you may contribute to the U-M Basic Retirement Savings Plan, 403(b) Supplemental Retirement Account (SRA), or the 457(b) Deferred Compensation Plan. If you make up to the maximum contribution to an IRA for which you are eligible, it does not reduce your limit to contribute to any of the U-M plans.

However, there are some IRA limits to keep in mind if you contribute to a traditional IRA or a Roth IRA while also contributing to the U-M plans. For example, you may not be able to deduct all of your contributions to a traditional IRA for income tax purposes if you (and your spouse, if you are married) participate in a retirement plan at work, and your income exceeds IRS limits. In addition, Roth IRA contributions might be limited if your income exceeds a certain level. However, this income limit on Roth IRA contributions does not apply to the U-M Roth 403(b) and U-M Roth 457(b).

View for more information.
IRC 415(c) Limit
Section 415(c) of the Internal Revenue Code (IRC) limits the amount of total contributions that may be made to a defined contribution retirement plan by capping them at the lesser of 100% of an employee’s compensation or $66,000 in 2023. Under a 403(b) plan, this limit applies to employer contributions (whether vested or not), all after-tax and tax-deferred employee contributions, and forfeitures reallocated to employee accounts. It covers 403(b) elective deferrals you make to the U-M Basic Retirement Plan and 403(b) SRA (both pre-tax and after-tax Roth). Also, 403(b) non-elective contributions and 403(b) contributions made pursuant to a one-time irrevocable election are subject to the 415(c) limit. However, employee 403(b) contributions made under the Age 50 catch-up or to a 457(b) Deferred Compensation plan are not included when calculating this limit.

The 415(c) limit may affect you when you participate through certain other types of retirement plans and also contribute to the U-M 403(b) plans. You could exceed the limit if:

You participate with another 403(b) plan outside of the U-M 403(b) plans, either at the same time as you are employed at U-M or due to previous employment in the same calendar year (e.g., as a new hire).

Contributions are made for you to a SEP-IRA, 401(a) plan (including a 401(k) plan), or 403(a) plan sponsored by a corporation, partnership, or sole proprietorship in which you have more than a 50% ownership interest.

You contribute to a 401(a) or 403(a) Keogh plan with respect to self-employment income from a trade or business in which you have a more than 50% ownership interest (including a Keogh plan established with respect to fees for a non-employee member of a board of directors).

Contributions to a SEP-IRA or qualified retirement plan you are deemed to control need to be aggregated with 403(b) contributions made to the U-M plans in order not to exceed the IRC 415(c) limit. You may need to adjust contributions to these plans accordingly. Call the SSC Contact Center at (734) 615-2000 if you have questions or to report contributions made to these plan types.
If You Leave U-M and Work Somewhere Else

You have one limit no matter how many employers or retirement plans you have. If you have already reached the IRC limit when you leave U-M and go to work for another employer, you may not be able to contribute to their retirement plan until the following calendar year. You will need to carefully coordinate your elective deferrals if you plan to work for another employer and want to contribute to their retirement plan.
View Your Per-Paycheck Contribution Limit

You can view your 403(b) SRA and 457(b) contribution limit for the year and for the remaining number of paychecks through Wolverine Access. Select the Faculty & Staff tab, select Employee Self-Service, click Benefits, and then click Calculate Ret. Contribution under Retirement Self Service.

At the top of the page are two tabs, one for the 403(b) plan and one for the 457(b). The “As Of Date” in the upper right hand margin should read the current date. Click the “Recalc for Next Year” button and it will calculate the limit for the following calendar year.

This calculation is based on your current plan elections and job data online with Human Resources Records and Information Services. It is for illustration only and not a guarantee of any benefits to be provided.
Basic Retirement Plan Limit
2023 Limits

$22,500 limit for 2023 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.

The limit is $30,000 if you are age 50 or older.
403(b) SRA Limit
Summary:

2023 Limits

$22,500 limit for 2023 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

The limit is $30,000 if you are age 50 or older

Viewing Your Limit Online

The Calculate Ret. Contribution panel on Wolverine Access self-service will display your projected 403(b) SRA contribution for the remainder of the current year and can recalculate it for the following year. Go to Wolverine Access and select the Faculty & Staff tab, select Employee Self-Service, click Benefits, and then click Calculate Ret. Contribution under Retirement Self Service. 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.

Base Salary
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

For 2023, your limit is automatically $22,500. If your salary is less than $22,500 for 2023, 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

For 2023, your limit is increased by $7,500 if you are age 50 or older by Dec. 31, 2023, making it $30,000 instead of $22,500.

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 (2023 Limits)

Your salary = $50,000
Your 403(b) limit = $22,500
Your Basic Retirement Plan employee contribution = $50,000 x 5% = $2,500
Amount extra you could contribute to a 403(b) SRA = $22,500 - $2,500 = $20,000
SRA limit per pay period (monthly) = $20,000/12 = $1,667

Note: This example assumes you are eligible for the 5% employee contribution with 10% U-M contribution.
457(b) Deferred Compensation Plan Limit
Summary:

$22,500 for 2023; Plus an additional $7,500 if you are age 50 or older

General 457(b) Limit of $22,500 for 2023

Your limit is automatically $22,500 for 2023. If your salary is less than $22,500, 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 $7,500 if you are age 50 or older by Dec. 31, making it $30,000 instead of $22,500.

Limit Aggregation

The contribution limit applies to all 457(b) plans you participate in across all employers. Contact a qualified tax planner if you participate in more than one 457(b) plan to ensure your combined contributions do not exceed the federal limit.

Sample 457(b) Limit Calculation

Your 457(b) limit = $22,500
457(b) limit per pay period (monthly) = $22,500/12 = $1,875

Note: This example assumes you do not qualify for the age 50 catch up and are paid monthly.

View Your Limit Online

The Calculate Ret. Contribution panel on Wolverine Access self-service will display your projected 457(b) contribution for the remainder of the current year and can recalculate it for the following year. To view your limit, go to Wolverine Access and select the Faculty & Staff tab, select Employee Self Service, click Benefits, and then click Calculate Ret. Contribution under Retirement Self Service, and click the 457(b) tab.
How to Contribute the Maximum
View your limit on the retirement contribution calculator in Wolverine Access for the 403(b) SRA or 457(b) plan. Go to Wolverine Access, select the Faculty & Staff tab, select Employee Self-Service, click Benefits, and then click Calculate Ret.Contribution under Retirement Self Service..

Enroll or increase your contribution amount through Wolverine Access self-service to reach the annual limit on a per paycheck basis.

Open your SRA or 457(b) account with TIAA or Fidelity Investments (or both) online if you don’t already have one for the plan in which you are enrolling. Be sure to declare your beneficiaries and select your investment funds.

Increase your contribution for the following year each December to make sure your amount is keeping place with the limit as it gets indexed and increased by the IRS.

Reach Your Limit Without Going Over

The M-Pathways payroll system will monitor contributions made to the Basic Retirement Plan, 403(b) SRA, and 457(b) plan during the course of the year. Contributions for any plan will be suspended for the remainder of the year if you reach its applicable limit and then resume the following year if you have an eligible appointment.

Choosing a Large 403(b) SRA or 457(b) Amount

If you choose to contribute a large 403(b) SRA or 457(b) amount per pay period, rather than contributing up to your annual limit in equal installments over the course of the year, you should keep the following in mind:

Contributing over the course of the entire year allows you to invest gradually so that large swings in the financial markets have less effect on the average price at which you purchase shares. This is referred to as dollar-cost averaging.

If you make large 403(b) SRA contributions you may reach the annual limit before you have made your 5% contribution for the year to the Basic Retirement Plan. Your 5% contribution will be suspended for the year and will then resume the following year.

If your 5% 403(b) contribution to the Basic Retirement Plan and 403(b) SRA are suspended, the university contribution (if you are eligible based on fulfilling the waiting period) will continue on your full eligible pay up to the earnings cap.

If You Receive a Salary Increase

The annual limit on 403(b) contributions is not based on your salary, so your limit does not go up if your salary increases. If you make 403(b) SRA contributions you do not need to lower it due to a salary increase. The M-Pathways payroll system will monitor your contributions and suspend them for the rest of the calendar year if you reach the limit. If your SRA and Basic Retirement Plan contributions are suspended to keep you within limit, the university contribution will continue. Both your contribution as well as the SRA will resume the following January if you have a continuous appointment.

If You Retire, Terminate, or Take a Leave of Absence

Your annual limit does not change because you are going to work fewer months and earn less due to retirement or another employment event. Since you will receive fewer paychecks, simply increase the amount of your contribution per paycheck in order to save the maximum allowable for the year. A vacation payoff check will generally not have contributions for the Basic Retirement Plan, 403(b) SRA or 457(b). If you belong to a bargaining unit, check with the terms of the agreement to determine if Basic Retirement Plan contributions will be provided.
FICA Wage Base and Limits for Compulsory Participants
NOTE: The following section on the 403(b) SRA limit only applies to you if you earn more than the FICA wage base ($160,200 for 2023) and you are a compulsory participant in the retirement plan.

How FICA Affects Your 403(b) SRA Limit

FICA is the Social Security and Medicare tax you pay on wages and salary. The $160,200 taxable base for 2023 is the point at which you no longer pay the Social Security portion of the tax. The Internal Revenue Code provides a unique feature for retirement plans that have a compulsory participation feature. It gives you a tax advantage by not counting your 5% Basic Retirement Plan contribution made on your pay over the FICA wage base against how much you may contribute to the 403(b) SRA.

Under this arrangement, your 5% contribution made on your U-M pay over FICA is no longer tax-classified as 403(b) but as 401(a) contributions instead. The result is that you can contribute more to an SRA, since only part of your Basic Retirement Plan contribution counts against the 403(b) elective deferral limit.

Your contribution to the Basic Retirement Plan on your U-M pay under FICA is a voluntary 403(b) contribution and reduces the amount you may contribute to the SRA.

Your contribution to the Basic Retirement Plan on your U-M pay over FICA is tax-classified as a mandatory 401(a) contribution and does not count against the 403(b) limit. This allows you to contribute more to the SRA than if you were a voluntary participant in the Retirement Plan.

When You Earn Above the FICA Wage Base

If you are already enrolled in the retirement plan at the time you meet the compulsory criteria and your U-M pay for the calendar year exceeds the FICA taxable wage base, your participation does not change. However, the 5% you contribute on your U-M pay over the FICA wage base does not count against the 403(b) elective deferral limit. This allows you to contribute a larger amount to an SRA.

More information is available in the Guide to Understanding Your Contribution Limit for Highly Compensated Compulsory Participants.

U-M Contributions and FICA

Your contribution to the Basic Retirement Plan and the university match continues when your U-M pay exceeds the FICA wage base. You still contribute 5% of your eligible U-M pay and U-M provides its match up to the earnings cap of $330,000 for 2023. What changes is that your 5% contribution on your U-M pay over FICA no longer counts against your 403(b) elective deferral limit.
Priority of Deductions Taken from Your Pay
If you make large contributions to the retirement savings plans and your paycheck is not able to support all of them, deductions will be taken in order up to the amount your paycheck will allow. Deductions for U-M benefits plans in which you are enrolled are automatically taken from your paychecks in this order:

Health Plan

Legal Services Plan

Dental Plan

Vision Plan

Life Insurance

Long-Term Disability Plan

Basic Retirement Plan

Dependent Care Flexible Spending Account

Health Care Flexible Spending Account

TIAA pre-tax Extra to Base Plan

TIAA pre-tax SRA

Fidelity pre-tax SRA

457(b) pre-tax

Fidelity after-tax Roth SRA

TIAA after-tax Roth SRA

457(b) after-tax Roth

In addition, you have other deductions taken from your pay. It is critical to plan your elected contribution amounts, for example, the amount you contribute to a pre-tax SRA or a 457(b) after-tax Roth, so there is also enough pay to support other deductions that need to occur. Examples of deductions that need to occur include FICA (Medicare and Social Security tax), federal and state withholding taxes, court-ordered deductions, parking, union dues, athletic tickets and voluntary charitable contributions, such as donations to Michigan Medicine, U-M schools and colleges, and United Way. You will need to make alternate arrangements to pay these other contributions if there is not enough pay to support these amounts after U-M benefit and retirement contributions are taken out.

Examples for Retirement Savings Plan Deductions

Following are some examples on the order in which retirement savings plan contributions are taken from your pay. These examples do not cover all possible scenarios and are for illustration purposes only.

Pre-Tax SRA vs After-Tax SRA

Your gross monthly paycheck is $4,000.

You elected to contribute $2,000 to the Fidelity after-tax Roth SRA.

You elected to contribute $2,000 to Fidelity pre-tax SRA.

There will only be enough pay to support a portion of the after-tax Roth SRA since the pre-tax SRA, FICA and other benefit deductions are taken first.

Pre-Tax SRA vs After-Tax 457(b)

Your gross monthly paycheck is $4,000.

You have elected to contribute $2,000 to 457(b) after-tax Roth.

You have elected to contribute $2,000 to the Fidelity pre-tax SRA.

There will only be enough pay to support a portion of the after-tax Roth 457(b) since the pre-tax SRA, FICA and other benefit deductions are taken first.

Pre-Tax SRA vs. Flexible Spending Account

Your gross monthly paycheck is $3,000.

You have elected to contribute $2,500 to the Fidelity pre-tax SRA.

You have elected to contribute $400 to the Health Care Flexible Spending Account.

There will only be enough pay to support a portion of the Fidelity pre-tax SRA since the pre-tax Health Care Flexible Spending Account, FICA and other benefit deductions are taken first.

After-Tax SRA vs After-Tax 457(b)

Your gross monthly paycheck is $4,000.

You have elected to contribute $2,000 to 457(b) after-tax Roth.

You have elected to contribute $2,000 to the Fidelity after-tax Roth SRA.

There will only be enough pay to support a portion of the after-tax Roth 457(b) since the after-tax SRA, FICA and other benefit deductions are taken first.

After-Tax TIAA Roth SRA vs After-Tax Fidelity Roth SRA

Your gross monthly paycheck is $4,000.

You have elected to contribute $2,000 to TIAA after-tax Roth SRA.

You have elected to contribute $2,000 to the Fidelity after-tax Roth SRA.

There will only be enough pay to support a portion of the after-tax TIAA Roth since the after-tax Fidelity Roth SRA, FICA and other benefit deductions are taken first.

Review Your Paycheck

Be sure to review your paycheck periodically to ensure payroll deductions are as you expect, and to ensure you have sufficient funds prior to signing up for additional contributions. To view your paycheck on Wolverine Access, login to Employee Self Service and select Payroll and Compensation. The View Paycheck window will be displayed. Under Select Paycheck, click the View Paycheck link for the check you would like to view.

Questions About Your Benefits?

Call the SSC Contact Center at 5-2000 from the Ann Arbor campus, (734) 615-2000 locally, or (866) 647-7657 toll free, Monday through Friday from 8 a.m. to 5 p.m. or submit your questions online through an eForm.

Limitations

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. Every effort has been made to ensure the accuracy of the benefits information in this site. However, if any provision on the benefits plans is unclear or ambiguous, the Benefits Office reserves the right to interpret the plan and resolve the problem. If any inconsistency exists between this site and the written plans or contracts, the actual provisions of each benefit plan will govern.

Contribution Limits

Retirement Plan Contribution Limits

IRA Contribution Limits and the U-M Plans

2023 Limits

Summary:

2023 Limits

Viewing Your Limit Online

How Your Limit is Calculated

General 403(b) Limit

Age 50 or Older Catch-Up

15 Years of Service Catch-Up

Sample 403(b) Limit Calculation (2023 Limits)

Summary:

General 457(b) Limit of $22,500 for 2023

Age 50 or Older Catch-Up

Limit Aggregation

Sample 457(b) Limit Calculation

View Your Limit Online

Reach Your Limit Without Going Over

Choosing a Large 403(b) SRA or 457(b) Amount

If You Receive a Salary Increase

If You Retire, Terminate, or Take a Leave of Absence

How FICA Affects Your 403(b) SRA Limit

When You Earn Above the FICA Wage Base

U-M Contributions and FICA

Examples for Retirement Savings Plan Deductions

Review Your Paycheck

Questions About Your Benefits?

Limitations

Benefits Office

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