2014 Maximum Annual Contribution Limits

The Internal Revenue Service recently announced that the Maximum Annual Contribution (MAC) Limits will not change for 2014. For each plan, they are either $17,500, or $23,000 if you are age 50 by 12-31-14. Payroll deductions automatically stop when these limits are reached. (If you have 15 years of service with UC as of 12-31-2013, you may be eligible to contribute an additional $3,000 in 2014 under the Lifetime Catch-up provision; contact Fidelity for details.)

How to Make Changes

1. By Phone: Call Fidelity Retirement Services at 1-866-682-7787, Monday thru Friday, 5:00 am to 9:00 pm (Pacific Time).  After the prompts, enter your Social Security Number and PIN, or your User ID and PIN.  When you hear “Main Menu,” say “Representative,” or
2. Online: Go to: http://www.netbenefits.fidelity.com, login, select the applicable Plan, select “Contribution Amount” under “Act” in the left-hand column and then follow the prompts. Online transactions can be processed 24 hours a day, 7 days per week.

Payroll Deduction Methods 

You may select either the “percentage” or “flat dollar” payroll deduction method for the 403(b) and 457(b) plans. There is one important frequency difference between these methods as outlined below. 

1. Percentage (%) Payroll Deduction Method
   If you use this method, a payroll deduction will be made from all paychecks, including special payments such as, Staff Recognition Awards, Health Sciences Special Compensation Plan payments (commonly known as “Z” payments), terminal vacation pay, etc.
2. Flat Dollar Payroll Deduction Method
   If you use this method, a deduction will be made from paychecks you receive on your “primary” pay cycle only. This means that if you receive a special paycheck other than the one for your “primary” pay cycle, or other special payment (such as Staff Recognition Awards, “Z” payments, terminal vacation pay), a 403(b)/457(b) deduction is not taken from any special payments.   

For monthly paid employees, typically paid on the first of the month, a “flat dollar” deduction is one monthly deduction. For bi-weekly paid employees, the “flat dollar” monthly amount is evenly divided between two bi-weekly pay periods ending in the month, excluding any third bi-weekly pay period in the month which is typically a Benefits Holiday. 

Are you enrolled in both the 403(b) and 457(b) Plans?

If you use the “percentage” payroll deduction method for the 403(b) and 457(b) plan, and the overall total to be deducted from both plans is 100% or more, the payroll system will not take either one. For example, no deduction will occur for either plan if you elect a 70% deduction for each plan, 50% for each plan, 70% for one plan and 30% for the other plan, or any other combination where the overall total of the “percentage” to be deducted for both plans equals 100% or more.

Solution

Be sure the overall total to both plans combined is less than 100% and is a percentage that will leave sufficient earnings to cover any required tax deductions such as OASDI and Medicare and after-tax benefit premiums (see next paragraph).  For example, deduct 40% to one plan and 45% to the other (85% total), or 25% to one plan and 50% to the other plan (75% total). Or, elect the “flat dollar” method to one plan and the “percentage” method to the other. Or, if you have reached your 403(b) Maximum for the year, you may want to reduce or cancel the percentage for that plan and increase your 457(b) percentage to 70%, or vice versa.

Effect on After-Tax Benefit Plan Payments

If you have other “pre-tax” payroll deductions such as for medical, parking, flexible spending account(s), etc., these deductions will come out of your pay before the 403(b)/457(b) contributions are applied. However, any “after-tax” payroll deductions such as for disability, life insurance, legal, etc. are deducted after 403(b)/457(b) plan contributions are applied, so be sure sufficient funds remain for those payments. While missed insurance payments are held in suspense for a short period of time, if your payment is missed for two months or more, your insurance plan will be cancelled. Monitor your paychecks to be sure that all after-tax benefit deductions have been taken and if not, make arrangements for direct payment of those premiums with your benefits office. 

If you want to change your payroll deductions for the first pay date in 2014, mark your calendar as follows:

If you want to make any changes, call Fidelity at 1-866-682-7787, or go online as outlined above. If you have any other questions or don’t know what your “primary pay cycle” is, contact the person in your department who handles benefits/personnel issues or call Campus Human Resources, Benefits Services at extension 40830, or Healthcare Human Resources at extension 40500.

Campus Human Resources, Benefits Services
Phone: (310) 794-0830 | Fax: (310) 794-0835