Tax deferred savings plans at UGA
The University of Georgia offers a program which allows you to invest a specific amount of your salary into a tax sheltered retirement plan. Section 403(b) of the Internal Revenue Code allows employees of colleges, universities, and other nonprofit organizations to place a portion of their compensation in an annuity contract or a custodial account, which is an account invested in mutual funds. Section 457(b) of the Internal Revenue Code allows employees of certain state and local governments and non-governmental entities tax exempt under IRC 501 to defer compensation into a tax sheltered plan as well. Employees of the University of Georgia are allowed to have both plans.
Pre-tax or post-tax contributions
Contributions to these plans may be made on a pre-tax basis or a Roth post-tax basis. For pre-tax contributions, you do not pay income tax on allowable contributions until you begin making withdrawals from the plan, usually after you retire or separate from service. However, if your contributions are made to a Roth contribution program, this benefit does not apply. Instead, you pay income tax on the contributions to the plan but distributions from the plan (if certain requirements are met) are tax free.
403(b) and 457(b) contribution limits
The information provided is based on the Board of Regents understanding of current tax law. This information is not intended as tax advice. You should seek the advice of your own tax adviser with respect to your individual circumstances.
2016 and 2017
- Employee yearly maximum contribution: $18,000
- Employees age 50 or older: additional $6,000 for a total of $24,000
- Employees with 15 or more years of full time service may be eligible for additional “catch up” provisions – consult your 403(b) or 457(b) vendor representative or your tax adviser
An employee may contribute the above maximum contribution amounts, based on his/her age, to both a 403(b) plan and a 457(b) plan.
Employees are eligible to participate in the plan and elect to have contributions made on their behalf immediately upon employment at UGA. Exclusion: students who are employed at UGA in student job classifications are not eligible to participate in tax deferred savings plans.
UGA’s Retirement Manager System will assist you in making the salary reduction you authorize and remitting the amount to your chosen vendor each month on your behalf.
If you wish to contribute to one or both plans, you must also open an account with your chosen provider(s) in addition to setting up your contributions in the Retirement Manager System.
Any additional questions or concerns may be directed to Human Resources (706) 542-2222.