Your voluntary contributions to the Plan are made automatically through the payroll system, and remitted directly to your Contract Provider. You may elect to make your contributions before or after taxes are applied to your pay.
The payroll system can deduct your contributions after income and Medicare taxes are applied to your salary during each biweekly payroll cycle. Paying taxes on these contributions now means that the funds will not be taxed when you draw them from the Plan. Please note that the Internal Revenue Service has rules governing the tax treatment of the investment gain and interest you earn on these contributions—generally, they are distributed tax-free if you have participated in the Plan for at least five years.
The payroll system can deduct your contributions before income taxes are applied to your salary during each biweekly payroll cycle. Taxes are due when you take money out of the plan (contributions and investment gains/interest). Please note that your contributions are subject to current Medicare taxes.
The Internal Revenue Service (IRS) sets annual limits on the amount you can contribute to the Plan. The limits, which can change each year, depend on your age at each December 31.
These limits apply to after-tax contributions, before-tax contributions, and a combination of the two methods.
You can change the amount of your contribution at any time—simply ask your campus/department’s Benefits Administrator for a new Salary Reduction Agreement.
You can stop your contributions at any time by providing written instructions to your Benefits Administrator.
The IRS requires you to coordinate your contributions to this plan with your contributions to other plans to which you also contribute, for purposes of determining your maximum contribution amount each year. These special requirements are:
Elective contributions to the Commonwealth’s SMART Plan are not coordinated with contributions to the 403(b) Plan. You may contribute up to the maximum amount to each plan.
Employees whose employment is interrupted by qualified military service, or who are on leave of absence for qualified military service, may make additional contributions to the Plan upon resumption of their employment. Contact your Benefits Administrator with questions about this feature.
The Plan accepts rollovers from other retirement plans. Amounts you roll into this plan may only be accepted by Contract Providers, and will be subject to the same rules that are applicable to your Contributions (e.g. making distributions to you).
You may exchange another contract issued under Tax Code Section 403(b) into this plan as long as the exchange otherwise meets the Internal Revenue Service’s rules governing such transactions.
Exchanges into the 403(b) Plan may be made only to accounts issued by the Contract Providers. Amounts you deposit in this plan as an exchange will be treated as Plan Contributions for purposes of making distributions to you.
Connect @MassDHE
