University of California at Berkeley

Q&A Highlights Changes On 403(b) Maximum

A helpful update on the maximum annual contribution allowed for 403 (b) retirement plan participants has been developed by the campus's Benefits Unit.

The question-and-answer format addresses such issues as who needs to consider resetting their contribution for 1997, what happens to employees whose contributions were automatically shut down in 1996 and how employees can find out their 1997 limit.

The full text of the Q&A will be available by Friday, Nov. 22 on the Human Resources web site. Look under news and announcements at htm.

The Benefits Unit in Human Resources will also mail the detailed explanation in December to all who contributed to the 403(b) plan in 1996.

Below are key points addressed in the update:

  • Contributions which were automatically stopped by the system in 1996 and not resumed will restart with the first paycheck in 1997 unless a Salary Reduction Agreement (available from Department Benefits Counselors) is submitted by the December payroll deadline to cancel plan participation.

  • The 1997 maximum annual contribution (MAC) will not be set in the system until at least March and will be based on January payroll data. Until the 1997 MAC is in place, it can't be appealed (nor can "alternative" or "catch up" elections be made).

  • The 1996 amount stays in the system until it is replaced by the 1997 MAC. (Exception: For employees contributing over $9,500 under a catch up election, the MAC will revert to $9,500 in January.)

  • Employees who had MACs of "zero" which were not reset, and employees who were not in the payroll system in January 1996 (and therefore do not have any MAC in the system) will need to wait until the 1997 amount is set before enrolling. New hires after January 1997 should go through their department benefits counselors to request a manual maximum contribution from the Benefits Unit in Human Resources.

  • UC Benefits has developed a number of methods for refining data elements used in the calculation, including the reconstruction of Fidelity/Calvert balances. As a result, it is expected there will be fewer appeals in 1997.


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