General Limit of $15,500
Your limit for making 457(b) elective deferrals is $15,500 for 2008. If your salary is less than $15,500, your limit is your salary. However, if you earn less than $15,500 you cannot contribute your entire salary because you must still pay the 7.65% FICA (Social Security and Medicare) tax. You must also pay for pretax deductions for other benefit plans and deductions you have such as parking, United Way, and U.S. Savings Bonds.

Age 50 or Older Limit of $20,000
If you are age 50 or older by the end of the calendar year, your limit is $20,000.

Your Per Paycheck Contribution
After you determine your annual limit, subtract any contributions made during the same calendar year to another employer’s 457(b) plan. Divide the remaining amount by the number of pay periods left in the calendar year to determine your per paycheck contribution.

Your 457(b) salary deferral contribution will continue until you change or cancel it by submitting a new Salary Deferral Agreement. If you reach the annual limit before the end of the calendar year, the contributions will be suspended for the balance of the year. It will generally resume automatically the following January.

If You Retire or Terminate
Your limit for the year does not change because you retire, terminate employment, take a leave of absence, or are placed on a layoff ( RIF). You may reach your limit by increasing your 457(b) contribution before the event occurs.

You have one 457(b) limit no matter how many employers or plans you have. If you have reached the IRC 457(b) limit while at U-M and then go to work for another employer, you may not be able to contribute to their 457(b) 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 457(b) plan.

Vacation Payoff
If you are eligible to accrue vacation, any unused accrual at termination of employment or retirement will be paid to you. This payment will not have the 457(b) contribution taken if you are enrolled in the plan.

Do Not Exceed the Limit
The M-Pathways payroll system monitors your year-to-date contributions and will automatically suspend them for the rest of the calendar year if you reach the IRC limit.

This process only tracks your deferrals at U-M. If you contribute to another employer’s 457(b) plan during the same calendar year, you will need to carefully monitor your combined deferrals so they do not exceed IRC limits.

Elective deferrals to other types of plans that do not reduce your U-M 457(b) limit include:

• 403(b)
• 401(k)
• 408(k)(6) Salary Reduction Simplified Employee Pension Plans (SARSEPs)
• SEP-IRAs
• SIMPLEs (Savings Incentive Match Plans for Employees)

Consult with a tax advisor if you have questions about the need to aggregate your combined elective deferrals so you do not exceed IRC limits.