University Of Michigan Benefits Office

Eligible Compensation

Eligible compensation defined
Not everything you receive in a paycheck can be put into the Retirement Savings Plan. Compensation must meet federal requirements in order to be deferred. It must be earned compensation that is paid to you as a University of Michigan faculty or staff member for services performed, subject to federal income tax withholding through the University, and reported on a W-2 issued by the University.

Federal income tax withholding
Certain forms of compensation may be subject to federal income tax but cannot have withholding taken by the University. In these cases, you may not make a pre-tax contribution to the Retirement Savings Plan because the University cannot provide a pre-tax benefit on compensation that is not subject to tax withholding. A fellowship is an example of compensation not subject to tax withholding through the University.

No after-tax payments; it must be taken pretax from your paycheck
Salary deferrals must be made as a pre-tax deduction from your paycheck. For example, you cannot write a check to the University of Michigan to have it sent to TIAA-CREF or Fidelity.

Visit the Payroll Office Web site for a complete list of the types of compensation that may be deferred. www.payroll.umich.edu/earn-code.xls

Eligible Compensation

Ineligible Compensation

Examples of compensation that are eligible to be deferred under the University of Michigan Retirement Savings Plan include:

Examples of compensation and payments that are not eligible to be deferred under the University of Michigan Retirement Savings Plan include:

Base salary and wages
Overtime
Shift differential
Administrative differential
Incentive payments (Risk Pay) under the Medical Service Plan
Longevity pay
Summer salary for University-year appointees
Temporary employee earnings (SRA only)

Fellowship, scholarship, and stipends
Credits for opting out of benefit plans
Form G payments
After-tax payments
Allowances for housing, uniforms, and travel
Royalty payments
Long-term disability plan benefit payments
Worker’s Compensation

Limitations
The University in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their spouses, partners, and dependents. Although the University has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the University modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the University's right to modify, amend or terminate them.