Employee Matters

The Employee Compensation and Benefits Services staff prepares this column.

Decrease your taxes and save for retirement
A comfortable retirement requires some planning. The earlier you start planning the financial part, the better prepared you will be. Many employees say the Wisconsin Retirement System and Social Security benefits pay the bills in retirement, but it’s the money they set aside in the UW tax- sheltered annuity program that pays for the quality of that retirement.

What is the tax-sheltered annuity program?
Authorized by Internal Revenue Service Code 403(b), this program is commonly referred to as a 403(b) program. The program allows employees who work for educational, health-care and non-profit organizations to shelter some income from taxes now and provide supplemental income after they retire. Participants not only save money on taxes, but put away money that will be extra income to supplement benefits from the Wisconsin Retirement System and Social Security.

Who is eligible?
Any faculty, academic staff, classified, classified limited term or a student hourly employee making W-2 wage income is eligible to participate. Some employees with graduate student titles are excluded.

Where can I invest my 403(b) contributions?
UW has screened a number of companies to act as approved TSA vendors with whom you can have payroll deductions invested. Each company has a number of stock, bond and interest-bearing funds from which you can choose. These companies have Web sites that describe these funds and offer all kinds of investment education.

Are there other tax-deferred retirement plans offered?
Yes, eligible UW employees may also defer income through the state of Wisconsin Deferred Compensation Program, which is authorized under the Internal Revenue Service Code 457, and allows employees who work for state, county and municipal governments to shelter money for retirement much like the TSA program does. Due to recent legislation, UW employees may now contribute up to the maximums to each program.

When can I enroll and how much can I contribute?
You can enroll in the TSA and WDC programs at any time. The minimum biweekly contribution is $8 and the minimum monthly contribution is $20. The IRS indexes the maximums. For 2003, the maximum contribution to each program is $12,000. There is also an “age-50-and-older” catch-up provision of $2,000. This and the maximum are scheduled to increase by $1,000 each per year through 2006. Finally, employees with 15 years or more of UW service are eligible for additional TSA catch-up, and employees in the three years prior to retirement have additional catch-up rights under the WDC program.

How do I get started in these programs?
Visit the Employee Compensation and Benefits Services Web site at: http://www.bussvc.wisc.edu/ ecbs/ecbs.html or e-mail employee@bussvc.wisc.edu.