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Employer FAQs

Frequently Asked Questions by Employers

CCC is not licensed to provide financial or tax advice. To the extent answers to questions below deal with Federal or State income tax information, any information provided is not intended or written by CCC to be used, and cannot be used by any taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Information from CCC relating to Federal tax matters may not be used in promoting, marketing or recommending any entity, investment plan, or arrangement to any taxpayer. Information provided on this page is intended for CCC Client-Employers and is not intended and may not be appropriate for plans outside our administration.

  1. Exactly what is a 403(b) Plan?
  2. What are the 403(b) and 457(b) Limits for 2023?
  3. What is the Universal Availability (UA) Notice and what do employers need to know?
  4. What Form W-2 Codes should be used for all types of 403(b) and 457(b) deferrals and contributions?
  5. What is OregonSaves?
  6. Is it possible for us to offer a Retirement Incentive Program that allows participants to defer Federal and State income taxes?
  7. We are offering an Early Retirement Incentive (ERI) program includes a stipend (payments), can these payment be deferred?
  8. How does an employer determine if an employee is technically "severed from employment" as it pertains to the 403(b) and/or 457(b) Plan?
  9. We are facing RIF (Reduction in Force via terminations), can these employees access their 403(b) or 457(b) assets?
  10. How do I handle returned remittances? Are their timing considerations?
  11. We have received a check from a mutual fund company that may be used to offset Plan expenses. What should I do with this check?
  12. Our Employees have received checks from Vendors that are payable to the Employer and appear to stem from SEC settlements. What should I suggest that these Employees do with these checks?
  13. What happens if an employee specifies a flat amount to be deferred and doesn't earn enough to make the specified deferral?
  14. Why are 403(b) TSA contributions in lieu of health insurance premiums problematic?
  15. How do we add a new 403(b) Vendor to the Plan?
  16. Are Life Insurance Policies no longer allowed in 403(b) accounts?
  17. Does CCC support Employer Benefit Fairs or Financial Educational?
  18. How do we adopt Roth contributions?
  19. Can an employees defer some of their accrued vacation and sick pay to their 403(b) account?
  20. Are Employer 403(b) Contributions and/or Employer 457(b) Contributions subject to FICA taxes? What limits apply to these?

The questions above relate to "Plan Level" from Employers, however more FAQs are available for Participant Questions on our Employees FAQ page.

  1. Exactly what is a 403(b) Plan?

  2. 403(b) Plans generally serve as voluntary supplemental retirement savings plans designed to supplement retirement benefits available from State pension plans and Social Security. The IRS provides a Summary of 403(b) Plan Basics page and a 403(b) Plan Brochure for Employees on its website. Additionally, CCC's site offers a page of Education Tutorials and more to familiarize employees with a variety of 403(b) topics.

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  3. What are the 403(b) and 457(b) Limits for 2023

  4. 2023 403(b) Limits*

    1. Basic Elective Deferral Limit: $22,500
    2. Age 50 Catch-up:$7,500 (this makes the limit $30,000 for eligible employees)
    3. The Special Catch-up for 15 Years of Service**: Up to an additional $3,000
    4. Annual Additional Limit (applies to the combination of Elective Deferrals and Employer Contributions): $66,000

    2023 457(b) limits*

    1. Contribution Limit (applies to all contributions, employee and employer): $22,500
    2. Age 50 Catch-up: $7,500 (this makes the limit $30,000 for eligible employees)
    3. The Special 3 Year Catch-up**: Up to twice the basic limit for the year $45,000 max

    *Please note: all limits must not exceed 100% of includable compensation.
    ** Special Catch-ups are subject to eligibility requirements and require evaluation by CCC

    Additional information on employer contribution limits (and the applicable FICA treatment) is available on our Employer Contributions page.

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  5. What is the Universal Availability (UA) Notice and what do employers need to know?

  6. Federal regulations require that employers sponsoring 403(b) plans meet certain Universal Availability (UA) rules. Generally, universal availability means that if an employer permits one employee to defer salary into a 403(b) plan, the employer must extend this offer to all eligible employees. This meaningful notice of their right to participate in the plan is referred to as the UA notice. Failure to provide such notification is considered by the IRS to be a plan defect, which would be time consuming and expensive to correct.

    CCC client employers will receive updated notices shortly after the IRS releases new limits for the next calendar year and are encouraged to distribute this notice in November or December, and additional distributions are encouraged. It is critical employers document the distribution of these notices this information will need to be made available upon audit (CCC clients are provided with a link to a survey to collect this information when we provide the UA notice).

    Methods for distribution are listed below, and we encourage employers to use as many of these as is practical to reach all eligible employees (including those who work seasonally, as substitutes, at multiple worksites, etc.).

    • Email (if certain employees do not use email as a part of their job, additional methods are required)
    • Employee Handbook
    • New Hire Packet / Orientation materials
    • Paycheck Stub Envelope Stuffers (anyone not paid during the month of distribution must be contacted using another method)
    • Office Mail Boxes
    • USPS Mail
    • Substitute Communications
    • Worksite Handouts
    • Notice posted on District website
    • Public posting in work areas/Bulletin Board

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  7. What Form W-2 Codes should be used for all types of 403(b) and 457(b) deferrals and contributions?

  8. 2022 Instructions for W2 Reporting for 403(b) and 457(b) Deferrals and Contributions

    • Employee 403(b) Deferrals go in Box 12 Code E.
    • Employer 403(b) Contributions go in Box 14 (the "other" box) with the description "Employer 403(b) Contributions".
    • Employee 403(b) Roth Deferrals go in Box 12 Code BB.
    • Employee and Employer 457(b) Deferrals go in Box 12 Code G.
    • Employee Roth 457(b) Deferrals go in Box 12 Code EE

    *Note: Employer 403(b) contributions do not have a required reporting box, using the "other" box is a best practice.

    Additional information on employer contribution limits (and the applicable FICA treatment) is available on our Employer Contributions page.

    For additional information, please see the IRS W2 Instructions (2022 version) and this information is available on the Common Errors on Form W-2 Codes for Retirement Plans web page.

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  9. Is it possible for us to offer a Retirement Incentive Program that avoids payroll taxes and allows participants to defer Federal and State income taxes?

  10. Yes, you may establish a Retirement Incentive Program under which the Employer makes post-severance 403(b) contributions on behalf of program participants, however due to the complexities of setting up such a program it is critical that any proposed agreements or contracts describing the program be reviewed to ensure the arrangement is compliant with all applicable rules and limitations before the program is implemented. We strongly recommend Employers contact uson this matter.

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  11. What is OregonSaves?

  12. OregonSaves is a state-operated retirement saving plan available to employers who do not sponsor another retirement saving plan option for employees. CCC Client Employers in Oregon sponsor 403(b) and/or 457(b) plan we administer plus a great many have State Retirement Plans available to employees, therefore would be exempt, however OregonSaves asks that employers certify their exception on the OregonSaves website.

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  13. We are offering an Early Retirement Incentive (ERI) program includes a stipend (payments), can these payment be deferred?

  14. Post-severance ERI stipends are not eligible for 403(b) or 457(b) elective deferrals.

    Note: If you are an Employer wishing to structure a post severance employer contribution program, please contact CCC for assistance.

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  15. How does an employer determine if an employee is technically "severed from employment" as it pertains to the 403(b) and/or 457(b) Plan?

  16. CCC has created guidance for employers to determine if an employee meets the criteria to be considered "severed from employment". This document is available here.

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  17. We are facing RIF (Reduction in Force via terminations), can these employees access their 403(b) or 457(b) assets?

  18. In both the 403(b) and 457(b) plans, severed (former) employees may distribute their accounts, please see our info sheet concerning what criteria must be met to be severed from employment and additional information concerning distributions can be found on the Employee FAQ page.

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  19. How do I handle returned remittances? Are their timing considerations?

  20. First contact CCC immediately and provide as much information as possible about the remittance check was returned. CCC will contact the Vendor to find out why the remittance was returned and how to rectify the issue so amounts can be re-submitted for affected participants. The most common reasons for a returned remittances:

    • There is not an open account* for one or more of the Participants included in the remittance summary the employer provided.
    • The vendor cannot find a Participant listed due to a name change and the remittance summary lacks unique identifiers that can help them trouble-shoot, such as the last 4 digits of an SSN).
    • The vendor did not receive a remittance summary from the employer to accompany the funds received and could not rectify the issue before their deadline to deposit or return (generally 5 business days).

    It is critical to contact CCC as soon as possible for assistance in such matters, as the window to insure deposits are made in compliance to timing specified in the 403(b) Plan document (for elective deferrals in 403(b) plans this deadline for deposit is most commonly stated as within 15 business days following the end of the month in which the amount would otherwise have been paid to the Participant.

    *CCC's enrollment steps pages and the CCC 403(b) Salary Reduction Agreements state that evidence of an open account should be attached to any new Salary Reduction Agreement, as this can help prevent returned remittances.

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  21. We have received a check from a mutual fund company that may be used to offset Plan expenses. What should I do with this check?

  22. If the amount of the check is very modest our recommendation is to deposit the check in the same account that you use to pay CCC expenses and treat it as an offset to 403(b) plan administration costs. We welcome client to contact us if assistance is needed in determining the appropriate next steps.

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  23. Our Employees have received checks from Vendors that are payable to the Employer and appear to stem from SEC settlements. What should I suggest that these Employees do with these checks?

  24. Some of these checks appear to be payable to the Employer with no mention of the Employee, while others appear to be payable to the Employer for the benefit of the Employee. The best information is what is included with the check, there is a named "settlement administrator" on the enclosed letters and generally a website referenced with FAQs for employees and a phone number for employees ti direct questions concerning the settlement checks.

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  25. What happens if an employee specifies a flat amount to be deferred and doesn't earn enough to make the specified deferral?

  26. The Employer should develop an administrative policy to cover this scenario. Most common policy we encounter is this: If an employee earns enough during a given payroll cycle to 'justify' the deduction specified in the Salary Reduction Agreement, then process and remit the deduction. Otherwise, disallow the entire deduction. Note: The CCC Salary Reduction Agreements state that the deductions are subject to the Employer's administrative policies.

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  27. Why are 403(b) TSA contributions in lieu of health insurance premiums problematic?

  28. Private Letter Ruling 9104050 addresses this issue, and the conclusion is that in such arrangements, all employees that DO NOT elect the 403(b) TSA contribution option and ACCEPT the employer's payment of health insurance premiums on the employees' behalf would have those health insurance premiums treated as currently taxable income.

    Please contact CCC immediately if your policies currently include a "403(b) TSA Contribution in lieu of health insurance premiums" option, so we can discuss possible remedies to this 403(b) Plan defect.

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  29. How do we add a new 403(b) Vendor to the Plan?

  30. The requirements for adding a new vendor are contained in your 403(b) Plan Document. Generally plans will have a set number or interested participants before considering a new Vendor, the Employer must be supportive of adding another vendor to the plan, and certain agreements must be in place to share information between the Vendor and the CCC as Plan Administrator. CCC is happy to field Vendor representative questions on this matter and encourage our clients to direct them to contact us.

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  31. Are Life Insurance Policies no longer allowed in 403(b) accounts?

  32. Although life insurance policies are not allowed in 403(b) accounts under the new regulations (except incidentally), such policies existing prior to 1/1/2009 may be maintained if you continue to remit contributions as you did prior to 1/1/2009.

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  33. Does CCC support Employer Benefit Fairs or Financial Educational?

  34. CCC is happy to support these activities by helping to coordinate vendor representation and/or presentations. We encourage employers to contact us in the planning stages of these events so we can be of assistance.

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  35. How do we adopt Roth contributions?

  36. Contact CCC and we can assist you with an amendment to your Plan Document to allow for Roth contributions, updating the vendors once the amendment is completed, and providing ll the employer "next steps" to get Vendors offering Roth set up in your deduction codes and included in your compliance reports.

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  37. Can an employees defer some of their accrued vacation and sick pay to their 403(b) account?

  38. Employees may defer some (up to their annual deferral limits) of their regular pay, accrued vacation and sick pay into their 403(b) account if received by the later of 2 1/2 months from the date of severance or the end of the limitation year (in most cases calendar year) in which the severance occurred if elected in the employer's plan document. IRS Pub. 4483 contains additional information on this issue.

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  39. Are Employer 403(b) Contributions and/or Employer 457(b) Contributions subject to FICA taxes?

  40. Employer 403(b) Contributions are not subject to FICA (Social Security and Medicare) taxes, because they are considered to be employee benefits. Employer 457(b) Contributions are subject to FICA (Social Security and Medicare) taxes, because they are considered to be (deferred) compensation. More information (including current limits) can be found on our Employer Contributions Page. Please consult with CCC before finalizing any collective bargaining agreement or employment contract that includes provisions involving 403(b) or 457(b) Plans.

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Additional Information

  • Our Employee FAQ page covers questions commonly asked by participants.
  • Visit our Choosing an Investment page to learn more about the questions to ask when evaluating your choices, how various vendors market to and service participants, and the types of products offered by 403(b) vendors.
  • Please visit our Useful Links page for additional helpful information on general investment topics.

 

 

Page Last Modified: 10/26/2022 1:47:49 PM