Tier 5 and 6 Members Covered Under Section 383-e
Both Tier 5 and 6 members in the Section 383-e plan are required to contribute.
For Tier 5 and 6 members in this plan, the contribution rate is based on earnings.*
These are mandatory contributions and will not provide an additional annuity when you retire.
The contribution rate in the Section 383-e plan is higher than contribution rates for Tier 5 and 6 members in other retirement plans—see chart below.
Comparison: In other PFRS retirement plans, most Tier 5 members contribute 3 percent, and for most Tier 6 members, contribution rates range from 3%–6% based on earnings.
Annual Wage | Tier 5 & 6 Contribution Rate in Section 383-e Plan | Tier 6 Contribution Rate in Other Retirement Plans |
|---|---|---|
Up to $45,000 | 4.50% | 3.00% |
$45,000.01 to $55,000 | 5.00% | 3.50% |
$55,000.01 to $75,000 | 6.00% | 4.50% |
$75,000.01 to $100,000 | 7.25% | 5.75% |
Over $100,000 | 7.50% | 6.00% |
Federal Tax Treatment of Contributions for Tier 5 Members
The additional contributions required when you elect this plan are taxable, meaning they will be taken from your earnings after taxes and will not reduce your taxable income. The difference between 3% and your new rate will be taken after taxes, and 3% will be taken before taxes.
Example, for a Tier 5 member currently paying 3%, who makes $50,000 per year:
- Contribution rate after electing new plan will be 5%
- 3% will be pre-tax
- 2% will be after-tax
Federal Tax treatment of Contributions for Tier 6 Members
If your date of membership is on or after July 1, 2025, you are automatically enrolled in the Section 383-e plan and your contributions will be taken from your earnings before taxes.
If you elect to join the Section 383-e plan, the additional contributions required are taxable, meaning they will be taken from your earnings after taxes and will not reduce your taxable income. 1.5% of your contribution will be taken after taxes, and the rest will be taken before taxes.
*Note: For new part-time employees, your employer calculates a projected annualized wage by using your part-time rate to determine what your annual wage would be if you worked full-time. Once you have been a member for more than two full state fiscal years, your contribution rate is calculated using actual earnings from all public employment two state fiscal years prior.
Tier 2 and 3 Members Covered Under Section 383-f
Members who elect the Section 383-f plan will be required to contribute 1.5% of their annual earnings as of the date they elect the Section 383-f plan. These contributions are taxable, meaning they will be taken from your earnings after taxes and will not reduce your taxable income.
These are mandatory contributions and will not provide an additional annuity when you retire. In addition, Tier 2 and 3 members in the Section 383-f plan may not elect to make voluntary annuity savings contributions.
If you currently have voluntary contributions on file and you do not withdraw them before your election into Section 383-f is complete, they will not be refunded. To withdraw your voluntary contributions, you can submit the Application for Refund of Excess Contributions (RS5195) along with the form to elect the Section 383-f plan (see Electing the Section 383-e or 383-f Retirement Plan).
Comparison: In other PFRS retirement plans, most Tier 2 and 3 members are not required to contribute and may elect to make voluntary, after-tax contributions which provide an annuity, in addition to their pension, at retirement.
Rev. 10/25