Purpose:
The purpose of this bulletin is to notify agencies that employee participation in tax-sheltered annuity plans must be suspended while an employee is receiving paid Workers’ Compensation benefits. Workers’ Compensation-related benefits include the statutory Workers’ Compensation benefit and any supplemental payments for on-the-job injuries.
Affected Employees:
SUNY, CUNY, School for the Deaf, School for the Blind, and Education Department employees who have an active 403(b) tax-sheltered annuity and a Workers’ Compensation leave are affected.
Background:
Under IRS regulations, Workers’ Compensation-related benefits are exempt from Social Security and Medicare taxes. Workers’ Compensation-related benefits are also exempt from federal income taxes, New York State income taxes, and local income taxes, if applicable.
Also under IRS regulations, non-taxable Workers’ Compensation-related benefits are not eligible for 403(b) tax-sheltered annuity plan contributions.
Effective Dates:
Effective immediately
Agency Actions:
Agencies are no longer responsible for end dating payroll deductions in PayServ to suspend an employee’s 403(b) tax-sheltered annuity plan contribution when the employee has been placed on a Workers’ Compensation leave. The 403(b) deductions will be end dated systematically in PayServ.
The 403(b) tax-sheltered annuity plan deductions will not automatically restart when the employee returns from a paid Workers’ Compensation leave. If the employee wishes to resume their 403(b) deductions, the agency must advise the employee to contact their Payroll/Benefits Officer upon their return from leave.
This applies to the following payroll deduction codes:
| Plan Type | Deduction Code | Description |
|---|---|---|
| 46 | 403 | CUNY 403(b) Plan |
| 46 | 404 | SUNY 403(b) Plan |
| 46 | 413 | NBE Tax Deferred Annuity |
| 46 | 414 | NYT Tax Deferred Annuity |
| 46 | 432 | SED Tax Deferred Annuity |
| 47 | 703 | CUNY 403(b) Plan After tax |
| 47 | 704 | SUNY 403(b) Plan After Tax |
NOTE: Please share this bulletin with the appropriate Human Resource and Benefits personnel.
OSC Actions:
OSC will identify employees who are placed on Workers’ Compensation leave and systematically end date any active 403(b) and/or Deferred Compensation deductions on the employees’ record(s).
Questions:
Questions regarding 403(b) tax-sheltered annuity plans may be directed to the Payroll Retirement mailbox. Questions regarding Workers’ Compensation may be directed to the Workers’ Compensation mailbox.