How to complete a Salary Reduction Agreement
The Salary Reduction Agreement is required by your school district to establish, change or stop your 403(b)-retirement plan contribution. By completing this form, you are telling payroll how much you want deducted from your paycheck and contribute to your retirement plan. I have included samples from a commonly used salary reduction agreement among school districts in Minnesota; versions may vary. This is to be used as a general reference guide.
This section is rather self-explanatory except for 3 locations.
- Pay Periods per Year - How many times you receive a paycheck during the school year? Most school districts pay 24, which is two times per month (1st & 15th/ 15th & 30th). Some employees are 18 or 19 pays, some districts are 12 or 26 pays. If you are unsure, confirm with your payroll / benefits office.
- Requested Start Date – date you want this request to take effect.
- Bargaining Group – What contract are you under? Examples: Teacher, Educational Assistant, Clerical, Custodial, Administration, etc.
Part Two: Complete left to right.
****Stop and answer: “Is this a new 403(b), a change to an existing 403(b) contribution or are you stopping your deferral? Are you contributing Roth or pretax?”
1. Salary Reduction - 3 rows and 3 columns:
Please enter an “X” in the appropriate row and column of your intended contribution.
- Example: if you wanted to change your current Roth 403(b) contribution, you will place an “X” on the 403(b) Roth line, Change column.
- Example: If you intend to contribute $100 per paycheck traditional / pre-tax 403(b), write $100 in the box on row 1, which corresponds to 403(b). If you wish to contribute $100 per paycheck to your 403(b) Roth. Write $100 in the box on the 3rd line down, which corresponds to 403(b) Roth.
Contribution – Annualized Salary Reduction Amount – the amount you wrote per paycheck column to the left, multiply by your number of pay periods.
- Example: $100 per paycheck, 24 pays; $100 x 24 = $2,400.
3. Employer Match – Employer Match/Percent per Pay Period - The IRS mandates matching dollars may only be given by the employer (district) pretax.
- You may receive your match if your contributions are 100% Roth.
- Refer to your Employer Contract to confirm your match amount and eligibility.
- Write your Employer Match amount in column which corresponds the line you placed the “X”.
- If you do not know the amount per paycheck, write in the annual amount in the Annualized Employer Match column and divide by your number of pay dates. This is the match amount per paycheck.
Part Five:
Employee Signature – Please sign and date.
Please fax (952-955-8216) or email (kwilliams@lpl.com) your completed Salary Reduction Agreement to me. If you email, I encourage you to use encrypted email due to your social security number required on the form.
I need to sign and date Part Six confirming the account is in good order to receive contributions.
