Tax Deferred Contribution

Effective immediately, employees separating from service may elect to make a tax deferred contribution from their unused annual leave payout instead of receiving a lump sum payment.  You may contribute up to 100 % of the annual leave payout (minus Social Security and Medicare taxes), within the annual IRS limits on elective deferrals based on your age/service and the calendar year in which the contribution is to be made.

As a reminder:

  • The Internal Revenue Service limits on elective deferrals for 2009 are $16,500 for employees under age 50 and $22,000 for employees age 50 and over. 
  • The 401(k) and 403(b) share an annual limit.  The 457 has a separate annual limit.
  • There are catch-up provisions available in the 403(b) and 457 (if the employee meets specific qualifications) that may allow amounts in excess of the limits for the given year.

If you wish to take advantage of the tax deferral opportunity, the 403(b) annual leave deferral agreement  PDF icon and the 401k /457 annual leave deferral agreement  PDF iconare to be used specifically for the deferral of unused annual leave. A regular salary reduction agreement will not suffice.

You may elect to contribute a flat dollar amount or the net annual leave pay after Social Security/Medicare taxes. If an employee wishes to contribute the net amount, he/she may indicate this on the form, and the contribution will be calculated by the Office of Benefits & Retirement in Knoxville. In the event the amount would be in excess of the IRS limits for that employee, the contribution amount will be reduced to be within the limits and any excess will be paid to the employee. If you wish to enroll in a tax deferred plan in order to take advantage of this opportunity, please complete the appropriate enrollment form along with the release form.  PDF icon

Completed forms must be received by the Payroll Office no later than the 15th of the month in which the employee is separating service.  If you should have any questions, please contact Ken McCune at 448-3401.

Contact Us

Payroll Office

62 South Dunlap Suite 120
Memphis, TN 38163
Phone: 901-448-5574
Fax: 901-448-4886