Skip to main content

403(b) and 457(b) Plans

403(b) and 457(b) contributions can be tracked in SchoolInsight Financials to help prevent employees from exceeding their annual contribution limits. This requires enrolling employees in the appropriate retirement plan and assigning them the correct payroll items.

Plan Enrollment
District Payroll Items

Employee Payroll Items
Managing Contribution Limits

Plan Enrollment

Any employee who participates in a 403(b) or 457(b) plan should have that enrollment indicated in the Retirement tab of Employee - Single View. Without the appropriate enrollment, you will not be able to add a 403(b) or 457(b) payroll item to that employee.

To enroll employees in a 403(b) and/or 457(b) plan:

  1. Go to Financials Main > Human Resources > Employee - Single View
  2. Look up an employee
  3. Select the Retirement tab
  4. Edit
  5. Set the 403(b) Enrollment to “Enrolled” if applicable
    • If applicable, check Regular Catch-Up or 15 Year Catch-Up
    • If selecting 15 Year Catch-Up, enter the Start Date and Additional Maximum Deferral
  6. Set the 457(b) Enrollment to “Enrolled” if applicable
    • Set the Catch-Up to None, Regular, or Special
    • If selecting Special, enter the Additional Maximum Deferral
  7. Save

District Payroll Items

Plan Types

Through a combination of pre-tax/post-tax (Roth) plans, employee/employer contributions, and different catch-up options, there are 12 different payroll item types for 403(b) plans and 12 payroll item types for 457(b) plans.

SchoolInsight Financials automatically populates all 24 options (plus an additional 7 TRS-specific options at Illinois districts) with a Simple Amount algorithm on your District Payroll Items page.

Configuration

All default payroll items have blank vendors and accounts. You will need to fill in those details on each District Payroll Item before adding them to any employees.

These may require the creation of a new:

  • Vendor
  • Function and/or object 
    • Liability functions (IL)/objects (MO) are used to keep track of how much money is owed to each vendor.
    • IL districts should generally use a liability function in the format 481XX.
    • MO districts should generally use a liability object in the format 215X or 216X. 
    • An object (IL)/function (MO) may also be needed if there are any employer contributions.
  • Account
    • If new functions/objects are created, new accounts will be needed too.
    • For example, if the participating employees are paid out of fund 10, 20, and 40, an IL school would need to add accounts 10-L481XX, 20-L481XX, and 40-L481XX.

To configure the District Payroll Items:

  1. Go to Financials Main > Payroll >District Payroll Items
  2. Edit the item
  3. Fill out the fields:
    • Vendor
    • Reduce Liability Account and Increase Liability Account (for deductions)
    • Expenditures and Liability Account (for benefits)
  4. Save

New District Payroll Items

You may need to create new district payroll items in the following cases:

  1. If the contribution should be a percentage instead of a simple amount.
  2. If multiple vendors are used for the same plan type.

To create a new payroll item:

  1. Go to Financials Main > Payroll > District Payroll Items
  2. Create Payroll Item
  3. Fill out the details using the same settings as an existing 403(b) or 457(b) Simple Amount item. The Vendor and Algorithm may be different (use the algorithm “District Percentage” if trying to contribute a percentage instead of a flat dollar amount).
  4. Save

Employee Payroll Items

In the Payroll tab of Employee - Single View (or at Financials Main > Payroll > Mass Add Employee Payroll Items), add the payroll items that are applicable to the employee and set the amount or percentage that should be deferred or contributed. If the payroll item is percentage-based, remember to add it to all positions.

Using the correct payroll items is essential for proper detection of contribution limits, so pay careful attention to the difference between the plans.

Managing Contribution Limits

When SchoolInsight Financials detects that an employee has exceeded the maximum contribution limit for a particular plan, the payroll run will automatically cap the amount on the payroll items associated with that plan.

When allocations between different plans change, you will need to return to the Payroll tab of Employee - Single View and adjust the deferrals or contributions. Note that you should only do this in consultation with the plan administrator. 

The following example using the 2022 457(b) contribution limits demonstrates how changes may be made to correctly allocate contributions to regular and catch-up plans without exceeding limits:

Martha Hobbs is enrolled in a 457(b) plan, which ordinarily has an annual contribution limit of $20,500. However, she is 52 years old, so she is eligible for the Regular Catch-Up plan, which allows her to defer an additional $6,500. She does not receive any employer contributions, and she is paid 24 times per year.

If Martha plans to defer the maximum $1,125 per semi-monthly payroll, she will need two EPIs:

  • TRS 457(b) SSP - Employee
  • TRS 457(b) SSP - Employee - Regular Catch-Up

The amounts on these two payroll items could be set up in several different ways.

Option A:

She could set it up so that each plan is divided equally across 24 payrolls.

  • $854.16 for TRS 457(b) SSP - Employee
  • $270.83 for TRS 457(b) SSP - Employee - Regular Catch-Up

Option B:

She could set it up to max out her Regular Catch-Up first.

  • In the first five payrolls of the year, she would defer $1,125 to the Regular Catch-Up plan
  • In the sixth payroll, she would defer $875 to the Regular Catch-Up plan and $250 to the normal plan
  • From the seventh payroll onward, she would defer $1,125 to the normal plan

NOTE: Without manual adjustment by the bookkeeper, the sixth payroll would defer $875 to the regular catch-up plan, and future payrolls would defer nothing.

Option C:

She could set it up to max out her normal plan first.

  • In the first 18 payrolls, she would defer $1,125 to her normal plan
  • In the 19th payroll, she would defer $250 to her normal plan and $875 to her Regular Catch-Up plan
  • From the 20th payroll onward, she would defer $1125 to her Regular Catch-Up plan

Note: Without manual adjustment by the bookkeeper, the 19th payroll would defer $250 to her normal plan and nothing to the Regular Catch-Up plan all year.

Any variation on these options is also possible, as long as the annual limits are respected. The company that manages the 403(b) or 457(b) should provide you with guidance about how to allocate deferrals for each employee.