Understanding Salary Reduction Agreements
A Salary Reduction Agreement (SRA) is a crucial component of 403(b) retirement plans, allowing eligible employees to contribute a portion of their salary towards their retirement savings. Here’s what you need to know about how SRAs work for 403(b) plans:
What is an SRA?
An SRA is a legally binding agreement between an employee and their employer that authorizes the employer to withhold a specified amount from the employee’s paycheck and contribute it to their 403(b) retirement account. This reduction in salary occurs before taxes are calculated, potentially lowering the employee’s taxable income.
With an SRA, an employee can start contributions, enrolling them into a 403(b). Participants can also change their contribution amount or stop contributions altogether.
Participants can also make a one time contribution by noting the one time contribution amount and date on the SRA tool.
Key Features of SRAs
Flexibility: Employees can establish, change, or cancel their salary reductions by submitting a new SRA
Effective Date: The agreement specifies when the salary reductions will begin, typically starting with the next pay period when submitted with sufficient processign time or as soon as administratively feasible
Investment Options: The SRA allows employees to select from available investment providers for their contribution
When will my change in contributions go into effect?
When a participant submits an SRA, a confirmation of the request is sent to their email address. Upon receipt of that confirmation PlanScope360 notifies the employer. Allow two weeks before the next payroll cycle for employer processing.
Need help?
Our participant transaction team is available during normal business hours Monday - Friday 9am-5pm EST at 877-395-0456. You can also reach us via email at info@planscope360.com or fax 888-614-3672.
About
This information is brought to you through a partnership between your employer and PlanScope360. PlanScope360 is a plan governance platform of Verity Asset Management [Registered Investment Adviser]. Verity Asset Management and any other named entity are not affiliated.
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