4.04.02: Tax-Sheltered Annuity Investments

 

Tax-sheltered annuity (TSA) investments or deferred compensation
 

Employee contributions to an elective tax-sheltered annuity (TSA) or a deferred contribution plan are reportable compensation.

An employer payment made to a TSA may or may not be reportable, depending on the specific reason for the payment.

If an employer contributes to a TSA on behalf of an employee as a form of compensation that would normally be considered reportable, the TSA payment is reportable.

Examples of TSA payments that are reportable include but are not limited to:

  • Salary or wages.
  • Longevity pay.
  • Merit pay.

If an employer contributes to a TSA on behalf of an employee for compensation that would normally be considered nonreportable, the TSA payment is nonreportable.

Examples of TSA payments that are nonreportable include but are not limited to:

  • Payment in lieu of insurance premiums.
  • Payment for other fringe benefits excluded from the definition of reportable compensation.
  • Payment that is an employer match of employee contributions to TSA.

The increase in compensation that results from a TSA payment cannot exceed the Nornal Salary Increase. See 4.03.00 Normal Salary Increase (NSI).

Please note: reportable and nonreportable compensation is defined in MCL 38.1303a and only applies to active MPSERS members. For information on reporting earnings for retirees please see section 9.01: Earnings of Retirees Who Return to Work.

Last updated: 01/06/2021