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Board approves 403(b) revision to permit nonelective employer contributions
Summary
The board approved a change to the district 403(b) plan to allow nonelective employer contributions for certain contract payouts, which staff said would avoid FICA on those payments and effectively save about 7.65% for affected amounts.
The Caledonia‑Mumford Central School District Board of Education approved a revision to the district’s 403(b) retirement plan at its Aug. 13 meeting, allowing nonelective employer contributions for certain contract payouts through the district’s third‑party administrator.
District staff explained that some contracts (including certain certified administrators and teachers) currently provide for payouts such as vacation, sick or personal time in ways that are processed through payroll and subject to FICA. By directing eligible payouts into the 403(b) plan administered by Omni, the district said those payments would not be processed through payroll and would avoid FICA taxes. "If we put it right in a 403 b plan and accept this, you forego FICA taxes. So in essence, think of this as you're saving 7.65% because the payment does not have to run through payroll," Speaker 10 said, describing the mechanics and precedent for other districts.
Speaker 10 told the board the plan is legal and commonly used, noting that the transfer is typically handled as a wire or check to the third‑party on behalf of the employee. The board asked questions and then approved the 403(b) plan revision.
Next steps noted in the meeting: business office staff will coordinate implementation with Omni and apply the change to the specified contracts; the board did not discuss or provide dollar estimates for the aggregate fiscal impact at the meeting.
