WEA Member Benefits
403(b) Employer Matching and
Vesting Contribution Program
Enhance your Wisconsin school district employee benefit program
:
Introduction
The 403(b) is an employee benefit offered by most Wisconsin public schools and a great way for employees to save
for retirement.
Many school districts offer an employer match through their 403(b) program. While this is not required, it provides
substantial benefits to employees and employers alike. A vesting schedule is also typically part of the program.
Like the 401(k) in the private sector, school districts can decide what type of match they would like to provide in
their program. Two common types of 403(b) matching programs are illustrated below.
Matching examples
The district matches a percentage of employee contribution up to a certain limit.
Example: The employer matches 50% of the first 6% of salary that an employee contributes.
Paycheck amount
Employee contribution per
paycheck
Employer contribution per
paycheck
$1,000
10% ($100)
Half of 6% ($30)
Annual total
Employee: $2,600
Employer: $780
The district matches dollar for dollar up to a certain limit.
Example: The employer matches 100% of employee’s contribution up to 5% of their salary.
Paycheck amount
Employee contribution per
paycheck
Employer contribution per
paycheck
$1,000
10% ($100)
5% ($50)
Annual total
Employee: $2,600
Employer: $1,300
Vesting schedules
Employee contributions are always 100% vested and are owned by the employee. Contributions made
by the employer may be set up on a vesting schedule. This means the employee will not own 100% of
the employer contributions or employer matching contributions until the conditions of the vesting schedule have
been fulfilled.
Two common vesting schedules are graded and cliff. A graded vesting schedule gradually vests over a certain time
period. On a cliff schedule, the employee goes from 0% vested to 100% vested after a certain amount of time has
passed.
Examples of graded and cliff vesting schedules are illustrated below.
Graded vesting schedule
Cliff vesting schedule
1 year
20%
1 year
0%
2 years
40%
2 years
0%
3 years
60%
3 years
0%
4 years
80%
4 years
0%
5 years
100%
5 years
100%
Administering a 403(b) matching contribution program
Initiating a matching program is a fairly simple process. The school district controls the parameters of
the program by:
• Designating how the program will be funded and paid out, and
• Defining which employee groups are eligible to participate in the program.
The district may also choose to set up a vesting schedule to encourage staff retention.
Benefits
A 403(b) matching and vesting program can offer substantial benefits to both employees and
employers.
How does it help your school district?
• It saves on employment taxes (FICA, workers compensation) on employer contributions.
• A matching and vesting program encourages employee retention and makes your district more competitive for
attracting and retaining quality staff.
• Employers can use forfeitures to reduce vesting costs. Forfeiture occurs when an employee leaves your district
before they are fully vested. These amounts can be used to pay future employer contributions.
Why is it good for employees?
• Contributions made by the employer are free to the employee, allowing the employee to accumulate more
retirement savings.
• It offers more incentive for employees to save for retirement.
• More flexibility is built in to employees’ retirement savings by accumulating assets outside of Social Security or
the state pension plan.
• Employees have the ability to grow tax-deferred retirement savings.
Member Benefits can help employers get started on a
403(b) vesting and matching program
Adding a match to your program can help increase participation. For example, in May 2015, one
school district had 58 participants in their 403(b) program. After implementing a match, they ended the year
with 348 participants. Other districts we work with have experienced similar results.
Member Benefits has helped guide districts through the 403(b) issues and framework to process the vesting/
matching contributions. We can also assist you with communication about your program and provide recordkeeping services. Our 403(b) experts are dedicated to assist you, so it’s easier to get started than you might think.
Contact a Retirement Consultant today.
Call 1-800-279-4030
E-mail [email protected]
WEA Member Benefits • 660 John Nolen Drive • Madison, WI 53713 • weabenefits.com
WEA Member Benefits helps Wisconsin public school employees and their families achieve their financial
goals by providing personal insurance, retirement and investment, and financial planning programs that
are designed specifically for the education community. Over 426 Wisconsin public school districts offer our
403(b) program and over 48,000 members participate in our retirement saving programs.
We specialize in 403(b) programs and have been providing 403(b) record-keeping services for Wisconsin
public school districts since 1978. We also provide plan compliance and plan document services.
If your district is interested in setting up a matching/vesting program, our 403(b) experts can help. Call us for
more information.
READY TO GET STARTED?
Meet with a Member Benefits representative to explore the option
of a 403(b) employer matching contribution plan
for your school district.
1-800-279-4030
[email protected]
This brochure is for informational purposes only and is not intended to constitute
legal, financial, or tax advice. Certain recommendations or guidelines may not
be appropriate for everyone. Consult your personal advisor or attorney for advice
specific to your unique circumstances before taking action. The 403(b) retirement
program is offered by the WEA TSA Trust. TSA program registered representatives
are licensed through WEA Investment Services, Inc., member FINRA.
TSA 4265-280-0216 (W)