Tax Savings Options

Employees may take advantage of voluntary pre-tax programs that help reduce taxable income and provide employees greater spendable income.

Flexible Spending Account (FSA)

The State of Hawaiʻi Island Flex Flexible Spending Account (FSA) is an employee benefit plan that provides employees with a way to pay for their eligible health care expenses and dependent care expenses with tax-free money.

By directing “before tax” money from the employee’s paycheck into one or both of these accounts, employees may be reimbursed on certain out-of-pocket medical, prescription drug, dental, and vision expenses and dependent care expenses. To participate employees must be a member of the State of Hawaiʻi Employees’ Retirement System (ERS).

To enroll in plan year July 1, 2018 to June 30, 2019 and for more information, please contact the plan administrator National Benefit Services (NBS) at (808) 465-2284 and neighbor Island employees may call toll-free at 1-855-399-3035 ext. 502. Applications and detailed information on the program are available at the NBS Island Flex website.

 

Optional Retirement Savings (457 & 403(b))

The University understands the importance of individualized retirement planning. In addition to the pension from the State Employees’ Retirement System (ERS), other retirement savings plans are available. These retirement plans are voluntary and eligible employees may participate in one or both plans:

  • The State of Hawaiʻi 457 Deferred Compensation Plan known as the “Island Savings Plan” (ISP) and/or
  • The University’s 403(b) Tax Deferred Annuity Program (TDA).

Contributions are payroll deducted and made before taxes are withheld, thus enabling the employee to build a retirement nest egg and save on withholding taxes with each paycheck. Taxes are paid when funds are distributed, normally at retirement.

To determine the differences between the ISP and TDA programs, refer to the comparison sheet. Employees separating from service (i.e., resignation, retirement, termination) may consider participating in the Vacation Pay Deferral Program and deferring the compensation received for unused vacation leave credits into the supplemental retirement plans for tax savings.

The maximum Contribution Limits for the University of Hawaiʻi 403(b) Tax Deferred Annuity Program and the State of Hawaiʻi 457 Deferred Compensation Plan may be adjusted by the IRS on an annual basis.

Known as the “Island Savings Plan,” the plan complies with the provisions of Section 457 of the Internal Revenue Code. The Island Savings Plan (ISP) is available to employees eligible to participate in the State of Hawaiʻi Employees’ Retirement System (ERS). The plan is currently administered by Prudential Retirement.

To enroll and for more information, please contact the Island Savings Plan Honolulu Office toll-free at 1-888-712-5642, press 2 or visit the Island Savings Plan website.

All faculty, staff, and student employees (including casual and 89-day hires) are eligible to participate in the 403(b) retirement plan sponsored by the University of Hawaiʻi. The program complies with Section 403(b) of the Internal Revenue Code and is currently administered by National Benefit Services (NBS).

For more information, please contact NBS toll-free at 1-800-274-0503 ext. 504, email uh403b@nbsbenefits.com or visit the National Benefit Services website.

How to Enroll

To enroll, eligible employees (including student employees) should:Select and contact any of the authorized TDA service providers listed on the NBS website.

  1. Seek advice from your personal financial advisor and establish your 403(b) account.
  2. After processing an account application with the TDA service provider or your financial advisor
  3. Complete a UH Form 82, UH 403(b) Salary Reduction Agreement
  4. Submit it to NBS via fax or mail

For more information about enrollment, watch the Enrollment/Plan Setup Video

Current copies of the UH Form 82, a listing of due dates and other forms may be downloaded and printed from the NBS website.

Premium Conversion Plan (Pre-Tax)

The Premium Conversion Plan (PCP) provides an opportunity to health care plan participants to save some tax dollars and make the most of their paychecks. Employees who are enrolled in any health care plan offered through the EUTF that qualifies under the PCP rules may participate and increase their take home pay by paying their health premium contribution on a pre-tax basis.

To enroll, check the box next to “Premium Conversion Plan” on the EC-1: Enrollment Form for Active Employees when electing EUTF plan benefits.

Vacation Pay Deferral Program

The Vacation Pay Deferral Program is comprised of 2 sub-programs, Post-Separation Vacation Pay Deferral Program and Early Vacation Payout Program. These are voluntary programs that provide University employees the ability to shelter their compensation received for unused vacation leave credits to the State of Hawaiʻi 457 Deferred Compensation Plan known as the “Island Savings Plan” (ISP) and/or the University’s 403(b) Tax Deferred Annuity Program (TDA) due to separation from service (i.e. resignation, retirement, termination, etc.).

Deferring pay for unused vacation leave credits (usually a sizable amount) can provide tax-savings on such pay, in addition to significantly increasing an employee’s retirement savings. Employees are recommended to contact a financial advisor to determine if participating in the Vacation Pay Deferral Program is the right thing to do.

Employees with unused vacation may participate in the Post-Separation Vacation Pay Deferral Program. Employees retiring on November 1, December 1 or December 31 may consider participate in the Early Vacation Payout Program if their vacation pay exceeds the annual contribution limit of both the ISP and TDA plans. Employees may contact their HR Representative for more information.

Employees may defer pay for unused vacation leave after separation from service (i.e. resignation, retirement, termination). The deferral of the vacation pay must occur within 2-1/2 months from the date of separation or by the end of the calendar year in which an employee’s separation from service occurs, whichever is later. Pay receive after separation from service may be deferred to the State of Hawaiʻi 457 Deferred Compensation Plan (Island Savings Plan (ISP)) and/or University’s 403(b) Tax Deferred Annuity Program (TDA) if the following requirements are met:

  1. The deferral request is made while employed with the University (no later than fourteen (14) days prior to the last date of employment (COB date); and
  2. Deferral takes place within 2-1/2 months (approximately 75 calendar days) from the date of separation from service (COB date) or by the end of the calendar year in which the separation from service takes place, whichever is later; and
  3. The deferral is within the applicable annual contribution limits, as established by the Internal Revenue Service (IRS). (To receive assistance in determining the contribution limit for the State of Hawaiʻi 457 Deferred Compensation Plan, please call an Island Savings Plan representative from the Prudential Retirement – Honolulu Office at 1-888-712-5642 and pressing ‘2’ when prompted. For assistance on the University’s 403(b) Tax Deferred Annuity Program, please contact National Benefit Services (NBS) at 1-800-274-0503 x668.)
  4. Submit the necessary Post-Separation Vacation Payout forms by the stated deadlines.

Any portion of the unused vacation pay that is not deferred will be paid in the usual manner for post-separation pay. All State and Federal taxes shall apply.

ISP PSVPD Program

TDA PSVPD Program

Contact your financial advisor for assistance.

The Early Vacation Payout (EVP) program allows the payout and deferral of pay received for unused vacation leave credits prior to the employee’s separation from service (restricted to employees planning to retire). Employees participating in the EVP Program may also participate in the Post-Separation Vacation Pay Deferral Program. To participate in the EVP Program the employee must:

  1. be retiring and have a planned retirement date; and
  2. have a vacation balance of at least 80 hours or any other applicable amount that is the equivalence of 10 vacation days; and
  3. submit necessary Early Vacation Payout forms by the stated deadlines (see Early Vacation Payout Schedule).

Any portion of the unused vacation pay not deferred under the Early Vacation Payout Program will be paid in the usual manner after separation.

ISP EVP Program

TDA EVP Program

Contact your financial advisor for assistance.

HI 529 – Hawaiʻi College Savings Plan

HI529 is a voluntary program designed to assist families in saving for college. Administered by the State of Hawaiʻi Department of Budget and Finance, HI529 offers valuable tax benefits, high contribution limits, expert investment management, and the flexibility of choosing from a range of investment options. Contributions are made with after-tax dollars, the earnings on the account grow tax-deferred, and distributions used for qualified higher education expenses are tax-free (Hawaiʻi State and federal taxes). Employees are allowed to contribute to HI529 through payroll deduction.

To enroll (may be done online) and for more information, please visit the HI 529 – Hawaiʻi College Savings Program website or call toll-free 1-866-529-3343.