Fringe Benefits for Faculty on Leaves of Absence at Partial or No Salary

In December 1991, the Deputy Provost, and the Assistant Vice President for Human Resources issued a memorandum addressing the provision of benefits for faculty members who go on leave of absence. The memorandum notified officers, deans, and department chairs that IRS policies now sharply limit the ability of the University to provide retirement benefits for faculty who are on leave of absence at partial or no salary. The text of the memorandum follows. – March 1995

When a faculty member goes on a leave of absence and full salary support is provided through an outside source of support, full benefits can always be provided if the outside source also finances benefits costs. For purposes of ease and continuity, it is most helpful if outside support can be paid through the University rather than directly to the individual. In these cases, the faculty member remains a University employee at full benefits. Effort should always be made to secure such benefit funding before submitting a proposed leave of absence to the Provost’s Office for approval.

When a faculty leave is not fully supported by outside sources or it is impossible to direct support to the University rather than to the individual, academic areas on occasion recommend that a faculty member who goes on leave of absence receive fringe benefits based on the faculty member’s pre-leave salary, regardless of the actual salary arrangement during the leave of absence period. While this practice is acceptable for nonretirement benefits, the Internal Revenue Code and IRS regulations limit the ability of both the University and the employee to make tax—deferred contributions to the regular retirement plan (CRP) and the supplemental retirement account (SRA). Consequently, it cannot be assumed that either the University¹s 7.5% retirement contribution or the employee’s 5% contribution can continue for faculty members on leave of absence at partial or no salary from the University.

Determining whether a retirement contribution can be made on behalf of one individual faculty member on leave of absence at partial or no salary will, in all cases, now require an individual calculation. Factors affecting the maximum deferral amount include the length of the leave, the salary paid during the leave from the University, and the individual’s previous use of a Supplemental Retirement Account. In all cases, before recommending any agreement regarding retirement plan contributions during a leave of absence, please contact the Benefits Manager in the Benefits Office at 702-2039 in order to obtain a maximum deferral calculation. This calculation will often require the assistance of TIAA-CREF in order to ensure that it is consistent with IRS rules, and therefore some processing delay can be expected. Departments should also be prepared to supply salary history in each instance.