You will receive your "payment to encourage savings" in your November 27 paycheck. The lump sum will be a multi-thousand dollar increase to your paycheck for one month. There are tax implications to such an increase and you have options you may want to consider.

If you do nothing, the lump sum will be subject to all the same tax as your normal income. If you redirect your lump sum to your retirement account, you can avoid federal and state income tax and only pay FICA taxes. Please note, although any tax you end up paying on your lump sum in your federal returns is at the same rate as your normal income, the University withhold taxes on the lump sum at the supplemental rate of 22%. House Officers diverting their lump sum to a retirement account should be mindful on how this might affect their November take home pay.

2024 Lump Sum Investment Tool Kit

Please see the following chart for this year's Lump Sum Payment

If you're thinking of directing your payment to encourage savings to a retirement account, here are a couple of things to remember:

If you already make a contribution to the 403(b) SRA or 457(b) and wish to increase it to include the November lump sum payment, enter the total amount to be deducted, not just the amount of the increase. After your November pay, you must make a second change back to your normal lower deduction (if desired) or the new amount will be deducted from your December 31 pay as well. It does not automatically revert back!

If you do not already contribute, the amount you elect to contribute from the November lump sum payment will continue to be deducted with the December paycheck and beyond. Again, you will need to make a second election to lower or cancel the adjusted amount for the December 31 paycheck or it will continue to be deducted.

Please keep in mind that there are deadlines for making changes to your deductions. You can find these in the 2024 Lump Sum Investment Tool Kit.

The Benefits Office Can Help Arrange Deductions

If you need assistance setting up your payroll deductions the Benefits Office can help.

Contact the Benefits Office at (734) 615-2000

Suzanne Giddings is happy to speak to individual House Officers who have questions on how to set up payroll deductions for the retirement account.
- uniqname: suzg

Suzanne and the Benefits office are not able to assist with financial planning questions like, 

• whether to invest your lump sum,
• how much to invest,
• tax advice,
• tax modeling,
• or strategies for minimizing tax liability on the lump sum payment.

Don't want to redirect your Lump Sum?

No action by you is required if you prefer to just take the lump sum in your paycheck as income.

If you do not want to redirect your lump sum to a retirement account, you may want to consider adjusting your W-4 withholding before your November paycheck. Doing so may help you avoid having too much money withheld by the IRS. Please use the Withholding Calculator on the IRS website to figure this out. If done right you can have slightly more money in your pocket in November instead of a slightly larger tax return in April. You can adjust your W-4 at any time in Wolverine Access. If you change your withholding for November, remember to change it back in December. Each person's situation is different, please consult your tax professional before making any changes.