need help understanding my paycheck (2019 vs. 2020)

[clarkfan1979]

I started a new job on August 13, 2019. I got 5 paychecks in 2019 and I just got my first paycheck in 2020. My 403b contributions are much different in 2020, even though the terms of my 403b plan did not change.

This is summarized a little to keep things simple.

My monthly paycheck is $4,016, before taxes. I get an additional $1,253.67 in health insurance contributions, so my paycheck says, "total = $5,269.67"

For my 403b, the employee contributes 8.75% and the employer contributes 10.4%.

For 2019, when calculating my 403b contributes, my paycheck lists "applicable gross" as $3,488.52 and not $4,016. As a result, the 403b contributions are $305.25 (employee) and $362.81 (employer). This is a little upsetting to me because the actual employer contribution ends up being 9%, instead of 10.4%. I have no idea why my 403b contributions are based on $3,488.52, instead of $4,016.

For 2020, my paycheck lists "applicable gross" as $5,269.67. The 403b contributions are $461.10 (employee) and $548.05 (employer). This ends up being better than I would expect.

Why did "applicable gross" change from 2019 to 2020? My salary and 403b plan did not change.

I feel like I got shorted in 2019. However, I am getting more than I would expect in 2020, so I am not in a rush to go to HR.

Can anyone help me make sense of this?

[Proud Foot]

Does your company have a dedicated payroll manager? You should talk with them because they should have a better understanding of the payroll system and should be able to give you a better answer than HR.

I know getting it corrected (if it is indeed wrong currently) would lead to less dollars contributed, if this is a company wide issue this could cause problems with the 403b plan audit.

[AMandM]

Were you paid a whole month's salary for August? If not, is it possible they took your 4+ months' pay and averaged it out over the 5 months to give you equal amounts each month? That 3488 is pretty close to (4.5 x 4016) / 5.

I would look at your year-end totals for 2019 to see what the totals were for both pay and 403b contributions and what the percentage is.

[clarkfan1979]

Were you paid a whole month's salary for August? If not, is it possible they took your 4+ months' pay and averaged it out over the 5 months to give you equal amounts each month? That 3488 is pretty close to (4.5 x 4016) / 5.

I would look at your year-end totals for 2019 to see what the totals were for both pay and 403b contributions and what the percentage is.

The employer contribution is 9% of base salary for 2019 and it should be 10.4%.

[clarkfan1979]

I called HR and figured it out. I did not get a complete answer from HR, but it was satisfactory. My paycheck changed because my status as an employee was re-classified in December 2019, based on Colorado PERA, which is the retirement organization for state workers in the state of Colorado. I teach community college.

Upon hire in July 2019, I was considered an "old" employee because I previously had a Colorado PERA account in 2006 to 2011. In December 2019 central payroll learned that I cashed out my PERA accounts in 2011, which disqualifies me as an old employee.

Starting Jan 2020, I am now considered a new employee, which is actually better for me. As a "new" employee, I get a employer contribution toward my 403b of $548/month. As an "old" employee, I was getting an employer contribution of $362/month. This is an increase of $186/month.

Interestingly, the percentage contribution of the plan did not change. However, the "Applicable Gross" did change. My current monthly salary is $4016. As an old employee, the "Applicable Gross" is $3,488, so my employer contributes 10.4% of $3,488, which is $362.

However, as a new employee, my "Applicable Gross" is $5,269 and I get 10.4% of $5,269, which is $548. I get $1,253 of contributions towards my health insurance. PERA now considers that to be part of my total compensation and contributes 10.4% of my total compensation.

Lastly, when I asked HR, how do they calculate "Applicable Gross" to be $3,488/month for "old employees" when my base salary is $4,016,/month, they said they didn't know. They just said it is a complicated formula created by Colorado PERA.

It kind of sucks for "old" employees that their "Applicable Gross" is lower than their actual salary. Isn't a 403B contribution supposed to be based off of your based salary, not a number less than that?