Deferring Annual Leave

Now you can save even more for retirement! If you are eligible to receive a payout of annual leave, either due to leaving employment or as part of a institutional leave payout plan, you can defer your unused annual leave payment as contributions into either or both your UTSaver TSA 403(b) Plan and your UTSaver DCP 457(b) plan.

Before the earlier of your last day of employment or the last working day of the month before your annual leave payout is issued, submit your Annual Leave Deferral Agreement [link to form] to your local benefits office.

You can defer any portion of your unused annual leave payment up to the plan limit. For 2023 the limits for the UTSaver TSA and DCP plans if you are under age 50 is $23,000 per plan. If you are age 50 or older, you can defer up to $30,500.

It is important to note that this limit includes any salary deductions you may have already made for the year.  Please contact your benefits office to determine your available limits for each plan before submitting your Annual Leave Deferral Agreement.

Since both the UTSaver TSA and DCP plans permit contributions to be made before or after taxes are paid, make sure to select on the form if you want your deduction made before taxes (Traditional) or after taxes (Roth).

Annual Leave Deferral Agreement

Questions and Answers

Can I defer any portion of my unused annual leave into my UTSaver TSA or DCP while I am still employed?

The UTSaver TSA only permits the sheltering of unused annual leave payable as a result of leaving employment. However, if you are employed in a UT institution that uses a cash balance leave plan that permits cash-outs each year, you can defer these payments into your UTSaver DCP plan so long as your limits permit.

Can I defer my unused annual leave amount to an IRA or other non-UTSaver account upon termination?

No, you can only defer to a UTSaver TSA or DCP account.

Can I get paid for my unused sick leave and can that payment be deferred to a UTSaver TSA or DCP account?

Unused sick leave balances are not paid to University of Texas employees when they separate from service either by termination or retirement. Therefore, there are no funds to defer to a UTSaver account. You can only defer amounts that are actually payable to you.

Can I defer part of my unused annual leave amount to a UTSaver TSA or DCP account and receive the remainder as a lump sum payment?

Yes, you may defer part of your unused annual leave payment to your UTSaver TSA or DCP account and receive a check for the remainder, which will be taxable. Maximum annual deferral limits apply.

Can I defer 100% of my annual leave payment to my UTSaver TSA or DCP account?

You can defer any portion of your unused annual leave payment up to the 457(b) limit. However, remember that you can only defer Federal income taxes. You must have enough left to cover deductions for Social Security and Medicare. For this reason, you can never defer 100% of any payment.

If I have both a UTSaver 457(b) DCP account and a UTSaver 403(b) Tax Sheltered Annuity, can I defer part of my unused annual leave to each account?

Yes, you can.

When do I have to make my election?

You must complete your Annual Leave Deferral Agreement and submit the form to your institution’s benefit office on or before the last day of active employment, or the last working day in the month of employment prior to when the vacation payment is issued. (In most cases, this will be your last day of employment).

What is the process for deferring my unused annual leave payment to a UTSaver TSA or DCP account?

Download and complete the Annual Leave Deferral Agreement before your last day of employment

If you do not have a UTSaver TSA or DCP account, choose a Provider from the list of Approved Providers and follow their enrollment instructions to set up an account directly with them.

If you do not have a UTSaver TSA or DCP account, complete applications, and beneficiary forms and return those directly to the Provider before contributions are deducted from your annual leave payment.