Appendix AA92: Changes in DCP/Medicare Policies for Student Employees
Updated: August 4th, 2011
BERKELEY: OFFICE OF financial and Business Services
May 18, 1998
DEANS, DIRECTORS, DEPARTMENT CHAIRS, AND ADMINISTRATIVE OFFICERS
Re: Changes in DCP/Medicare Policies for Student Employees
I have good news to announce for student employees! Under new IRS guidelines, undergraduate and graduate student employees who are registered and enrolled in courses at least half time will now be exempt from withholding for Medicare and the Defined Contribution Plan. Under previously announced (March 29, 1995) policies student employees had to be enrolled full time and have a total combined appointment percentage of 50% or less in order to be exempt. This is now changed.
NEW POLICY
Undergraduate and graduate students must be registered and enrolled in a minimum of 6 units during the Academic Year in order to qualify for the exemption. During Summer Session, the exemption will require registration and enrollment in 6 units by undergraduate students and 2 units by graduate students. Student employees who do not meet the half-time enrollment requirement will continue to be required to contribute 7.5% of their earnings to the Defined Contribution Plan (DCP) and 1.45% to Medicare.
OTHER HIGHLIGHTS OF THE NEW POLICIES
• No limit is imposed on the number of hours that a student may work and be eligible for the exemption from withholding.
• In general, withholding is not required during academic term break periods.
• Graduate students registered and enrolled and approved for advancement to doctoral candidacy are also exempt from withholding.
These changes are effective with May 1998 earnings paid in June 1998.
Later this month, departmental administrative officials will receive detailed procedures implementing the new IRS guidelines, as well as answers to frequently asked questions. In the meantime, if you have questions about these revised policies please contact Jim Hensler at 642-2851 (hensler@uclink).
Alison McGill
Controller and Executive Director
Financial and Business Services
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