UCD Directives

UC DAVIS:  ACCOUNTING AND FINANCIAL SERVICES

DEANS, DIRECTORS, DEPARTMENT CHAIRPERSONS
     AND CAMPUS/UCDMC ADMINISTRATIVE OFFICERS


Re:     Revised Requirements for Student Exemption from OASDI/Medicare
Withholding

The Internal Revenue Service has released revised guidelines for exemption of
student employees from OASDI (Social Security) and Medicare withholding. 
Eligibility criteria outlined in Directive 95-038 are now out of date. 

The new guidelines are effective with May earnings (May 27 paychecks for
employees paid biweekly and June 1 paychecks for employees paid monthly). 
Student employees who do not qualify for exemption will continue to contribute
7.5% of gross earnings to the University's Defined Contribution Plan (DCP) in
lieu of OASDI and 1.45% to Medicare. 

Under the new rules, undergraduate and graduate students employed in
non-career
positions who are enrolled at least half-time are eligible for exemption
regardless of the number of hours worked.  The minimum unit requirement for
exemption from OASDI/Medicare withholding during the academic year is 6 units
for undergraduate students and 4 units for graduate students.  For Summer
Session, the minimum requirement is 6 units for undergraduate students and 2
units for graduate students.

There is no exemption for wages earned in a pay period in which 50% or more of
the days fall outside an academic term.  The table below describes the timing
of minimum unit requirement changes for the summer  months.

     Student DCP/Medicare Exemption Rules
               
           Minimum Units for Exemption     
Pay Period End Date     Pay Cycle    Undergraduate     Graduate

     06/13/98              BW             6               4
     06/27/98              BW             no exemption     
 07/11/98 through 
     09/19/98              BW             6               2
     10/03/98              BW             no exemption     
     10/10/98              BW             6               4
     06/30/98             MO/MA           6               4
     07/31/98             MO/MA           6               2
     08/31/98             MO/MA           6               2
     09/30/98             MO/MA           6               2
     10/31/98             MO/MA           6               4

Further information may be obtained from the following contacts:

Payroll Tax Issues--         Terrylee Neal        757-8936    
(tneal@ucdavis.edu)
Benefits/DCP Issues--        Elizabeth Hansen     752-1765    
(eahansen@ucdavis.edu)
Undergraduate Issues--       Pat Gutierrez        752-0228    
(pagutierrez@ucdavis.edu)
Graduate Student Issues--    Karen Hamner         752-7484    
(kmhamner@ucdavis.edu)

Sincerely,

Anthony B. Flores
Associate Vice Chancellor-Finance

ABF/SH

98-063 

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