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<h1><span style="font-size:11.0pt;line-height:105%;font-family:"Arial",sans-serif"><img width="153" height="59" id="_x0000_i1025" src="cid:image001.png@01D98253.E929FDC0"></span><span style="font-size:11.0pt;line-height:105%;font-family:"Arial",sans-serif"><o:p></o:p></span></h1>
<p class="MsoNormal"><span style="font-family:"Arial",sans-serif"> <o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">May 9, 2023<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
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<span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">To:<o:p></o:p></span></p>
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<p class="MsoNormal" style="mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:-.7pt;text-align:justify;line-height:110%">
<span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">Department Benefits Representatives<o:p></o:p></span></p>
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<span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">From:<o:p></o:p></span></p>
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<td width="643" valign="top" style="width:482.45pt;padding:0in 0in 0in 0in;height:28.85pt">
<p class="MsoNormal" style="mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:-.7pt;text-align:justify;line-height:110%">
<span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">Central HR Benefits Office on behalf of UC Office of the President<o:p></o:p></span></p>
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<span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">Re:</span><span style="font-size:11.5pt;line-height:110%;font-family:"Arial",sans-serif"><o:p></o:p></span></p>
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<p class="MsoNormal" style="mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:-.7pt;line-height:110%">
<b><span style="font-size:12.0pt;line-height:110%;font-family:"Arial",sans-serif">Lincoln Financial - 2023 Disability Benefit Taxation</span></b><b><span style="font-size:12.0pt;line-height:110%"><o:p></o:p></span></b></p>
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<p class="MsoNormal" style="border:none;padding:0in"><span style="font-size:11.5pt"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.5pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif">DBRs, please share this very important information via your department listserv.<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:14.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></b></p>
<p class="MsoNormal" style="margin-bottom:6.0pt"><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif">The UC Disability Program offers both employer and employee-paid benefit plans. Whether or not benefits paid from these plans are subject
to income tax depends on who pays the insurance premiums.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpFirst" style="margin-bottom:0in;margin-bottom:.0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1">
<![if !supportLists]><span lang="EN" style="font-size:12.0pt;font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><b><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif">Basic Disability</span></b><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif"> – UC pays premiums and benefits are generally taxable.<o:p></o:p></span></p>
<p class="MsoListParagraphCxSpLast" style="margin-bottom:0in;margin-bottom:.0001pt;mso-add-space:auto;text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1">
<![if !supportLists]><span lang="EN" style="font-size:12.0pt;font-family:Symbol"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><b><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif">Voluntary Short<span style="color:#00B050">-</span> and Long-Term Disability</span></b><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif">
– Employees pay premiums on an after-tax basis and benefits are generally not taxable.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif">The Basic and Voluntary Short-Term Disability (VSTD) plans both provide benefits for a maximum of 6 months and are usually paid concurrently if an employee is enrolled
in VSTD. When this happens, Lincoln Financial Group (LFG) consolidates payments from both plans into one check. Each year LFG follows IRS guidelines to determine the percentage of disability benefits subject to taxability. For 2023, 16.84% of combined Basic
and VSTD disability benefit payments are taxable. This is a slight reduction from 2022.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif"> <o:p></o:p></span></p>
<div align="center">
<table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="456" style="width:342.15pt;border-collapse:collapse">
<tbody>
<tr style="page-break-inside:avoid;height:.3in">
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<p class="MsoNormal" align="center" style="text-align:center"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Taxability of Disability Benefits<o:p></o:p></span></b></p>
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<tr style="page-break-inside:avoid;height:.3in">
<td width="324" nowrap="" valign="top" style="width:243.15pt;border:solid #7F7F7F 1.0pt;border-top:none;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Plan<o:p></o:p></span></b></p>
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<td width="72" nowrap="" valign="top" style="width:.75in;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif">2022<o:p></o:p></span></b></p>
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<td width="60" nowrap="" valign="top" style="width:45.0pt;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif">2023<o:p></o:p></span></b></p>
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<tr style="page-break-inside:avoid;height:.3in">
<td width="324" nowrap="" valign="top" style="width:243.15pt;border:solid #7F7F7F 1.0pt;border-top:none;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Basic Disability only<o:p></o:p></span></p>
</td>
<td width="72" nowrap="" valign="top" style="width:.75in;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">100%<o:p></o:p></span></p>
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<td width="60" nowrap="" valign="top" style="width:45.0pt;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">100%<o:p></o:p></span></p>
</td>
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<tr style="page-break-inside:avoid;height:.3in">
<td width="324" nowrap="" valign="top" style="width:243.15pt;border:solid #7F7F7F 1.0pt;border-top:none;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Voluntary Short-Term Disability only<o:p></o:p></span></p>
</td>
<td width="72" nowrap="" valign="top" style="width:.75in;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">0%<o:p></o:p></span></p>
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<td width="60" nowrap="" valign="top" style="width:45.0pt;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">0%<o:p></o:p></span></p>
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<td width="324" valign="top" style="width:243.15pt;border:solid #7F7F7F 1.0pt;border-top:none;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Basic and Voluntary Short-Term Disability (when combined into consolidated payments)<o:p></o:p></span></p>
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<td width="72" nowrap="" valign="top" style="width:.75in;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">17.33%<o:p></o:p></span></p>
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<td width="60" nowrap="" valign="top" style="width:45.0pt;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">16.84%<o:p></o:p></span></p>
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<td width="324" valign="top" style="width:243.15pt;border:solid #7F7F7F 1.0pt;border-top:none;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Voluntary Long-Term Disability only<o:p></o:p></span></p>
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<td width="72" nowrap="" valign="top" style="width:.75in;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">0%<o:p></o:p></span></p>
</td>
<td width="60" nowrap="" valign="top" style="width:45.0pt;border-top:none;border-left:none;border-bottom:solid #7F7F7F 1.0pt;border-right:solid #7F7F7F 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.3in">
<p class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">0%<o:p></o:p></span></p>
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<p class="MsoNormal"><span lang="EN" style="font-size:12.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
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