403b deduction from severence

Katie B

Teachers who retire receive a payment each year for 4 years. They receive that payment after their final contract has ended on June 30, so are not in fact employees when they receive their checks in mid-July. They also receive pay for unused accrued sick pay in July. Questions: can they defer funds into a 403b? How do we calculate withholdings on that check - supplemental @ 27%?