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Next Steps
Employer Pickup
What Is Employer Pickup?
Pickup refers to employee contributions that are tax-deferred. STRS
Ohio employers may choose to pick up employee retirement contributions
as a means of deferring federal and state income taxes on these amounts.
Picked-up contributions are not included in taxable income for federal
or state income tax purposes at the time the contributions are made.
However, these amounts become taxable when received by the individual
in the form of a refund or retirement benefits.
The authority for employer pickup is the Internal Revenue Code. There are no Ohio laws or any Retirement Board Rules governing this program.
There are three types of employer pickup that employers are authorized to adopt for their members. They include salary reduction, fringe benefit and fringe benefit included in compensation. Each type of pickup is explained in detail in this section.
This option has been available to employers since 1983, and 99% of employers of STRS Ohio members have an employer pickup plan in accordance with Section 414(h)(2) of the Internal Revenue Code. A “salary reduction employer pickup” plan does not result in additional cost to employers and offers significant tax advantages to employees.
How Do I Adopt a Pickup Plan?
The procedures for adopting an employer pickup plan are as follows:
Your board must pass a resolution adopting a pickup plan.
A 
Notification for Employer “Pickup” of Employee
Contributions form must be completed and submitted to STRS Ohio.
A copy of the authorizing action by the board must accompany the Notification for Employer “Pickup” of Employee Contributions form.
Click here for a sample of a resolution for the adoption of pickup.
Once STRS Ohio has received your notification and resolution, we will
send you a confirmation letter listing the plan you have adopted.
Once you have adopted an employer pickup plan, you need to indicate
on your payroll reports that contributions are tax-deferred.
We highly encourage you to adopt an employer pickup plan to defer taxes on contributions to STRS Ohio. If you adopt a salary reduction plan, your employees will receive preferred tax treatment of their contributions at no additional cost to you. If you should have any questions about the information in this section, please contact your employer advisor toll-free at 1-888-535-4050.
Who Qualifies as an STRS Ohio-Recognized Employee Group?
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Superintendents
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Administrators
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Teachers
Note: Each employee who is a member of STRS Ohio is considered a part of one of these groups (including substitutes and tutors). The type of pickup and pickup amounts can vary by employee group.
What Are IRS Conditions for Pickup?
The employer must specify that contributions, although designated as employee
contributions, are being paid by the employer in lieu of contributions
by the employee.
An employee must not be given the option of choosing to receive the amounts directly.
The pickup may not be effective for contributions made prior to the date of the school board resolution implementing the plan.
How Do I Notify STRS Ohio of Employer Pickup?
Notification for Employer “Pickup” of Employee Contributions form should be completed when a
pickup plan is adopted or changed.
The signed form and a certified copy of the applicable board resolution should be mailed to STRS Ohio. The board resolution must include rate of pickup, plan type, employee groups covered and effective date.
What Are the Types of Pickup?
There are three types of pickup, which are each described below. The
most common form of pickup is salary reduction.
Salary Reduction — individual employees’ salaries are reduced by the amount of employee retirement contributions. The contributions are then paid by the employer.
For example, assume that a teacher is employed on a full-time contract for $30,000 and that his or her employer has a salary reduction pickup plan in effect.
| Contract salary | $30,000 |
| Employee retirement contributions picked up by salary reduction (10% of original salary) | ( 3,000) |
| Taxable income (federal and state) | $27,000 |
| Earnings for retirement purposes | $30,000 |
| Contributions remitted to STRS Ohio | $3,000 |
Fringe Benefit — the employer pays all or part of the employee’s retirement contributions. There is no reduction of the employee’s salary.
Example: Fringe benefit pickup not included in compensation for retirement purposes. Assume that a teacher is employed on a full-time contract for $30,000, the employer has a fringe benefit pickup plan in effect, and the employer does not include the pickup in compensation for retirement purposes.
| Contract salary | $30,000 |
| Employee retirement contribution (10% of salary paid by employer in addition to stated salary) | ( 3,000) |
| Taxable income (federal and state) | $30,000 |
| Earnings for retirement purposes | $30,000 |
| Contributions remitted to STRS Ohio | $3,000 |
Fringe Benefit Included in Compensation (Pickup-on-Pickup) — the school board specifies that employer-paid retirement contributions, in addition to the employee’s salary, are to be included in compensation for retirement purposes. Member and employer contributions are remitted on total compensation determined by adding the amount of retirement contributions to be picked up plus stated salary (salary + [10% X salary]).
Example: Fringe benefit pickup included in total compensation for retirement purposes. Assume that a teacher is employed on a full-time contract for $30,000, the employer has a fringe benefit pickup plan in effect, and the employer does include the pickup in compensation for retirement purposes.
| Contract salary | $30,000 |
| Employee retirement contribution (10% of salary paid by employer in addition to stated salary) | ( 3,000) |
| Compensation for STRS Ohio retirement purposes | $33,000 |
| Taxable income (federal and state) | $30,000 |
| Contributions remitted to STRS Ohio ($33,000 X 10%) | $3,300 |
What Information Should Be Included in the Board Resolution
for the Adoption of a Pickup Plan?
The board resolution must include the rate of pickup, plan type, employee
groups covered and effective date. Click
here for a PDF sample of a resolution for the adoption of pickup.
