Pickup

1. What is pickup?
2. Are there different types of pickup?
3. If we already notified STRS Ohio when we initially adopted a pickup plan, do we have to let STRS Ohio know if we make changes to the plan?
4. Can a school adopt a retroactive pickup plan?
5. Do we have to offer the same type of pickup plan to all of our employees?
6. Does pickup-on-pickup benefit reemployed retirees?
7. Can a member pay part of their pickup-on-pickup?

1. What is pickup?
   Section 414(h)(2) of the Internal Revenue Code authorizes the tax-deferral or pickup of employee contributions to STRS Ohio. These tax-deferred contributions are not subject to federal and state taxes during the current year but are subject to taxation when received as a benefit or plan distribution.
2. Are there different types of pickup?
   Yes. There are three different types of pickup:
   • Salary Reduction — a member’s salary is reduced by the retirement contributions and the contributions are excluded from federal and state taxable wages.
   • Fringe Benefit not included in compensation — An employer pays all or part of a member’s retirement contributions in addition to his or her salary. Contributions are excluded from federal and state taxable wages.
   • Fringe Benefit included in compensation (often referred to as pickup-on-pickup) — an employer pays all or part of a member’s retirement contributions in addition to salary and agrees to include the contributions in compensation for retirement benefits. In this scenario the employee’s salary for retirement purposes is the contract earnings plus the employer-paid member contributions. Total member contributions remitted to STRS Ohio are 10% of this amount and the contributions are excluded from federal and state taxable wages.
3. If we already notified STRS Ohio when we initially adopted a pickup plan, do we have to let STRS Ohio know if we make changes to the plan?
   Yes. In addition to the initial notification to STRS Ohio of the pickup plan adoption, an employer must forward notification to STRS Ohio whenever there is a revision to a pickup plan. The procedure for notifying STRS Ohio of a pickup plan modification is the same as the procedure for initial notification. A Notification for Employer “Pickup” of Employee Contributions form must be completed by the employer and sent to STRS Ohio along with a certified copy of the applicable board action.
4. Can a school adopt a retroactive pickup plan?
   No. A pickup plan may not be effective for contributions made prior to the date of the board resolution implementing the pickup plan.
5. Do we have to offer the same type of pickup plan to all of our employees?
   The pickup amount can vary within an employee group as long as some form of pickup is provided for everyone within that group. STRS Ohio recognizes three employee groups, Superintendent, Administrators, and Teachers.
6. Does pickup-on-pickup benefit reemployed retirees?
   The calculation for the monthly annuity for reemployed retirees is not based upon the three highest years of earnings, as is the case with service retirement. The reemployed retiree does benefit by receiving an annuity or lump-sum payout from the inflated amount of contributions reported on their account.
7. Can a member pay part of their pickup-on-pickup?
   No, members cannot pay part of the pickup-on-pickup.

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