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.
Yes. There are three different types of pickup:
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.
No. A pickup plan may not be effective for contributions made prior to the date of the board resolution implementing the pickup plan.
No. The type and percentage of pickup can vary within a group as long as the total percentage of all pickup plans is the same for each member within that group. For example, if the board adopts a fringe benefit pickup not included in compensation plan for all administrators, it is possible that the employer can pay the full amount of fringe benefit member contributions for a high school principal, and pay only a portion of a junior high principal’s fringe benefit member contributions, such as 5% fringe benefit pickup and the remaining percentage as salary reduction pickup. In a case like this, please provide STRS Ohio with documentation, such as the employee contracts, that clearly indicate the pickup amounts per individual.
The calculation for the monthly annuity for reemployed retirees is not based upon the five 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.
No, members cannot pay part of the pickup-on-pickup.
Yes. A pickup calculator is available in the Calculator section of the employer website. The calculation will only be as accurate as the information you provide. When entering data, please be sure you have accurately represented the percentage to be included in compensation for retirement purposes.