State Teachers Retirement System of Ohio

Page Description

Payroll Deduction

1. Are employers required to administer payroll deduction plans?


Yes. Ohio law requires employers to administer payroll deduction for the purchase of STRS Ohio credit.

2. What types of credit are eligible for purchase via a payroll deduction plan?


Most types of credit purchasable through STRS Ohio can be purchased via a payroll deduction plan. A complete list of all types of purchasable service credit is available in the Purchasing Service Credit brochure on the member website.

3. Are current fiscal year absence or leave purchases available via a payroll deduction plan?


No. A member’s purchase of a current fiscal year absence or leave must be handled as a lump-sum purchase through the employer who granted the leave. For more information, see the Absences and Leaves fact sheet.

4. How does a member sign up for payroll deduction?


The member should contact STRS Ohio directly regarding the purchase of service credit. If eligible for a service credit purchase, the member is sent a cost statement advising him or her of the current cost to purchase this credit.

Included with a cost statement for eligible credit is information regarding payroll deduction purchases. A member who elects to purchase credit via payroll deduction completes the Application to Purchase Credit Through Payroll Deduction form and forwards it to the employer. The employer must complete the employer portion of the form, initiate the deduction and forward the completed form to STRS Ohio.

5. If the member signs up for payroll deduction and there is an associated employer cost with the type of credit being purchased, how is the employer cost handled?


If a member is purchasing service credit through payroll deduction and his or her plan did not complete by the end of our fiscal year, the employer will receive a bill in September. If a member completes his or her payroll deduction purchase any other time during the year, the employer will be billed within one week of the purchase being completed. If the employer participates in the state foundation program and employer payment is not made, the next certification of the state foundation program will be adjusted accordingly.

6. What is a tax-deferred payroll deduction plan?


A member purchasing credit via payroll deduction can have deductions made on a tax-deferred basis if his or her employer has adopted a tax-deferred plan. An employer may offer:

  • An after-tax plan,
  • A tax-deferred plan, or
  • Both an after-tax and a tax-deferred plan.

7. Are there restrictions for a member purchasing service credit on a tax-deferred plan?


Yes. Restrictions apply to a member on a tax-deferred plan that do not apply to a member on an after-tax plan. Under a tax-deferred plan, a member cannot:

  • Stop or change payments until the credit is fully purchased or employment is terminated,
  • Make lump-sum payments for the same service being purchased, or
  • Stop payments to pay off the remaining balance in a lump sum.

8. What should an employer do to adopt a tax-deferred plan?


Adoption of a tax-deferred plan is optional for the employer. To adopt a tax-deferred plan, an employer must pass a board resolution. Once the board adopts the tax-deferred plan, the employer must notify STRS Ohio before the effective date of the plan. A copy of the resolution authorizing the plan should accompany the Notification of Adoption of a Tax-deferred Payroll Deduction Plan form. View a sample board resolution authorizing a tax-deferred plan.

Once we receive your notification and board resolution, we will send you a letter confirming the plan you selected and the effective date. Please review the letter and notify us if there are any discrepancies.

9. Why must I notify STRS Ohio before implementing a tax-deferred plan?


STRS Ohio identifies your employees who are currently participating in payroll deduction and notifies them of the plan adoption. STRS Ohio also advises them of the restrictions on a tax-deferred plan and their individual options.

10. Can I include payments for purchase service credit on my regular biweekly payroll report?


No. While you can send the payment at the same time as your regular payroll payment, do not include the purchase service credit amounts on your regular payroll reports. The purchase service credit amounts will be reflected on the monthly purchase service credit report completed in ESS or on the payroll deduction for purchase of service credit report you return with your payment and cash remittance form if paying by check, ACH credit or wire.

11. How do I know when to discontinue payroll deductions?


STRS Ohio will notify you on the purchase service credit work report approximately three months before the member’s last remittance month. You can also contact the STRS Ohio accounting department at 888‑535‑4050 with any questions or to verify final payment amounts.

12. Do I have to calculate the amount of the last payment due?


For both after-tax and tax-deferred plans, STRS Ohio will notify you in advance of the amount of the last month’s deduction. You will be responsible for remitting the final payment.

13. What if payroll deductions are not stopped in time?


For an after-tax plan, STRS Ohio will refund any overpayments directly to the member. Overpayments made on a tax-deferred plan are returned to the employer.

14. For members to purchase service credit, do I have to offer both tax-deferred and after-tax plans?


No. It is the employer’s decision whether to offer tax-deferred only or both tax-deferred and after-tax.

15. How does a member get more information about purchasing service credit?


A member interested in obtaining information regarding purchasing eligible service credit should contact the STRS Ohio Member Services Center toll-free at 888‑227‑7877. A member service representative will review all of their options and provide a cost statement listing the total cost to purchase the credit.

16. Can I get a copy of a member cost statement for purchasing service credit?


The member must provide you with a cost statement. Statements will not be released to employers without the consent of a member.

17. I have a new payroll deduction plan starting for one of my employees. Why aren't they showing up on my monthly statement?


STRS Ohio needs to receive the application to purchase service credit through payroll deduction, signed by both the member and the employer, along with the first month's payment before we can activate the installment payment plan. Once we have activated the plan, the member's information will appear on your monthly statement. If you submit your report via ESS, see the ESS Instructions for details on how to add someone to your report or refer to the online tutorial.

18. One of my employees who is currently in a payroll deduction plan to purchase service credit is going to work for a new school. Can they continue their plan at the new school?


Yes, but the member will need to contact STRS Ohio to request a new cost statement. The member will need to take the cost statement to his or her new employer to certify and set up payroll deductions.

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