Frequently Asked Questions

What is employer pickup?

Employer pickup refers to the practice of employers paying member contributions as a way to defer federal and state income taxes on these amounts. 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.

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, you must notify STRS Ohio whenever a pickup plan has been revised. The procedure for notifying STRS Ohio of a pickup plan modification is the same as the procedure for initial notification. Complete a Notification of Employer Pickup of Employee Contribution form and send it to STRS Ohio with a certified copy of the applicable board action.

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.

Does pickup-on-pickup benefit reemployed retirees?

No. The calculation for monthly annuity for reemployed retirees is not based on 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.

Can a member pay part of their pickup-on-pickup?

No. Members cannot pay part of the pickup-on-pickup.

Where can I find an example of how to calculate pickup-on-pickup?

For basic examples, please see the Employer Pickup fact sheet.