Payroll Deduction

For most types of purchasable credit, members may choose payroll deduction as a method of payment. Upon request, STRS Ohio will provide the member with a form to initiate the purchase of service credit through payroll deduction. After the member and employer complete their portions of the form, the employer should send the form to STRS Ohio.

Important points to remember:

• Deductions made by the employer should be deposited monthly with STRS Ohio no later than the 15th day of the month following the deduction.
• Members are eligible for payroll deduction by any one employer for only one type or restoration or purchase at any given time.
• After the application and first month’s payment are submitted, STRS Ohio will prepare a monthly report of participating members and notify employers via email when a purchase service credit (PSC) report is ready to complete in ESS.
• Accumulated deductions are refundable only upon termination of covered employment.
• Employers may offer both after-tax and tax-deferred payroll deduction plans, or they may elect to offer only one type of plan.

In an after-tax payroll deduction plan, a member may change the amount of payroll deduction by requesting the change in writing to the employer. A member may also terminate payroll deduction at any time. Termination of employment will discontinue deduction.

If a member terminates payroll deduction before the purchase of the entire amount of service credit, the credit established to date will be calculated and posted to the member’s account. A new application is required for the purchase of additional service credit.

In a tax-deferred payroll deduction plan, all federal and state taxes are deferred. In order to offer a tax-deferred plan, the employer must pass a board resolution agreeing to deduct and remit payments on a pretax basis. View the sample board resolution. The employer must then complete the Notification of Adoption of a Tax-Deferred Payroll Deduction and submit it to STRS Ohio along with a copy of the board resolution before the plan effective date. STRS Ohio will send a confirmation letter upon receipt.

Participating members must irrevocably agree to continue payroll deductions until the purchase is complete or employment is terminated. Members who begin the purchase of credit by tax-deferred payroll deduction cannot make any payments directly to STRS Ohio for the same credit.

Overpayments on tax-deferred payroll deductions will be returned to the employer for proper tax accounting.

STRS Ohio agrees to account for designated service credit purchases on a pretax basis but otherwise assumes no further liability. The current or deferred taxation of payments is determined solely by the IRS, and compliance with the guidelines set forth does not guarantee that taxes on payments will be deferred. STRS Ohio may refuse to account for payments on a pretax basis if so directed by the IRS, if guidelines based on the changing state of the law are not allowed, or if the qualified plan status of STRS Ohio is placed in jeopardy.

Once a tax-deferred plan is adopted by an employer, STRS Ohio will notify members currently participating in that employer’s after-tax payroll deduction plan of the restrictions and options of a tax-deferred plan. Members will be asked to discuss this notice with their employer.

The Application to Purchase Credit Through Payroll Deduction is available to members upon request by calling STRS Ohio toll-free at 888‑227‑7877. The form includes a table showing the minimum monthly payment to purchase service credit over different payment intervals. The member should complete the form by indicating the amount of monthly deduction and submit the form to the employer.

The employer should complete their portion of the form, which includes the date deductions will begin and the monthly amount to be withheld. The form should then be submitted to STRS Ohio with the first month’s payroll deduction.