12-Month Redistribution Option
Plan Summary
The 12-Month Payroll Redistribution Plan provides a method for academic employees on 9-month appointments to spread their 9-month gross salary approximately equally over the 12-month plan year (October 1st through September 30th of the following year).
Before enrolling in this option, please review the following information:
- This plan is for full time faculty members on a 9-month academic year contract.
- The total amount deferred will be paid out in accordance with the standard distribution schedule (July 1/3, August 1/3, and September 1/3)*.
- Interest will not be paid on the deferred amount.
- Open enrollment for the plan year ends September 15th.
- Employees entering the plan for the first time will not receive pay in September.
- Checks and/or direct deposits will be processed as any other payroll payment.
Disbursement Schedule
On the 12-Month Payroll Redistribution Plan your 9-month payroll schedule changes from the standard pay schedule of September through June TO October through June with a deferral for each of these months of approximately 25%. The total deferred amount is paid out during July, August and September (one-third each month).
The generalized example below illustrates the payment schedule for a 9-month employee with a yearly salary of $36,000.
- October through June: $3,000 each month (equal to gross wages of $4,000, less the 25% deferral). Total deferred equals $9,000.
- July, August and September: $3,000 each month (equal to total deferred divided over 3 months).
Enrollment
To enroll in the plan an employee will sign and date an “Authorization for 12-Month Payroll Redistribution Plan” form. This form must be returned by September 15th. Enrollment in the plan becomes effective at the beginning of the plan year (October 1st).
Termination/Withdrawal
Election to participate in the plan is irrevocable during the plan year. Pay out prior to the standard distribution schedule may be made only in the event of the employee’s termination of employment or death. Under current federal tax regulations, these restrictions are necessary in order for the payments to be taxed when received by the employee.
Where the payroll system is currently so programmed, the plan continues in effect until the employee terminates the plan. To withdraw from the plan, the employee must sign and date a “Request for Termination of Payroll Redistribution” form. This form must be returned by September 15th. Termination will be effective at the end of the plan year (September 30th) and the employee’s salary will revert back to a standard 9-month distribution effective September 16th.
If an employee terminates their employment with Portland State University the deferred balance will be paid out on the next regular payday or with their termination paycheck. If a participating employee dies the money accumulated in the redistribution pay account will be paid to the surviving spouse or children or to the estate according to normal payroll policies and procedures.
Note: 9-month faculty are not eligible to participate in this program if their annual compensation exceeds the federally established 401(a)(17) subject salary limit. For 2022, the limit is $305,000.
*Amount deferred will be impacted if the employee is on leave or their appointment changes during the academic year.