The Twelve Month Deferral Option Plan allows faculty under a 9 month appointment to spread the payment of wages you earn during your appointment period over 12 months (24 pay periods).
For example, assume your annual compensation for a 9-month academic year is $54,000. Your current semi-monthly gross pay as a 9-month faculty is $2,700 per pay period for 20 pay periods ($54,000/20). If you choose to be paid over 24 pay periods, your monthly gross pay would be $2,250 ($54,000/24). The amount deferred for the first 20 pay periods is $450 per pay period ($2,700 - $2,250) which is then paid out during the summer, over the last 4 pay periods.
1. A faculty member who provides service for 9 months but is paid over 12 months (9/12) is employed beginning in August. Must the employee be paid out in 20 equal installments?
No, the decision to be paid out over 18 pay periods or 24 pay periods is the employee’s decision.
2. When does the 9 month deferred pay begin?
The 9 month deferred pay begins the same pay date as the 9 month regular pay (August 1). It will continue for 24 pay dates.
3. What if I decide in the middle of the year that I want to stop my deferral?
Your election for the academic year is irrevocable after the commencement of the academic year. This is per the Internal Revenue Code - IRC 409A.
4. If I elect to defer pay, how will this affect my benefit deductions?
Benefit deductions (i.e. medical, dental, etc.) will be deducted over the entire 12 months instead of 10 months. Retirement deductions and university contributions to retirement as well as tax withholdings will be based on wages paid, not wages earned.
5.How will any summer or additional assignments affect my 9 month deferral?
Your summer assignment or any additional service assignments during the 9 month academic year are not part of your deferred compensation. Only your primary 9 month contract is eligible for deferral.
6. How will this affect my taxes?
Your tax withholdings will continue to be based on the latest W-4 A-State has on file for you and will be calculated on the amount of wages paid, not the amount earned. Your W-2 will reflect only wages paid during the calendar year, not the wages earned or deferred.
7. Will I need to complete an election form every year?
Your election will remain in effect unless you complete a request to cancel prior to July 1 of the new academic year.
8. What if my faculty assignment ends on May 31st?
Any earned but unpaid compensation will be paid in a lump sum, less any applicable deductions in the next payroll cycle. (If you have questions concerning your benefits and their end date(s) please contact Payroll Services at 870-972-3454.)
9. Where should I submit my election or cancellation form?
The election or cancellation form should be submitted to Payroll Services at hsupayroll@astate.edu
11. Who should I contact if I have any questions?
Please contact Payroll Services at 870-972-3454. Please ensure to communicate that you are an HSU employee.