How do you transfer Credit Union Deductions to Direct Deposits without hassles?
First, why would I want to? Credit Union Deductions were designed to allow state employees to have part of their pay go directly to their credit union. The process involves the state Treasury sending each participating credit union one big direct deposit and a list of state employees indicating how much each one is supposed to get from that big deposit. Generally, someone at the credit union has to read through the list and put the right amount of money into the right accounts. In addition to this process increasing the likelihood of human error, it also takes longer to post the money to your account. And if you want to modify or change a credit union deduction, you must complete a special form and send it to your HR Office to be processed.
Direct Deposits allow you to have your pay directly deposited in up to four different accounts (in credit unions or banks). The process involves the state Treasury sending your pay directly to the account (or accounts) that you have designated. If you want to change a deposit amount or even change accounts, you can do it directly in your MI HR Employee Self-service account. Whenever you make a change via your self-service account, a detailed confirmation email is sent back to you. Your HR office does not need to be involved.
OK, so if I have a Credit Union Deduction, what do I do?
1. Establish at least one Direct Deposit account. If you still receive a paper pay check, you do not have a direct deposit yet. When you do have a direct deposit, your remaining net pay (i.e., what you would otherwise get in a paper check) will go to that account. This is called your "default" account because any money owed to you that is not otherwise earmarked for deduction, will be paid into this account. In other words, your default account is your safety net to make sure you always get all the payments you are owed. We recommend that you confirm your financial institution's routing number, and especially your account number, before you begin to set-up a direct deposit.
2. New Direct Deposits don't show up until the second full pay cycle after your request is made. Remember that state paydays are almost two weeks after you have actually put in the work hours. And the first payroll processed after you make your direct deposit request will be "prenoted" - a zero dollar amount will be sent to your account just to make sure the routing number and account number really work. If it passes this test, then the next payday your net pay will be directly deposited!
3. Once the Direct Deposit shows up on your statement of earnings and deductions (i.e., you didn't get a paper check because all your pay now shows up in your direct deposit account), you can discontinue your Credit Union Deduction. Most state agencies will ask you to fill out a Form SE-31A, which you sign to indicate that you want to stop a Credit Union Deduction. The deduction will be stopped as of the next full payroll period. Using this approach, you will have one pay period where you will have both a direct deposit and a credit union deduction.
OK, but what if I have my Credit Union making automatic payments from the credit union deduction account? WIll there be any problem when the credit union deduction stops and the direct deposit starts? This depends on how your credit union handles the internal processing of deductions and deposits. If your deduction goes directly into your account and then automatic payments are made from that account, switching from a deduction to a direct deposit into the same acount should not be a problem. In other words, how the money gets into the account shouldn't matter.
However, if your credit union does your automatic payments first, then puts any balance into your account, you could end up with either no automatic payments being made or double payments being made in that transition pay period. The NuUnion Credit Union has a special method and Form for handling switches from Credit Union Deductions to Direct Deposits so your automatic payments are not interrupted. Contact any teller to let them know your plans and they will walk you through the process.
For other credit unions, you may want to talk with a branch manager to make sure they understand your intentions. Or you may want to discontinue the automatic payments from your account until you are comfortable that the direct deposit is working and the credit union deduction has stopped. Then you can reactivate automatic payments.
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