10.01: What is the Tax-Deferred Payment Plan

The Tax-Deferred Payment plan is a voluntary program that allows members of this retirement system to purchase active duty military service credit and/or pay for a repayment of a refund, contributions for post 1992 weekly workers compensation, and MIP Window buy-back on a tax-deferred payroll-deduction basis. Reporting units were able to choose to participate any time following the program implementation on July 1, 1998.

Note: All TDP agreements that were initiated on January 1, 2004 and later are subject to 8 percent annual interest on the unpaid balance. For more information see section 10.07: TDP Annual Interest further in this chapter.

ORS received a private letter ruling from the IRS that considers these deductions as employer payments. The payments are tax-deferred as long as the deductions are withheld and sent to the retirement system before the employee receives them (Section 414(h) (2) of the Internal Revenue Code.) Therefore, it is important that the deductions from the employees’ pay are made in the correct sequence. See section 10.03.05: TDP Deductions Must Be Made in Proper Sequence from the Employees' Gross Wages for more information.

Last updated: 09/29/2017