10.03.04: Employees Must Have Sufficient Funds to Cover the TDP Deduction


Effective July 1, 2011, the minimum scheduled deduction for new agreements must be large enough to pay off the balance, plus any accrued interest, in less than 15 years (based on 21 pay periods a year), and never lower than $50.  This ensures the agreement is paid off in a reasonable time frame and reduces the risk of the agreement balance increasing over time as a result of applying interest annually to the remaining balance.   The maximum deduction amount is the employee’s gross per-pay period wages minus social security, Medicare, and member contribution deductions. If the employee has sufficient funds to meet the above requirements, you may sign the agreement.

Employees cannot have constructive receipt of these funds. That is, the employees cannot have this money paid to them via cash, paper check or direct deposit. This money must go directly from the employer to ORS.

A TDP Calculator is available to help you and your employee make an educated decision in determining an affordable scheduled deduction amount. This calculator is also available on the member website, under Service Credit – How to Purchase.

Last updated: 04/16/2012