10.03.05: TDP Deductions Must Be Made in Proper Sequence from the Employees' Gross Wages

In accordance with the IRS private letter ruling (Section 414(h) (2) of the Internal Revenue Code), TDP payments are employee contributions that are picked up by the employer and therefore are considered employer contributions. This means that the deductions are withheld and forwarded to ORS without the employee ever having received them. As a tax-deferred program, the scheduled deduction for each pay period must be made in the following order:

  1. Social security tax (FICA)
  2. Medicare
  3. Member deductions
  4. TDP program deductions
  5. Other pre-tax deductions (401k, 403b, etc.)
  6. Federal income tax
  7. State income tax
  8. Local income tax

Last updated: 04/13/2012