10.12.00: Paying Off a TDP Agreement Early

An employee who has filed a retirement application with ORS or who will be terminating within 90 days may pay off a TDP agreement early.

For the lump sum payment to qualify as a pre-tax purchase, the lump sum must be withheld as a deduction from the employee’s gross wages, and the employee cannot have constructive receipt of the payment. The employee must have applied for retirement or must terminate within 90 days of the payment’s submission to ORS, provided the employee and the employer have completed both portions of the TDP Payment Options form. The Tax-Deferred Payment plan is the only way a pre-tax payment can be made through the employer, and all lump sum payments must be included on the reporting unit’s retirement detail report as DTL3 records.

Unlike the regularly scheduled deductions, these lump sum payments can be paid from money that is not reportable toward retirement. Bonus, incentive, and unused sick and annual leave payments are examples of such monies that could be lump sum payments and have TDP deductions against them. This change in policy to accept lump sum payments through TDP does not alter how an employee’s Final Average Compensation (FAC) figure is computed. Nonreportable compensation payments will not be used to calculate FAC.

If an agreement is not paid in full, the agreement’s monthly payment terms will continue until the agreement is paid off or employment with the reporting unit ends.

Last updated: 02/27/2012