What is a Deferred Compensation Plan?
A Deferred Compensation Plan is an arrangement whereby an employee voluntarily defers some portion of their current income until a specified future date.
What does NUSD call this type of deferral?
Summer Deferred Pay, Summer Deferred Paycheck, Def Pay, Deferred Pay, Summer Deferred Payroll Check. These all refer to the same deferred compensation. This type of deferral is commonly associated with school district employees and easily identified when the word “Summer” is included in the title.
Why would a district employee sign up for deferred compensation?
While some employees in the district work 12 months out of the year, there are many more whose actual months worked are less than 12. For those employees, the option to receive a check in the months they do not work is available through deferred compensation.
Who is eligible to participate in the Summer Deferred plan?
Employees working fewer than 12 months in the school year are eligible to participate in the plan.
How does deferred compensation work?
When annual compensation is calculated for a 12 month employee, their wages (voluntary deductions, benefits, taxes, wage garnishments, retirement etc.) are divided between 12 pay checks. When annual compensation is calculated for a 10 or 11 month employee it is divided by the number of months worked; so it would be divided between 10 or 11 paychecks. If the 10 or 11 month employee desires to receive a paycheck in the month(s) they do not work, they would elect to participate in the deferred compensation plan.
Can I withdraw a portion of those funds at any time during the year if I need extra money?
Withdrawing any portion of these funds (prior to actual summer month(s) paycheck) would require you to cancel the deferred compensation plan for the year. You would not be eligible to enroll in the plan again until the next school year.
Where do I get the forms to enroll or cancel?
The Pay Check Options form is available on the district website and the media stands located in the payroll department at the Education Center. This form is also included in the new hire packet.
What deductions or benefits are calculated in a Summer Deferred Plan
None. IRS regulations require that calculations for wages (voluntary deductions, benefits, taxes, wage garnishments, retirement etc.) occur on the employee’s paychecks during actual months worked.
What about the ‘annual’ health & welfare benefits I receive from the district?
There are many layers to this question and each calculation would vary depending on your individual selections. However, even though you may be a 10 or 11 month employee, your health & welfare benefits are for the full year and your coverage continues all year providing that you continue your employment with the district from one year to the next. Any benefit premiums, deductions or cash-in-lieu are first calculated for 12 months then split accordingly, into 10 or 11 paychecks. For additional questions or clarification regarding benefits, including the summer fringe amounts set aside if you pay out of pocket; please contact the Payroll/Benefits department at the number listed at the bottom of this page.
What happens if I leave my employment with the district before the summer months?
Any and all monies that have been deducted from your wages and set aside for the Summer Deferred Plan are due to you and paid out to you if your employment ends. Note that other adjustments would also be necessary for employment that ends prior to the end of the contract year. Your payroll technician can assist with questions in this area on an individual basis.
Are there any tax issues because my 10, 11 or 12 months fall in 2 different tax reporting years?
Employees should always consult with their own tax advisors if you have questions regarding your own tax situation.
Are the payroll deductions that make up the Summer Deferred check(s) done before or after federal and state taxes have been calculated and withheld?
The Summer Deferred check is a net check like a savings account. All voluntary deductions and taxes etc. have been paid up front during the 10 or 11 months that are applicable to the employee.
Where can I get more information about the information contained in this document?
Contact the payroll department at:
Last Names A-G (916) 567-5487
Last Names H-N (916) 561-5204
Last Names O-Z (916) 567-5486