payroll: AAUP Memo on 12-Month Pay Option

[paynews <paynews@uoregon.edu>]

This afternoon, the Payroll Office will be sending out the following 
special PAYNEWS to all 9-month faculty who are enrolled in the 12-Month 
Pay Option.   Please read this memo to better respond to any questions or 
comments you may receive from faculty in your department about the 
recent AAUP memo.

______________________________________________________________________


AAUP (American Association of University Professors) recently e-mailed a 
notice to its members regarding IRS tax changes regarding deferred pay 
that are in effect for the 2008-2009 academic year.  The memo pertains 
only to academic year unclassified employees.  It contained some 
misleading information and has generated a number of unwarranted concerns 
across campus.  Please allow me to address those.

First and foremost, our 12-Month Pay Option Plan already meets the new IRS 
criteria to avoid tax liability on deferred compensation.  These 
requirements are as follows:

- An election form, in writing, during an enrollment period at the 
beginning of the plan year.
- The election is irrevocable for that year and withdrawal is only 
permitted upon termination or death.
- Elections automatically carry forward to the next year unless 
expressly changed during the enrollment period.
- All funds are paid out in a twelve month period without any 
overlap or extended deferral.

The AAUP memo was misleading in a number of other instances.  First, it 
only discussed 10-month contracts.  In reality, Section 409A rules are 
applicable to any academic pay plan where salary is deferred for taxation 
in another tax year.  AAUP implied that employees could elect their 
payment installments, which is incorrect.  The memo also stated that no 
particular form is required.  While the IRS does not impose a specific 
form, we are required to have a document (which we do) with all applicable 
requirements included.

Additional information may be found in a series of Q & As on the IRS 
website at http://www.irs.gov/newsroom/article/0,,id=172883,00.html

The number of academic year unclassified employees who are enrolled in the 
12-Month Pay Option Plan is quite small as there is no financial benefit 
gained.  The University encourages employees to instead consider a bank 
savings plan option through payroll deduction.  Employees may learn more 
about this option by visiting the Business Affairs website at 
http://ba.uoregon.edu/12mopayplan/12monthpayoptions.htm

Thank you,

Judy Duff
Payroll Manager
Business Affairs
346-1104
judyduff@uoregon.edu




To view all payroll messages posted since January 2008 visit our
archive at http://www.uoregon.edu/~paynews/payroll