Summary

This optional pay plan provides a method for academic year BSU faculty to spread their base salary over a 12 month period in order to have a constant income stream.  Election to participate in the plan is for the entire 12 month period.  Upon enrollment, this pay plan will remain in effect until the faculty member withdraws from the plan at the end of the plan year, or leaves the University.  Employees will not be paid interest on the deferred amounts.

Enrollment

To enroll, faculty members need to complete the Twelve Month Pay Plan Enrollment Authorization form.  This form must be returned to Human Resource Services (AD350) no later than the first day of the initial academic year biweekly pay period.  Since these dates vary from year to year, Human Resource Services will publish deadlines on its website.

In compliance with IRS regulation, participation is irrevocable during the plan year except in cases where the employee leaves the University.  Once a faculty member enrolls in the plan, this election will remain in effect until the faculty member withdraws from the plan at the end of the plan year or leaves the University.  To withdraw (i.e. unenroll) from the plan, the employee will complete the Twelve Month Pay Plan Opt In/Out Authorization form. The signed and dated form must be returned to the Human Resource Services prior to the first day of the academic year payroll period. Termination of program participation will be effective at the end of the plan year and the employee's salary will revert back to a standard 20 biweekly distribution effective with the new academic year. If a participating employee dies, the money accumulated in the redistribution pay account will be paid to the surviving spouse or children or to the estate, according to normal payroll policies and procedures.

Enroll

Eligibility

The twelve month payment program (deferred pay) is open to full-time BSU faculty members with an academic year appointment.  At this time, full-time faculty at Indiana Academy and Burris are not eligible to participate.  Faculty who are enrolled in the early retirement program, on sabbatical, part-time contract faculty and full-time semester contract faculty are not eligible to participate in the program.  In addition, enrollment in the plan will be restricted to faculty whose academic year salary will not exceed $280,000 per year.  

Program Description

An amount will be deducted from 20 paychecks from the first academic year paycheck in August through the last academic year paycheck in May.  Normally, these deductions will be equal amounts unless the employee receives a mid-year increase.  The employee will receive six biweekly checks over the summer months, distributing the deferred amounts from the academic year.  Electing the 12-month plan simply spreads the 20 biweekly pays over a 26 biweekly timeframe.

If a summer salary is earned, the resulting salary will be paid over the appropriate summer pay periods in addition to the deferred salary from the academic year.  The deferred payments will be taken from the faculty member’s base salary only; earnings from any additional temporary appointments (overloads) will not be included.

Benefit deductions, including contributions the Health Savings Account, will be taken from 18 of the academic year paychecks.  The first and last paychecks, along with those issued in the summer, will not have any benefit deductions.  Voluntary deductions for the 403b and 457b, as well as University contributions to retirement plans, will be taken out over 26 paychecks

Tax Treatment

The deferred funds are not taxed until the summer month when they are issued.  The deferred amount will be included on the tax statements (W2) during the year it is paid, not in the tax year it is earned.

Frequently Asked Questions

Please note: This Q&A is a brief summary of the 12-Month Pay Plan deferred compensation and its attributes. It is not intended to provide you with tax advice. You should consult with your own advisor regarding any tax implications of your election to defer salary over 26 pay periods.

The 12-Month Payment Program is open to full-time faculty members with an academic year appointment (i.e., F1-Tenure Track; F3-Contract).

  • faculty enrolled in the early retirement program
  • faculty who are on sabbatical
  • part-time contract faculty
  • full-time semester contract faculty and
  • individuals who earn more than $280,000 in an academic

No. This optional program lets you spread your academic year base salary over 12 months (26 pay periods), giving you a constant income stream. Electing the 12-month plan simply spreads the 20 biweekly pays over a 26 biweekly time frame.

Yes. Enrollment is restricted to faculty members whose academic year salary is $280,000 or less. The IRS defines this limit.

To enroll, please sign and date the Twelve Month Payment Program Opt In/Out form and return it to the Human Resource Service office.

No. The 26 pay period agreement will be in effect as long as you continue as a full-time academic year faculty member, unless the University withdraws the privilege or you complete the Twelve Month Payment Program Opt In/Out form with the “stop deferral” box checked.

This cancellation notice must reach the Human Resource Services office by the established deadline immediately before the academic year it pertains to. The cancellation notice must be fully completed.

Your election for the academic year is irrevocable during the academic year, except when you leave the University. This is per the Internal Revenue Code; Ball State cannot make exceptions.

If your services with the University are terminated at a date other than at the conclusion of your normal appointment, the remaining balance of your academic year salary will be made in a lump sum payout, less applicable taxes and benefits.

The Twelve Month Payment Program Opt In/Out form must be returned to Human Resource Services (AD 350) no later than the first day of the initial academic year’s biweekly pay period.

For academic year 2019-20, the deadline is August 16, 2019.

Because these dates vary from year to year, Human Resource Services will publish deadlines on its website.

An amount will be set aside from each of your 20 paychecks during the academic year, August through the last academic year paycheck in May. Normally, these deductions will be equal amounts unless you receive a midyear increase. 

You will receive six biweekly checks during the summer months, distributing the deferred amounts from the academic year. Electing the 12-month plan simply spreads the 20 biweekly pays over a 26 biweekly time frame.

In keeping with IRS rules, the deferred funds are taxed during the summer month when they are issued. The deferred amount will be included on the tax statements (W-2) during the year it is paid, not in the tax year it is earned.

You can only withdraw from the plan at the beginning of the academic year. To withdraw from the plan, please complete the Employee Election section of the 12-Month Pay Plan Opt-In/Opt-Out Authorization form.

The Twelve Month Payment Program Opt In/Out form must be returned to Human Resource Services (AD 350) no later than the first day of the initial academic year’s biweekly pay period.

For academic year 2019-20, the deadline is August 16, 2019.

Because these dates vary from year to year, Human Resource Services will publish deadlines on its website.

If a participating employee dies, the money accumulated in the redistribution pay account will be paid to the estate or surviving beneficiary, according to normal payroll policies and procedures.

Benefit deductions, including contributions to your Health Savings Account, will be taken from 18 of the academic year paychecks. The last two paychecks, along with those issued in the summer, will not have any benefit deductions. Contributions to your 403(b), 457(b), and University contributions to your retirement account will be taken from 26 paychecks.

If you receive a summer salary, that salary will be paid over the appropriate summer pay periods, in addition to the deferred salary from the academic year. The deferred payments will be taken from your base salary only; earnings from any additional temporary appointments (overloads) will not be included.

Your tax withholdings will continue to be based on the latest W-4 that BSU Payroll has on file for you and will be calculated on the amount of wages paid, not the earned amount. Your W-2 will reflect only the wages paid during the calendar year, not the wages earned or deferred.

No. You will not have early access to monies deducted, per IRS regulations.

No. Interest will not be paid on the deferred amounts.

Please visit Human Resource Services in AD 350, call us at 765-285-1834, or send an email to humanresources@bsu.edu