Accumulated Absence Buyout: Special Payment Plan

For districts that do participate in a Special Payment Plan, only State Income Tax is withheld. 

• Only State Income Tax is withheld .  The balance is placed into the employees TSA.
• The employee must have their State deduction enabled (NJ or PA) and at least one TSA deduction enabled.  All other deductions if present are ignored.
• The State tax deduction will follow any settings on the employee's 'Payroll Summary Screen.
• THIS MUST BE PROCESSED AS A SEPARATE PAYROLL.  IT CANNOT BE COMBINED IN A REGULAR PAYROLL

What is a Accumulated Absence Buyout or a 403(b) Special Pay Plan?

 A 403(b) Special Pay Plan allows school districts to manage the costs associated with employees who leave the district with unused sick and vacation time to cash in, or employees who are eligible for an early-retirement option. A school district can designate money as an employer contribution for deposit to an employee's 403(b) account instead of contracting for payouts.  The plan also allows the employee to save tax-deferred. The school district has control on the design of the 403(b) Special Pay Plan. 

 A Special Pay Plan allows employees to defer taxes on contributions and earnings until they choose to withdraw them. And, tax deferral helps employees maximize the compounding value and increases their ultimate retirement income.  After the School District establishes the Special Pay Plan, contributions (payments) can be made to the employees 403(b) program in accordance with the plan guidelines.  The 403(b) contributions are free from federal income tax withholding and are free from FICA / MEDI taxes. 

Accumulated Absence Buyout / 403(b) Special Payment Plan:

• Must be board approved
• For a specific amount of money
• Paid in contributions to a 403(b) Special Pay Plan over a number of years.
• Individuals do not need to be currently active employees of the district.  This procedure will pay an inactive employee.
• The only "tax" withheld is State Income Tax (SIT).  The balance is placed into the employees 403(b) account.
• The employee must have a SIT deduction and a 403(b) deduction.  All other deductions if present are ignored.
• The SIT deduction will follow any settings on the employee's 'Payroll Summary Screen.

Getting Started

The special payroll option for Absence buyouts is a district option.  You are not permitted to use both options.  This must be configured in the payroll setup screen prior to use. Contact your account representative if you do not know which option your district uses.

Adjust the Current Year Payroll Setup

Payroll > Setup > Payroll > select Properties for current year.  For districts that use Special Payment Plan, you MUST have this checkbox checked off:

How is a Accumulated Absence Buyout created in SchoolFi?

Accumulated Absence buyout is created on the Payroll→Setup→Other Earnings screen.

Click Add Other Earning to create the buyout earning code:

Accumulated Absence buyouts are assigned to staff members on the staff member's Personnel→Staff →Payroll→Other Earnings screen.

Only TSA's that are listed in the employees deductions are shown, if there is more than one, you can select which to use from the drop-down.

The entry is listed on the Payroll Casual Entry Summary report

Note that only State Income Tax is withheld, and the balance goes into the TSA

There is no check produced or Direct deposit as the Net is 0.  A paystub will be placed in to the employees portal.