Deciding how much to have withheld.

Several factors can help you decide how much you want to have withheld for your TDP agreement.

• TDP requirements. The withholding amount must meet TDP requirements listed above. Once an agreement is signed, you cannot decrease or stop payments, even if your financial situation changes.
• Purchase cost/number of years purchased. In most cases, you can buy part of a year of service credit, up to the maximum amount you are eligible to buy.
• Career plans. Plan to have the agreement paid off well in advance of any career change or retirement. Once you stop working for an employer who is a member of the Public School Employees Retirement System, the TDP ends and you can't purchase the remaining balance.

  If you pay this amount per pay period You will pay off the balance in about And you will pay about $157 (minimum scheduled deduction) 15 years $48, 679 ($18,679 in interest) $200 9 years $41,658 ($11,658 in interest)

• Cost of interest. Although you must pay off the TDP agreement in less than 15 years, you can reduce interest charges by paying more than the minimum amount required. For example, if you pay an extra $43 a pay period toward a $30,000 balance, you will pay off the agreement six years earlier and save $7,000 in interest.

Use the TDP Calculator to review how different payment options will affect your TDP agreement.
 

TDPs and 403(b) plan deductions.

TDP deductions do not count as 403(b) deductions nor do they count against 403(b) deductions. Since TDP deductions are taken before 403(b) deductions, however, they lower the amount of your compensation available to be contributed to 403(b) plans.

How to sign up for the TDP program.

If you decide to purchase any or all of the service credit shown on your Member Billing Statement through the TDP program, complete the TDP authorization form that accompanies your billing statement. Your payroll office can help you complete the form. 

Return the agreement to your payroll office with a copy of your Member Billing Statement (be sure to keep copies for your records). The payroll officer will review, sign and date the form, and take action to begin your payroll deductions. Watch your pay stubs. It is your responsibility to ensure that the payroll deductions have started and are correct.

Note: If you intend to purchase out-of-system or nonpublic educational service from different employers, you can ask ORS to combine billing statements of a similar type before you initiate a TDP agreement. That way, you'll have one TDP Agreement with one scheduled deduction per pay period rather than multiple TDP agreements, each with its own separate minimum scheduled deduction per pay period.

An important note about due dates. 

The date your payroll officer signs the form is the effective date of the agreement. That date must be on or before the "due date" shown on your Member Billing Statement, or the agreement is invalid. If the due date has passed before your enrollment is completed, you must obtain an updated Member Billing Statement from ORS and complete a new TDP Agreement form.   

Increasing your scheduled deductions. 

Your TDP agreement is established for a fixed deduction amount per pay period. While this deduction cannot be stopped or reduced, you can increase the amount of your payroll deduction. For information on how to increase your deduction, download the Supplemental TDP Agreement (R0654C).  

What to do if your employment changes.

Your TDP agreement remains valid while you are on unpaid leave or temporarily off payroll for any reason, as long as an employer-employee relationship exists. Your payroll office should resume your deductions when you return to work.

If you change your employer to another Michigan public school, you must complete a TDP Addendum (R0625C) to continue the payments. The addendum must be signed within 90 days after you have terminated with your previous employer to retain the service credit cost from your prior agreement. It is your responsibility to provide your new payroll office with a copy of your previous agreement.

If 90 days have passed, you'll have to set up a new TDP agreement. Ask ORS for a recalculated Member Billing Statement and complete a new agreement form as described earlier in this section.  

If you leave public school employment with a TDP balance.

If, for some unforeseen reason, you find that you must leave public school employment before you're able to pay off your TDP balance, you have a few options for the remainder. How you handle it depends on whether you need the credit to qualify for a pension and insurances. 

• Get partial credit. Prorated credit will be granted for universal buy-in, military, maternity/paternity/child rearing, nonpublic education, and post-1974 out-of-system public education employment purchases.
  
  Prorated credit will not be granted for TDP agreements not paid in full for pre-July 1981 sabbatical leave, pre-1974 out-of-system public educational service, state of Michigan service, repayment of refunded contributions, or weekly workers' compensation. To receive credit for these service credit types, your balance must be paid in full.
• Increase your scheduled deductions. You can increase your deductions each pay period, or request that all or part of any final compensation, such as accrued leave payoffs, be applied toward your purchase. For either option, work with your payroll office to complete the Supplemental TDP Agreement (R0654C) before you terminate. Remember that required deductions such as social security and Medicare taxes are withheld from any final compensation first, so have your payroll office help you figure the net amount you have available.  
• Direct payment or plan-to-plan transfer. You can make a direct payment, or you can "roll over" funds from a qualified retirement plan such as a 401(k) or 403(b) plan to pay off your TDP balance (see Purchasing With a Qualified Plan-to-Plan Transfer). To apply a qualified plan-to-plan transfer or direct payment against your TDP balance, you must either: (1) have filed a retirement application, or (2) have a bona fide termination of your employment within 90 days after ORS receives payment. ORS must receive the funds by the expiration date of the billing statement or your termination date, whichever is first.

It is also important to coordinate your payoff with ORS and your school because your TDP balance changes with each pay date. Your payroll officer can help you determine your balance. Use the worksheet at the end of the Payoff Payment Options for a TDP Agreement (R0518C) to help you figure your payment options. Once you have determined your balance and your payoff payment method, complete the payoff agreement.