Special reporting on the monthly transmittal is required any time an employee has earnings deferred for payment in a later month. For example, an employee may:
Special reporting is not required if an employee is paid all salary in the month in which it is earned.
When you defer payment of an employee's compensation, you must determine the amount of compensation (and the corresponding contributions) you have deferred each month. The following example shows how this can be accomplished for an employee who works for ten months (from September through June) but is paid over 12 months.
Note: If an employee is paid additional compensation for other duties, does not complete a contract, is given additional contracts, or makes other changes during the school year, you will need to make the necessary adjustments in your reporting to account for those changes.
Determine the amount of compensation you will pay the employee each month. In this example, the employee is paid over 12 months; divide the employee's total annual contract amount by 12.
Annual contract amount |
$43,200.00 |
Divided by months in the year |
÷ 12 |
= Monthly compensation paid |
$ 3,600.00 |
Determine the employee's daily or hourly rate of pay by dividing the employee's total annual contract amount by the number of days or hours the employee has been contracted to work.
| Annual contract amount | $43,200.00 |
| Divided by contract days | ÷ 180 |
| = Daily salary | $ 240.00 |
Or
| Annual contract amount | $43,200.00 |
| Divided by contract days | ÷ 180 |
| Divided by hours in day | ÷ 7.5 |
| = Hourly salary | $ 32.00 |
Determine the amount of compensation the employee earned in a given month by multiplying the daily or hourly salary times the number of days or hours the employee worked that month. (Include days or hours the employee was in paid status; e.g., paid holidays, vacation time, or sick leave.)
| Daily salary | $ 240.00 |
| Multiplied by days worked | x 21 |
| = Monthly compensation earned | $5,040.00 |
Or
| Hourly salary | $ 32.00 |
| Multiplied by hours worked | x 157.5 |
| = Monthly compensation earned | $5,040.00 |
Compare the monthly amount the employee was paid and the amount the employee earned. The difference is the amount of compensation that will be deferred.
| Compensation earned | $5,040.00 |
| Minus compensation paid | -3,600.00 |
| = Deferred amount | $1,440.00 |
Note: You will also need to figure the amount of contributions due on this deferred amount and report these deferred contributions when you report the deferred compensation.
How you report the deferred amounts of compensation and contributions will depend on the reporting method you choose. You can select either of two methods. With either method, you must always report the total compensation paid and identify the compensation by when it was earned.
With this method, you will add lines to your transmittal report each month to account for the deferred amounts of compensation and contributions from the preceding month. The chart on the following page shows how to use this method to report a PERS Plan 1 member with a 12-month contract of $43,200. Notice that:
With this method, you will wait until the last few months of the employee's contract year to account for the deferred payments from the preceding months. The chart on the following page shows how to use this method to report a TRS Plan 1 member with a 12-month contract of $43,200. Notice that:
When reporting deferred compensation and contributions, remember the following points: