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Board approves tax-deferred payroll deduction plan allowing employees to buy STRS Ohio service credit pre-tax
Summary
The board adopted a resolution to permit tax-deferred payroll deductions for employees purchasing service credit under STRS Ohio, aligning STRS purchases with existing SERS practice.
Lebanon City Schools’ board on May 19 approved a resolution to adopt a tax-deferred payroll deduction plan that lets employees purchase past service credit under the State Teachers Retirement System (STRS) of Ohio on a pre-tax basis.
Why it matters: allowing pre-tax purchase of service years can lower current tax liability for employees buying service credit and bring STRS purchases into parity with how some other state retirement purchases are handled.
Board members asked for a plain-language explanation at the meeting. A presenter explained the policy: employees who have prior service years not credited to STRS may purchase that service; previously STRS purchases required after-tax payment but the new plan lets those payments be made through tax-deferred payroll deductions so the employee pays taxes when the retirement benefit is received.
“We already have this with SERS. We just needed to have it with STRS,” the presenter said. The board approved the resolution by roll call; members indicated unanimous support among those present.
Administrators said the plan does not change the underlying rules for who may buy service credit; it changes only the tax treatment of the payment timing. The board passed the resolution and staff will implement payroll-processing changes to accommodate the deduction option.
