Employees Can Cash Out and Invest Unused Sick, Vacation Time
Employees Can Cash Out and Invest Unused Sick, Vacation Time
Do you allow your employees to cash out unused sick leave and/or vacation time at year-end? Do you have employees retiring who will get unused sick and vacation time paid to them at the end of their employment?
They can invest their unused leave into their Ohio DC account, and this income will not be taxed until it is withdrawn. Many school employees take advantage of this tax-deferral strategy.
It’s easy for your employees to do! Have them follow these steps or download this brochure to help with the process.
To defer year-end leave pay, have them ask the payroll manager for the dollar amount of leave available and the date it will be paid. Ohio DC must receive their request at least 30 days before their pay date, so call us at 877-644-6457 at least 30 days in advance. Many participants must complete this request in early November to take advantage of the December cash out.
If leave cash out is due to ending employment or retiring, the IRS requires the deferred cash out to be made within 75 days of the employee's termination date or within the same calendar year in which they terminate, whichever is longer. The request to defer their termination cash out must also be completed one month prior to that pay date.
Have your employees call our Service Center at 877-644-6457 to defer their leave pay.
Investing involves market risk, including possible loss of principal.