Voluntary Deductions
Texas Prepaid Higher Education Tuition Program

Certain prepaid tuition or college savings contracts can be paid through a payroll deduction. The Texas Prepaid Higher Education Tuition Board (Board) administers the Texas Tomorrow Funds program, which includes the following IRS Code Section 529 plans:

Texas Guaranteed Tuition Plan (formerly the Texas Tomorrow Fund)
Texas Tuition Promise Fund
Texas College Savings Plan
LoneStar 529 Plan

Texas Guaranteed Tuition Plan

The Texas Guaranteed Tuition Plan is a plan administered by the Board that allows individuals to prepay college tuition and required fees at Texas public two- and four-year colleges and universities at today’s cost. The plan can also be used at Texas private colleges and universities, as well as eligible out-of-state colleges and universities.

The Board invests payments received from plan participants and uses the investment earnings and purchaser payments to pay college tuition and required fees for plan beneficiaries in accordance with their plan benefits.

Note: While this fund was closed to new enrollment in 2003, state employees may have existing accounts with authorized payroll deductions.

For more information, see the Texas Guaranteed Tuition Plan.

The Texas Tuition Promise Fund

The Texas Tuition Promise Fund is a prepaid tuition plan that opened in September 2008. It allows individuals to lock in the cost of undergraduate resident college tuition and required fees at today’s college prices.

With the Texas Tuition Promise Fund, an individual buys tuition units that represent a fixed portion of resident undergraduate tuition and required fees (1 unit = 1 percent of a 30 semester-hour academic year). Participants must purchase a minimum of one unit to establish an account. After that, contributions can be as little as $15 per payment.

For more information, including enrollment periods, see the Texas Tuition Promise Fund.

Texas 529 College Savings Plans

Texas College Savings Plan

The Texas College Savings Plan is a qualified 529 college savings plan offered through the state. The plan is a direct-sold plan, meaning that individuals can purchase a contract directly without having to go through a financial advisor.

The plan offers a number of different investment portfolios. Growth and withdrawals are tax-free if used for qualified higher education expenses. New applications and investments in the plan are accepted year-round.

For more information, see Texas College Savings Plan.

LoneStar 529 College Savings Plan

The LoneStar 529 College Savings Plan is another qualified 529 college savings plan offered through the state.

The plan is sold through financial advisors only. The plan also offers a number of different investment portfolios. Growth and withdrawals are tax-free if used for qualified higher education expenses. New plans can be opened year-round.

For more information, see LoneStar 529.

Multiple Contracts in Multiple Plans

State agency and higher education employees may have one or more separate contracts in one or all of the plans available. Agencies must set up a separate deduction for each plan for the sum of the contract amounts designated by the employee.

Deductions for all of the plans are considered post-tax deductions, meaning each deduction is taken after taxes are calculated.

Deduction Authorization

The Board is responsible for the creation and content of the following payroll deduction authorization forms:

Employer Authorization form — payroll deduction
Employee Payroll Deduction form

Employer authorization form

An Employer Authorization form must be completed by any agency establishing payroll deductions for any of the Board plans. This form allows for the collection of pertinent agency information in case future payroll deductions require employer assistance.

Agencies must submit a separate Employer Authorization form to each plan they intend to submit payroll deduction payments to.

This form is available for each plan via the websites listed above.

Employee Payroll Deduction form

To initiate a payroll deduction, the employee must complete an Employee Payroll Deduction form. This form includes important employee information, the monthly deduction amount and the account number(s) payroll deduction funds should be deposited to. A separate Employee Payroll Deduction form must be provided by the employee for each account in each plan to be included in the deduction.

The deduction may cover an unlimited number of separate contract accounts for any number of beneficiaries within the established rules of the prepaid higher education tuition plan.

A state employee may authorize a change in the amount to be deducted from his or her salary or wages by providing the agency payroll officer a revised Employee Payroll Deduction form that stipulates the changed amounts.

Neither the Comptroller’s office nor a state agency is liable or responsible for any damages or other consequences resulting from a state employee authorizing an incorrect amount of a prepaid tuition or savings account deduction. Furthermore, a state agency or institution of higher education is not required to accept a Payroll Deduction Authorization form if the agency believes the form contains an obvious alteration to the payroll deduction authorization form issued by the Board.

State agencies may reject an employee payroll deduction form if the form is:

Incomplete, contains erroneous data or is otherwise insufficient for the agency to establish the deduction in accordance with the form.
– or –
For an individual not employed by the agency.

Interagency Transfers

When a state employee transfers from one state agency to another, the agency the employee transfers to may require the employee to provide copies of the Employee Payroll Deduction form for payroll files, if the employee wishes to continue payroll deductions.

Timing of Deductions

All payments are due on the first of each month. If a payment is received after the contract due date of any month, the account owner may be subject to late payment fees. Therefore, necessary deductions to satisfy the full amount due on the employee’s account on the first of each month should be deducted from the prior month’s payroll.

It is the employee’s responsibility to ensure his or her deductions will cover the contract payment. Neither the employee nor the agency will receive a monthly invoice for payroll deductions.

Salary or Wages to Support a Deduction

State employees are solely responsible for ensuring their salaries or wages are sufficient to support a deduction for a prepaid tuition or college savings contract. If a state employee’s salary or wages are insufficient to support the total of the prepaid tuition contract accounts designated for deduction, then no part of the deduction will be made from the payment being processed. The amount that could not be deducted will not be made up by deductions from subsequent payments of salary or wages to the employee. This is considered an “all or nothing” deduction.

Agencies should not cancel the deduction because the employee’s salary does not support the deduction. If an agency is unable to make the payroll deduction from salary or wages according to the rules and within the timeframes established by this policy, the agency should advise the employee that it is the employee’s responsibility to make the payment and avoid the penalty for a late payment or nonpayment.

Alterations, Cancellations and Effective Date of Deduction Authorization

Agencies must take the deduction from the salary or wages paid on the first workday of a month. If a state employee does not receive a payment of salary or wages on the first workday of a month, the agency may determine which payment of salary or wages to the employee to take the deduction from.

Prepaid tuition contract deductions are only made once each month. A state employee may cancel a payroll deduction at any time by submitting a written authorization to the agency payroll office. Any changes regarding the prepaid tuition or college savings contracts must be arranged by the employee with the Board.

If a state employee submits a request to his or her state agency to cancel a deduction or a contract within a deduction, the agency must send a copy of the request to the Board within two weeks of the effective date of the request.

Cancellations and alterations must be processed no later than the first workday of the second month following the month when the agency receives the authorization. The agency shall notify the Board of the cancellation of any established payroll deductions within two weeks of the cancellation.

Payments of Deductions

Agencies determine the amount of payments due to a specific plan by totaling the deductions for all participating employees within a payroll document. A payment is then made to the receiving entity for each payroll document. Payments are in the form of deduction warrants for funds held inside the state treasury and checks or electronic funds transfers (EFTs) for funds held outside the state treasury.

An institution of higher education may make payments by EFT using an automated clearing house (ACH) format designated by the receiving entity for the payment records. The payment records will identify the account number and the amount for each contract.

Payments may not be submitted to the receiving entity before the effective date of the warrant or check, or the settlement date of the EFT.

For payrolls paid on the first workday of the month, the institution submits the EFT transaction for deposit into the state treasury no later than the fifth workday following the settlement date of the payment transaction.

Detail Reports

A state agency or institution of higher education that makes a deduction for an employee payable to the receiving entity must submit a detail report along with the warrant or check. Each check and detail report must be specific to the plan the payment is being made to.

Report content

The detail report must include:

Agency name.
Employee name.
Employee Social Security number (for each state employee who had a salary or wage deduction).
Account number.
Amount per account number of the deduction made for each employee.

The report must also list any adjustments for overpayment or underpayment, such as for cancellation and reissue. The detail reported must include each payment (positive and negative) within an account number for each employee and a report total that agrees with the warrant or check issued to the receiving entity.

The agency is responsible for ensuring that the report total exactly matches the amount of the warrant or check the report details. The agency must modify the report if additional adjustments to the details are required to match the warrant or check.

For warrants or checks paid on the first workday of the month

For warrants or checks paid on the first workday of the month, a state agency or institution of higher education must submit the detail report to the correct place of business no later than the fifth workday following the effective date of the warrant or check. The detail report must accompany the warrant or check.

For a deduction made on a supplemental payroll

If a deduction is made on a supplemental payroll, the agency or institution of higher education must submit the warrant or check for deposit into the state’s treasury and the detail report on or before the 14th of the month, or the following workday if the 14th is not a workday.

Where to mail the warrant or check and detail report

The warrant or check and detail report may be mailed to the following addresses, depending on the plan the deduction is for:

Plan	Payment Address
Texas Guaranteed Tuition Plan	Box 12018 Austin, TX 78711-2018
Texas Tuition Promise Fund	Box 44306 Jacksonville, FL 32231-4306
Texas College Savings Plan or LoneStar 529 Savings Plan	c/o North Star Financial Services Group, LLC P. O. Box 540010 Omaha, NE 68154

Refunding Excessive Payments of Amounts Deducted

If a state agency deducts more than the amount authorized by the employee, the overage may be recovered by offsetting the overage amount from a subsequent payment of amounts deducted for the organization. The agency may obtain a refund of the overage from the organization only if no subsequent payments to the organization are anticipated.

Example:

An employee authorized a $200 deduction. In January, an agency deducts $210 ($10 overage). In February, the agency deducts $190. The combined deductions for January and February will equal $400.

Learn more

To learn more about this payroll deduction, see Chapter 9, “Deductions,” in the USPS Process Guide or the SPRS Deduction Code Table.

Sources

Texas Education Code, Chapter 54, Subchapters F, G and H.

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