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General Pay

When an employee’s gross pay is insufficient to permit all deductions, the order in which authorized deductions are to be processed is as follows:

Retirement

Deductions for a defined benefit plan including Civil Service Retirement System/federal Employees Retirement System, Basic Benefit, Foreign Service Retirement System/Foreign Service Pension System Basic benefit, or other defined plans. This does not include salary off-set for re-employed annuitants since salary off-set is a reduction in and considered basic pay for the purpose of retirement and life insurance deductions).

Social Security Tax (OASDI)

 

Medicare Tax

 

Federal Income Tax

 

Basic Health Insurance Premium

This includes Federal Employees Health benefits premium - - pre or post tax - - or a premium for a similar benefit under another authority.

Basic Life Insurance Premium

This includes Federal Employee’s Group Life Insurance - - FEGLI - - or a premium for a similar benefit under another authority.

State income Tax

 

Local Income Tax

 

Collection of Debts Owed to the U.S. Government (see note below)

This includes tax debts, salary overpayments, salary advances, travel advances, debts that may or may not be collected, debts collected via the Treasury Offset Program, etc.), in the following order:

  • Continuous Levy under the Federal Payment Levy Program (tax debt);
  • Salary Offset (whether involuntary or required by a signed written agreement. For multiple offsets, the order is based on when each offset began with the earliest starting offset at the top of the order - - unless there are special circumstances as determined by the paying agency).

Court-Ordered Collections/Debts

In order as follows:

  • Child Support – for multiple orders, the priority is determined under 42 U.S.C. 666(b) and implementing regulations as required by 42 U.S.C. 659(d) (2);
  • Alimony Payments - if there are multiple alimony orders, the are prioritized on a first-come, first-served based, as required by 42 U.S.C. 659(d) (3);
  • Bankruptcy - if a bankruptcy court specifies a different order under Title 11, U.S.C., the court’s order must be followed;
  • Commercial Garnishments.

Optional Benefits

In order as follows:

  • Health Care/Limited-Expense Health Care Flexible Spending Accounts (i.e., pre-tax benefits under FedFlex);
  • Dental (i.e., pre-tax benefits under FedFlex);
  • Vision (pre-tax benefits under FedFlex);
  • Health Savings Account (pre-tax benefits under FedFlex);
  • Optional Life Insurance Premiums (FEGLI or similar benefits under another authority);
  • Long-Term Care Insurance Programs;
  • Dependent-Care Flexible Spending Accounts (pre-tax benefit under FedFlex);
  • Thrift Savings Plan (TSP) – (1) Loan Payments; (2) Basic Contributions; then (3) Catch-Up Contributions;
  • Other Optional benefits.

Other Voluntary Deductions and/or Allotments

In order as follows:

  • Military Service Deposits;
  • Professional Associations;
  • Union Dues;
  • Charities;
  • Bonds;
  • Personal Account Allotments (e.g., savings, checking accounts);
  • Additional Voluntary Deductions (first-come, first served basis).

IRS Paper Levies

 

Note: Priority of Deductions versus Net Pay Exclusions – The Order of Precedence determines which authorized deductions will take priority in calculating an employee’s salary payment when gross pay is insufficient to allow all deductions. This is not the same as determining the net amount of pay that is subject to a particular deduction. Pay applied toward certain other deductions may be excluded in determining net pay from which a deduction is made. However, this does not mean that those other deductions take priority in the order of precedence. For example:

    a. The Federal income deduction is deducted from the net amount of taxable pay. A TSP contribution is pre-tax; that is, it is excluded from taxable pay. However, the Federal income tax deduction takes priority over the TSP deduction in the order of precedence.

    b. A court-ordered alimony payment is deducted from the net amount of “garnishable” pay. A TSP contribution is excluded from the net amount of garnishable pay. However, the alimony payment takes priority over the TSP deduction in the order of precedence. (Garnishment is a statutory proceeding in which a person’s property and/or cash is taken and applied to the payment of a debt. State and Federal tax limit the amount of pay that can be garnished.)

Updated January 2009