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It has been mentioned couple of times in this site that faculty could be able to distribute their salary over 9 or 12 months. What are advantages and disadvantages of each? And can faculty who distribute their salary over 12 months work during the summer? Do they get 1 month vacation and sick leave? Any effect on taxes, health insurance, and deduction for benefits? Does it affect the amount of summer salary from the university or a funding agency?

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    I'd spend a 9-month distributed salary in 9 months and then starve for the next 3 months... Jun 1, 2015 at 10:50
  • Note there is a third form of appointment, which is the genuinely 12-month appointment.
    – Fomite
    Apr 23, 2017 at 8:32

4 Answers 4

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There may be some confusion here about the difference between 9 and 12 month appointments vs. arranging to have the salary for a 9 month appointment paid out over 12 months.

In the U.S., the typical faculty appointment is a 9 month appointment. Under this arrangement, a faculty member is required to be present on campus and teaching (and doing research and service) from September through May. They typically do not have formal vacation or sick leave but in practice can stay home (and cancel classes) if sick. They can also go on personal travel when classes are not in session. Faculty don't have to formally request time off as long as they attend to their responsibilities.

In this system faculty do not have to work over the summers, although many faculty do teach summer school or work on research grants and earn additional salary over the summer. Faculty will also often work on unfunded research projects over the summer.

Many faculty with 9 month appointments choose to have their annual salary paid out over 12 months. This doesn't create any obligation to work over the summer and has no significant tax consequences, but it is more convenient for household budgeting since summer salary can be quite variable and unpredictable from year to year.

For example, I just learned today that I will be able to earn a month of summer salary teaching a course that starts on June 8. I'm still waiting to hear if some research funding for this summer will come through. I've designed my personal budget so that I'm not dependent on summer salary, so I have my 9 month salary paid out over 12 months.

12 month appointments are quite common for academic administrators and some full time researchers. These typically do accrue sick leave and paid vacation, which has some advantages but also has some disadvantages such as having to explicitly request time off.

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    There is actually a bit of tax consequences, since withholding is determined based on what is earned in individual pay periods. So you will pay more tax "up front" if the payments are distributed over 9 months instead of 12. So you may need to increase the number of exemptions if you want to avoid giving the IRS an interest-free "loan."
    – aeismail
    May 31, 2015 at 21:35
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    Yes, that was the reason that I said no significant tax consequences... May 31, 2015 at 21:37
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    To clarify things a bit- when a faculty member on a 9 month appointment has their annual salary paid out over 12 months, then any summer salary for research or teaching results in extra pay during the summer. May 31, 2015 at 21:51
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    @aeismail I think the withholding should come out the same--since you are making and being taxed on the same amount of money, paid over the same number of checks. You're not actually drawing new salary over the summer when you take the 12 month deal, you're just being paid "deferred earnings" which are already post-tax.
    – user10636
    Jul 11, 2016 at 0:57
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    @aeismail I also love your optimism about my earning potential.
    – user10636
    Jul 11, 2016 at 1:01
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In the US, there are no tax implications behind distributing a 9-month salary over 12 months. If you have a 9 month appointment, you can work other jobs those 3 months, or get summer salary from a granting agency. However, if you have a 12 month appointment, then your university will probably not allow you to take a second job (though you may be able to arrange to buy some of your "time" to work on a grant). Faculty usually do not get "vacation" per se, they just go on vacation when they feel they have the free time (during one of their 3 free months, technically). However, in strongly unionized arrangements, vacation and sick leave may be more relevant. The advantage of 12 month distribution is that you get a regular amount of money flowing in to your bank account and you don't have to be careful to leave enough in savings to survive the summer.

[EDIT] The comments point out the possibility of micro-(dis)advantages to the employee in spreading salary over 12 months. I suggest that we need a full analysis of all of these effects. For example, employees usually make some contribution to the insurance scheme, which is usually divided evenly over 12 checks. If you aren't paid over your off 3 months, you would have to have set aside money to cover insurance during that time. This could get bureaucratically complicated, w.r.t. factoring in the employer contribution, and might necessitate increasing the employer contribution during salaried months to balance the lack of employer contributions during non-salary months. There would also be administrative costs to the university involved in processing monthly insurance contributions from employees (assuming that employees don't just end up on their own insurance-wise during their off months). Given the various unknowns, I'd want to see a detailed economic analysis of the effect of 9-month and 12-month payouts for 9-month appointments, before concluding that one has a monetary advantage over the other.

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    So the point of 12 months payment is just to have 12 salary a year? Faculty should be able to manage their finances they receive during 9 months to cover 12 months.
    – Thomas Lee
    May 31, 2015 at 21:04
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    I agree that people should be able to manage their finances, but some people seem to need lifestyle management assistance.
    – user6726
    May 31, 2015 at 21:39
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    Paying the 9-month salary over 12 months also allow the university to better manage its finances.
    – JeffE
    Jun 1, 2015 at 2:22
  • @JeffE The university will get interest free loan, but I assume there will be some benefits in return, possibly some pre-tax benefits
    – Thomas Lee
    Jun 1, 2015 at 11:03
  • For some real numbers on this "interest free loan," for a faculty member making $60,000 a year this would come out to less than $500 annually at current market rates. Or roughly $42 a month. If you're hamstrung by that gouging my suggestion is that you haggle and haggle hard!
    – Raydot
    Jun 1, 2015 at 20:38
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I use the 9 to 12 month salary distribution as I do not work full time during summer anymore. With current saving interest rates at 1% (e.g., capitalone savings account), for every $1000 take-home monthly salary, they may set aside $250 out of the paycheck every month to be paid during summer.

The interest you are giving away would be about $12 (Wrong calculations are made by other respondents as they use the time as 9 months on the whole amount they set aside for the whole summer). So if your 9-month take home salary is $45,000, you are just giving away $72 of your money. Now that is a dinner out for a couple and a kid nowadays, but I end up saving more as my budget gets reset to a lower amount for the rest of the year.

There is no substantial tax implication for me, as taxes are taken on the gross income and are distributed with no deductions in the summer.

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What everybody on here is forgetting or not aware of, is that you can get unemployment during the off months if you are paid on a 9 months basis. That could add up to over $7500 a year if you make 60000 a year.

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    I think that is probably false. If you have a contract for the past and the coming year, then you are likely cut off from the unemployment system in the US for a short hiatus. The law may have changed, but I once had to fight this out with the authorities. The logic is (or was) that you have an annual contract, but it is just paid out over 9 months.
    – Buffy
    Oct 20, 2019 at 10:44
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    This is not correct. You are on annual leave during the summer; you have not lost your job. (For example you are still covered by health insurance in the summer.) This is different for contingent faculty for whom the case for unemployment can sometimes be made.
    – Elin
    Oct 20, 2019 at 15:26

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