Procedure for Stopping a Pending Direct Deposit Transaction (2024)

The file for ‘pending’ direct deposit transactions is created soon after the regular MO/BW payroll process is confirmed. This is usually every other Monday for the BW payroll and around the 24th of each month for the MO payroll. It is always at least 3 days prior to the check date. Review the Calendars page for a full listing of processing dates and deadlines.

The wait time necessary before reissuing a payment is determined by the date the bank is notified to delete or reverse the transaction. Payments can be deleted or reversed. If the delete action is requested at least two full business days prior to the check date, an on-line check should be able to be processed prior to the original check date. If the reverse action is requested with less than two business days prior to the check date, confirmation will not be received until after the regular check date.

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When to Stop a Pending Direct Deposit

Below is a list of approved situations in which stopping a pending direct deposit payment is necessary:

• Campus/department realizes that an employee will be overpaid and chance for repayment will be unlikely (termination) or overpayment amount is grossly unreasonable.
• The employee contacts UCO Payroll or your Central Office concerning a personal situation and they want to stop the payment or need to close the account. This does not usually involve avoiding bank fees.
• Campus/department receives notice of employee death prior to check date.
• The employee contacts us to report possible fraud activity on their account. Ideally, the bank will take care of this problem for the employee by opening another account.

Considerations Before Stopping a Payment

• REVIEW PAYCHECK DATA. You first need to determine if the total payment is unearned and the complete direct deposit should be reversed OR if multiple jobs are involved and a partial payment is due to the employee so another transaction will need to be processed manually by the payroll office.
• Is this person still employed and will you be able to collect the overpayment from a future check? It may NOT be possible at the end of the calendar year. Will the employee receive any more checks in the current tax year?
• How large is the overpayment? If the employee is still working and is willing to have it deducted from a future check(s), it is much easier to process an overpayment using adjustment vouchers.
• If you stop the transaction for a partial payment, you MUST process an on-line adjustment voucher to replace the payment. Deductions will not be correct if you enter the adjustment in the off-cycle payroll.
• The your Central Payroll Office must review the deductions that were withheld from the payment. If the employee has tax deferred annuities or wage assignments (such as child support, garnishments, etc.), the deduction may have to be considered an overpayment if the employee wasn’t due any wages for the pay period.
• You will NOT be able to request a replacement payment for the employee until we receive confirmation from the bank that the transaction was returned to IU. Many times this will not be until the actual paydate.
• The employee MUST be notified that you have requested to stop their direct deposit to avoid bank fees. The employee may have setup auto-withdrawal or bill pay from their account that needs to be considered.
• If the employee’s account is already overdrawn it is unlikely that the bank will return the transaction.
• If the transaction is going to an account that has been closed many times the bank will reopen the account instead of returning the transaction.
• Transactions entered in the off-cycle payroll process are not considered ‘pending’. They are effective the day we send the file so there isn’t a window of time where the transaction can be deleted. We may or may not be able to retrieve those transactions depending on the employee’s account status.

After considering all of the above, if you determine it is appropriate to request a stop payment please complete the Stop Pending Direct Deposit form.

Reversing Transactions

If the Total Direct Deposit was paid on a single job record and is unearned and no payment is due from any department for this period, the total transaction can be reversed.

1. You must have the Name, ID, Check Date, Advice number, and NET pay to be sure you have the correct payment.
2. Employee must be notified that they will NOT be receiving a direct deposit on the regular check date. The department requesting the stop is responsible for informing the employee.
3. Review DEDUCTIONS – if employee had garnishment deductions withheld, you MUST contact the Garnishment Coordinator. The garnishment payment may have already been sent to the court. If so, this will cause an overpayment.
4. When notification is received from the bank, the On-Line Check Coordinator will be notified and the original payment will be reversed in HRMS.

If the direct deposit transaction amount is incorrect or includes payments from multiple jobs and/or departments, another transaction will need to be processed for payment after this direct deposit is reversed:

1. You must have the Name, ID, Check Date, Advice number, and NET pay to be sure you have the correct payment.
2. If employee is receiving payments from multiple job numbers (or departments), ALL departments MUST be aware that direct deposit is being stopped. The requesting department or payroll office should contact or send emails to all concerned departments.
3. Employee must be notified that they will NOT be receiving direct deposit on the regular check date. The department requesting the stop is responsible for informing the employee. They should be told that an on-line check will be processed for this check date and determine if it should be mailed or picked up in the payroll office. The employee should be aware that they may have to wait for payment until bank verification occurs.
   • If the employee received payment from two departments on the original check, the payroll office should enter an on-line adjustment voucher for the second department to process a payment at no charge. This can be handled as an exception to the on-line check rules. It doesn’t have to be picked up and can be mailed to the employee home address since the department did not request an on-line.
4. Review DEDUCTIONS – verify that the adjustment transaction will be enough to cover the same deductions as the original payment. If not, contact [email protected] for assistance. Tax deferred annuities (TDA) are calculated as a percentage based on the taxable gross amount so it is correct for these deductions to be less than the original payment. The same garnishment amount should be withheld if possible.
5. When notification is received from the bank, the original department will need to process an adjustment voucher to process an on-line check for the correct payment. On-Line Check Coordinator will be notified and the original payment will be reversed in HRMS.

Employee Requests Direct Deposit be Stopped

1. If an employee contacts our office requesting to stop a direct deposit due to a problem with their bank account, UCO Customer Service will usually talk with the employee to determine the plan of action. Depending on the situation, they may instruct the employee to reopen their account or contact the bank for assistance. If they determine the payment should be stopped, the payroll office can complete the “stop pending” form. In this situation we need to be aware that the bank may NOT be willing to reverse the transaction if we are within the two business day window or if the employee has unpaid bank fees.
2. When notification is received from the bank, the On-Line Check Coordinator will be notified and the original payment will be reversed in HRMS. Bloomington or Indianapolis will process an on-line check after notification from UCO Customer Service and the employee will be notified that the check is available for pickup.