457(b) FICA Alternative
Frequently Asked Questions

1. What is the Region 10 457(b) FICA Alternative Plan?

Legislation passed as part of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90) mandates that substitute, temporary and part-time employees participate in either FICA (Social Security Tax) or an alternative plan set up within the guidelines established by the Internal Revenue Service. The deductions for the FICA Alternative Plan (OBRA) are taken out of your paycheck in lieu of deductions normally made to FICA.

2. Who is eligible for the Region 10 457(b) FICA Alternative Plan?

You are eligible to participate in the Plan if you are an active employee and are not eligible to participate in the TRS Pension Plan.

3. How much do I contribute to the Region 10 FICA 457(b) Alternative Plan?

Social Security requires that the equivalent of 12.4% of an employee’s salary be contributed each month (6.2% employee, 6.2% employer). However, the FICA Alternative Plan requires only a 7.5% contribution split between the employee and the employer to a retirement account. The employer determines the contribution split.

4. What are the advantages of participating in the Region 10 457(b) FICA
    Alternative Plan?

The contribution to the Region 10 FICA Alternative Plan will be deducted from your paycheck on a pre-tax basis, so you are not taxed on the gross amount. Funds remain tax-sheltered until they are withdrawn. Unlike Social Security withholding, if your employment with your District ends, you may withdraw funds subject to the Internal Revenue Code distribution guidelines under a 457(b) Deferred Compensation Plan.

5. How do I participate in the Region 10 457(b) FICA Alternative Plan?

Enrollment in the Plan is automatic.

6. Do I still pay the Medicare portion of FICA?

Yes, Medicare withholding will be made from your paycheck in addition to the contribution to the Region 10 457(b) FICA Alternative Plan.

7. Where are the funds invested?

The portfolio is a fund similar to the one offered under the Teacher/Employee Retention and Recruitment Program (TERRP) managed by TCG Investment Advisory Services LP and the ESC Region 10 TERRP Investment Advisory Committee.

8. How do I find out how much money is in my account?

You will receive annual statements from JEM, the plan administrator, outlining your account activity. You may also call JEM to receive your account balance at (800) 943-9179.

9. How do I withdraw or rollover my money?

Upon termination of employment, attainment of retirement age, or in the event of permanent disability or death, you will have access to your account. You will also have access to your funds if you have a change of employment status at your District to a position covered by TRS if there have been no contributions to the account for two (2) years and the account balance is less than $5,000. If the account balance is greater than $5,000, the account will only be eligible for distribution due to termination, retirement, death or disability.