About FICA Alternative Plans
Some public employers have created FICA alternative plans to provide all employees the opportunity to have retirement savings and to lessen the employer's tax burden. Depending on your plan demographics, substantial savings can be achieved by adding a FICA Alternative Plan to your benefit program.
Education Service Center Region 10 is pleased to sponsor this 457(b) FICA Alternative Plan with the following plan highlights:
- Social Security requires that you pay 6.2% of your earnings to FICA taxes. The FICA Alternative Plan requires a 7.5% contribution to the Plan but you will receive this money back plus earnings when you terminate your employment or retire. You will continue to contribute to Medicare.
- The Plan lowers your current income taxes since contributions to the Plan are made on a "pre-tax" basis, unlike Social Security withholdings, which are made on an "after-tax" basis.
- You are 100% immediately vested (meaning you own the money) on your contribution to the Plan.
- When you leave your employer, you can rollover your account balance to an Individual Retirement Account or another qualified retirement plan or take a cash distribution subject to taxation.
- There is no IRS penalty for taking a cash distribution prior to retirement.
- If you become eligible later for TRS, you can use your Plan account balance to purchase service credit.
- Plan assets are managed by a professional registered investment advisor, TCG Advisors, LP.
To get more information about the Plan or enrolling in the Plan, please contact JEM at 800-943-9179.