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Possible Social Security coverage of ceratin state employees covered b


Guest Steven E. Schanes
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Guest Steven E. Schanes

Given: A stste retirement system is excluded from Soc. Sec. coverage. In general, the state system defined benefit formula meets the IRS "safe harbor" test for exclusion from Soc.Sec. coverage. However, for some individuals, the state formula falls short of the "safe harbor" test. What is the Soc. Sec. status of such individuals?

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They must be covered by Social Security. There are regulations which say that coverage is measured for each employee, rather than overall for the employer. Some employers are specifically adopting separate safe-harbor-only plans for employees not covered by the regular retirement system, in order to deal with this issue.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Guest Steven E. Schanes

Your phrase "must be covered" is a nice one. How would that work? Does the employee calculate his own projected benefit, determine that it does not meet the "safe-harbor" test and then apply for Social Security coverage? Let me add, possibly, to the picture- suppose the public employer had had Soc. Sec. coverage and then opted out, adopting a plan of benefits that meets the test for some but not for others. In a DB FAS plan, the projected benefit could vary- possibly "crossing them safe-harbor line" for some but not others. Thanks for you help on this.

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The employer should be withholding Social Security taxes on those employees who are not covered by a safe harbor plan, and paying the employer's share of Social Security taxes on such employees. What to do if the employer does not meet its obligation in that regard is a major can of worms, which I don't think I can get into within the confines of a general message board.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Guest Steven E. Schanes

I appreciate your response. Are you aware of any IRS letters or any other documents which go to this issue? Is my impression that an employer is only liable for three years of unpaid FICA correct?

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  • 1 month later...
Guest Bill Wolf

Steve,

In Massachusetts all employees not covered by the state defined benefit plan must contribute 6.2% to an alternate social security account. The communitys 457 provider usually sets this up and provides the recordkeeping. Applies to employees who work <20 hrs. This satisfied the IRS as Mass is not a social security state.

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