Mandatory Employee Contributions to MPP Plan

[Guest long]

Does anyone know if a mandatory employee contribution to a money purchase pension plan (as a condition of employment) is subject to FICA or income tax? In other words, is the contribution treated as an after-tax employee contribution or an employer contribution (which is not subject to income or FICA taxes)?

[Guest Pensions in Paradise]

After-tax employee contribution.

[mbozek]

If the employer is a govt entity, mandatory contributions can be excluded from income tax as an employer pick up under IRC 414(h)(2).

[Guest TrustMe401k]

We have several clients with postal trucking contracts who have money purchase with required contributions and these are NOT subject to FICA.

[GBurns]

USPS contracts are under the Service Contract Act (DBRA) and have their own prevailing wage rules that are not applicable otherwise.

[Guest long]

I agree they are after-tax contributions -- no FICA or income tax exemption applies. See e.g. Public Employees Retirement Bd. v. Shalala, 153 F.3d 1160 (10th Cir. 1998) and PLR 20030500.