Definition of SS Integration

[Guest JB2]

I tell clients that it's a provision where the IRS acknowledges the fact that your SS benefit decreases as your income increases. The integration is the level of income you pick to determine which employees you want to receive a "larger piece of the profit sharing pie."

Also tell them that it is one of very few qualified plan provisions that permits the plan to favor the highly paid people (as long as they stay within IRS guidelines of course).

[Guest le190]

I often have clients who request a simple, easy to understand description of SS Integration: what it is, how it benefits the plan, who it benefits, the implications of using it, etc. Does anyone know where to find a good way to describe it AND make the client understand it? Any help is greatly appreciated. Thanks.

[LCARUSI]

Assuming a DC plan is integrated at the SS wage base level, I explain it as follows:

Employees under the wage base receive SS benefits with respect to their entire income - and the benefits are funded by the employer's FICA contributions. The employer's contributions are with respect to the employee's entire compensation.

Employees over the wage base receive SS benefits with respect to part of their income (up to the SS wage base). And the employer's contributions are with respect to only part of the employee's income. Therefore, integration allows the employer to make greater contributions with respect to income over the wage base to compensate for the fact that the employer makes no FICA contributions with respect to income over the wage base.

[Guest Matthew 15]

Try the Pension Answer Book Q7:1. This may suit your needs. If you don't have access to it, let me know and I will post it for you (of course with all credit given to Aspen Publishing).

[Dave Baker]

Try my shareware program -- the Inte-greater -- and see how an integration formula affects the employees' accounts as you vary the contribution level (for a corporate-sponsored profit sharing plan).

The program runs through 102 possibilities for an integration level (0 to 100% of the social security taxable wage base, and 80% plus $1) to determine which level is best for the favored employee(s) (typically the owner of the sponsoring business).

It's $25 shareware. A couple of hundred people have registered it. (Heck, four or five have even paid for it. http://www.benefitslink.com/gif/smile.gif)

See https://benefitslink.com/cgi-bin/inte-greater/