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457(b) FICA Alternative
Frequently Asked Questions
1. What is
the North Texas School District Consortium 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 North Texas School District Consortium 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 North Texas School District
Consortium 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 North Texas School
District Consortium 457(b) FICA Alternative Plan?
The
contribution to the North Texas School District Consortium
457(b) 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withdrawn.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 North Texas School District Consortium457(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 North Texas School
District Consortium 457(b) FICA Alternative Plan.
7. Where are
the funds invested?
The
investments under the plan consist of a portfolio directed
by the Investment Advisory Committee of the NTSDC, with the
advice of their professional registered investment advisor,
TCG Advisors, LP.
The
current investment allocation is available on this website
under Investment Funds.
8. How do I
find out how much money is in my account?
You will
receive annual statements from PARS, the plan administrator,
outlining your account activity. You may also call PARS to
receive your account balance at (800) 540-6369
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.
*
If an employee is also a
participant in a defined benefit governmental plan (as
defined in the Internal Revenue Code Section 414(d)), he or
she may request a transfer from his or her account for (a)
the purchase of permissive service credit (as defined in the
Internal Revenue Code Section 415(n)(3)(A)) under such plan.
Updated:
January 21, 2008 |
