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Division of Retirement and Benefits
Robert [email protected]
907 465-4469
Section 218 Coverage – Social Security & Medicare
HistoryHistoryHistoryHistory
• Before 1951: No coverage
• 1951: Section 218 added
• Coverage available
• Positions not under retirement system
• 1955: Retirement systems included
• Until 4/83: Termination possible
HistoryHistoryHistoryHistory
• 4/1/86: Mandatory Medicare coverage
• New hires
• 7/2/91: Mandatory Social Security
• Unless qualifying retirement system
• Since 1986: Tax deposits/941s filed with IRS
• Intent is to protect workers and families
Get IRS Publication 963!Get IRS Publication 963!• Complex provisions
• Provides good explanations
• Resources
• http://www.irs.gov/pub/irs-pdf/p963.pdf
218 Agreements218 Agreements218 Agreements218 Agreements
• Coverage Groups
• Absolute
• Retirement system Referendum required Police and fire positions
• Exclusions
•Mandatory
• Optional
Alaska 218 AgreementsAlaska 218 AgreementsAlaska 218 AgreementsAlaska 218 Agreements
• Original and 183 modifications
• Significant variations
• Retirement positions generally not covered TRS, PERS Divided vote option
• Several entities covered, then terminated
• State positions
Alaska 218 AgreementsAlaska 218 Agreements• Exclusions vary
• Election workers
• Students
• Part-time positions
• Elected officials
• Fee-based positions
• New hire notification
• SSA-1945
Your 218 AgreementYour 218 AgreementYour 218 AgreementYour 218 Agreement
• Reference copy in agency files
• Contact state Social Security administrator for interpretation
• Kay Gouyton
• (907) 465-5707
Determining CoverageDetermining CoverageDetermining CoverageDetermining Coverage
• Position covered under your 218 agreement?
• If yes, withhold social security and Medicare taxes
• Deposit withholding and employer match
Determining CoverageDetermining CoverageDetermining CoverageDetermining Coverage
• Position not covered by agreement
• Hired since 4/1/86? If yes, withhold Medicare tax
• Covered by public retirement system?
• If no, withhold Social Security and Medicare taxes
• Unless excluded services
Qualifying Retirement SystemQualifying Retirement SystemQualifying Retirement SystemQualifying Retirement System
• Used to determine if mandatory Social Security applies
• System that matches OASI
• Different standard than 457, 403(b) or 401(a)
• Details in rev. Proc. 91-40
Qualifying Retirement SystemQualifying Retirement SystemQualifying Retirement SystemQualifying Retirement System
• Defined Benefit Plan
•Minimum retirement payment of 1.5 X average of last 3 years pay X years of service
• Defined Contribution Plan
•Minimum allocation of 7.5% of pay
• Employer and employee funds count
• Earnings not included in 7.5%
• Reasonable earnings requirement
Qualifying Retirement SystemQualifying Retirement SystemQualifying Retirement SystemQualifying Retirement System
• Employee must meet all standards of the plan to be a participant
• Length of service
• Dates employed
• Age
• Special rules for part time, seasonal or temporary employees
• Contact IRS for determinations
Additional ConsiderationsAdditional Considerations• Elected or appointed officials
• Election workers
• $1500 threshold (same for 2010)
• Police and fire positions
• “Volunteer” firefighters
• Rehired annuitants
Additional ConsiderationsAdditional Considerations• Students
• Rev. Proc. 2005-11
•Military differential wage payments
• Accountable plans
ResourcesResourcesResourcesResources
• Your 218 Agreement
• Alaska state Social Security administrator
• Kay Gouyton 907 465-5707
• Robert Gregg 907 465-4469
• SSA Government Employer Web Page
• www.ssa.gov/slge/
• IRS Government Employer Web Page
• www.irs.gov/govt/fslg/index.html
ResourcesResourcesResourcesResources
• Qualifying Public Retirement System
• IRS-877 829-5500
• SSA Employer Web Page
• www.socialsecurity.gov/employer
•W2 Issues
• Tim Beard, Social Security Administration [email protected] (206) 615-2125