3121 FICA Alternative (Premier) Plan
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In 1990, the Omnibus Budget Reconciliation Act was passed. Government entities who exercised their Social Security Section 218 exclusion allowance were provided the option of giving their part-time, temporary and seasonal Employees a meaningful, defined contribution retirement plan as an alternative to Social Security.
Benefits To The Employer
Social Security contributions for part-time, temporary and seasonal Employees are eliminated. The Employer immediately begins saving the matching 6.2% of payroll for eligible Employees. Medicare contributions of 1.45% continue.
Benefits To The Employee
After-tax 6.2% Social Security contributions are replaced with 7.5% pre-tax Employee contributions (7.5% pre-tax is approximately equivalent to 6.2% after-tax). Earnings in a pre-tax account accumulate more rapidly since payment of taxes on the contributions and earnings are deferred. Employees earn market rate of return on their accounts and are 100% vested in the full account value with no penalty for withdrawal upon termination from employment.
The 3121 FICA Social Security Alternative Plan is typically structured as an Internal Revenue Code Section 457 plan. Therefore, there is no 10% penalty assessed if Employees take a distribution of their account balance before age 59½. Administration is provided by MidAmerica. MidAmerica, headquartered in Lakeland, Florida, provides administrative services for over 2,200 programs nationwide, representing approximately 600,000 Employees.
The Social Security Regulations require that participants in a Social Security Alternative program always received 100% of their principal contributions plus interest. Therefore, all contributions are invested in a guaranteed fixed annuity with American United Life Insurance Company, a OneAmerica Financial Partner. There are no surrender charges or fees to Employees if they take a distribution from their account.
Effective material is provided to communicate the Social Security Alternative Plan to your Employees. We will also assist in group meetings. All Employee needs are serviced from MidAmerica’s national service center through a toll-free number and website access. In addition, local representatives can be available for Employee meetings.
Employee Account Information
Periodic statements are provided to all Employees. Employees may contact MidAmerica’s service center at any time for up-to-date account balances, distribution information, or to ask questions.