The FICA Alternative Retirement Plan Saves Eligible Employers Money

Why pay FICA taxes for part-time, seasonal, or temporary (PST) employees if you don't have to? Qualified employers can save the matching 6.2% of Social Security on PST wages with the FICA Alternative Retirement Plan; it is an alternative to Social Security under Internal Revenue Code Section 3121, available only to qualified government entities.

Don't worry if you aren't a qualified employer, PRG can assist you in obtaining information regarding your agreement to Section 218 of the Social Security Act.

Plan Advantages For You As An Employer

  • Saving the 6.2% of the matching Social Security portion of total PST payroll
  • Easy implementation
  • Limited on-going payroll administration
  • Website access for payroll data transfers
  • Annual employer statements
  • Ongoing plan support

Plan Advantages For Your Employees

With the FICA Alternative Retirement Plan, your employees gain more control of when and how they can use their money. Employee contributions are 7.5% pre-tax dollars with the FICA Alternative Retirement Plan, unlike the 6.2% after tax contribution to Social Security. Employee funds become available upon the employee's:

  • Termination of employment
  • Death or disability
  • Normal retirement age
Contributions to the FICA Alternative Retirement Plan are deposited into a group annuity contract which provides guaranteed interest and a guarantee of principal.

Potential Employer Savings

Annual PST Payroll Emloyer Savings
$50,000 $3,100
$100,000 $6,200
$250,000 $15,500
$750,000 $46,500
$1,000,000 $62,000
$1,500,000 $93,000
$5,000,000 $310,000

Here is how 6.2% equals 7.5% pre-tax:

Social Security FICA Alternative
Gross monthly wage $1,000.00 $1,000.000
Less 7.5% pre-tax contribution 0 $(75.00)
Taxable Income $1,000.00 $925.000
Less 15% Fed Inc. taxes $(150.00) $(138.75)
Less 5% State Inc. taxes $(50.00) $(46.25)
Less 6.2% FICA withholding $(62.00) 0
Less 1.45% Medicare $(14.50) $(14.50)
Net paycheck to you: $723.50 $725.50

For more information and to learn how your organization can benefit from a FICA Alternative Retirement Plan, please contact us.