Colchester FICA Alternative Plan

The
          FICA
       Alternative
       Retirement
          Plan

Savings to the Employer and a
Benefit for the PST Employee.
           Overview

A FICA Alternative Retirement Plan
  allows qualified Governmental
Employers to eliminate and save the
 matching 6.2% FICA Taxes on the
wages paid to Part-Time, Seasonal &
   Temporary (PST) employees.



               The FICA Alternative Retirement Plan
  Connecticut Plans

West Hartford Public Schools
  Town of West Hartford
 Trumbull Public Schools
 Plainville Public Schools
      Town of Vernon
  Vernon Public Schools
 Stamford Public Schools
     City of Stamford
         And More
           The FICA Alternative Retirement Plan
How does Colchester qualify?

  Many Connecticut governmental
entities did not withhold FICA taxes
prior to 1990 for Part-time, Seasonal
and Temporary employees (PST) as
 permitted by their 218 Agreement.



                 The FICA Alternative Retirement Plan
    Under the Omnibus Budget
Reconciliation Act of 1990 (OBRA)
 FICA was made mandatory for all
            employees.
              OR
 Every employee, including PST
employees, had to be covered by a
        retirement plan.


              The FICA Alternative Retirement Plan
       Employer Options
    A) Mandate Social Security for all
         PST Employees.
     B) Add PST employees to current
retirement plan for full-time employees
                  Or
            Implement a
  FICA Alternative Retirement Plan
       specified under IRC 3121.
                 The FICA Alternative Retirement Plan
        How does a
FICA Alternative Plan Work?
The PST employee contributes 7.5%
 pre-tax dollars to a specialized 457
plan versus the current 6.2% after-tax
   contributions to Social Security.
Medicare contributions do not change.




                The FICA Alternative Retirement Plan
       Employee Benefits
* Receives a 100% vested retirement
     account.
* Accounts earns a current market rate
     of interest.
 *Account is available upon
     termination of employment as
     a taxable distribution or as a
     rollover to another eligible
     plan.

                The FICA Alternative Retirement Plan
     Pay Check Comparison
   7.5% Pre-Tax versus6.2%?
                      FICA Alternative Plan   Social Security
Gross Check              $1,000                   $1,000
Less Pre-Tax 7.5%           $75                       $0
Taxable Income             $925                  $1,000


Less 15% Income Tax    $138.75                     $150
Less After-Tax 6.2%          $0                     $62
Less 1.45% Medicare      $14.50                  $14.50
Net Check               $771.75                 $773.50
          Cost Analysis

 Minimal cost to employer
 Little administration to employer

 Low Distribution cost to the PST
     employee. The employee will not
     get less back than 100% of
     their contributions made to their
     account.

               The FICA Alternative Retirement Plan
            Summary

  The FICA Alternative Plan saves the
  Employer 6.2%Payroll taxes for all
          PST Employees.

The Employee has more control of their
         Retirement Funds.



                The FICA Alternative Retirement Plan
    The
   FICA
Alternative
Retirement
   Plan


Thank you 