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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7407
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a Retirement Plan where FICA is being applied to it.

Resolved Question:

I have a Retirement Plan where FICA is being applied to it. I requested a reason and they sent me the following response-after I sent them a copy of my Retirement Plan which they didn't have.
Their response was:The old NQ employer funded retirement plan that you inquired about is covered under the General Timing rule and taxed when paid.

Only the employee funded NQDC plan administered with ING is taxed for FICA/Med in the year of service under the Special Timing Rule.

Reg §31.3121(v)(2)-1. Treatment of amounts deferred under certain nonqualified deferred compensation plans.

I would like to send you a copy of the plan to see if you agree with their assesment of it, but what I really want to know is, do I continue to pay FICA once I am fully retired and collecting Social Security if what they say is true? And...since I elect joint and survivor options and should I die first and my wife continues to receive the benefit, dies FICA continue to be applied?
Currently, I am collecting my pension, just started collecting Social Security (I turnedd 66 in January, 2013 and received my first check in February) and still working full time and plan to for at least another year.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,


Once an amount deferred under a nonqualified deferred compensation plan is taken into account as wages under the special timing rule, the nonduplication rule provides that neither that amount nor the income attributable to that amount is again treated as FICA wages.


Benefits under a nonqualified deferred compensation plan are subject to FICA tax when
actually or constructively paid to the extent the benefits relate to an amount deferred
that was not previously taken into account under the special timing rule.
If your contributions were ,and and the amount was not subjected to FICA withholding st the time of the contribution then they will have FICA withheld on those amounts when distribution occurs. This will happen even if you are collecting Social Security at the time of the distributions.
The fact that you are collecting Social Security does not effect the requirement to withhold on amounts that you were paid and then had contributed to the retirement fund in the past.

Customer:

So the FICA tax will continue throughout the payout including after my death and my wife continues to receive the benefit?

Robin D :

There were some provisions for widows payments but it was my understanding that those were for widows that received the payments before 1999. You would need to ask the payer directly about the widows portion. If it is just a continuation of the original then iti s most likely the FICA will be applied.

Customer:

Thanks.

Robin D :

Your positive rating is always thanks enough.


If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7407
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 8 other Tax Specialists are ready to help you

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