CAR, can you hear the trees rustle? I think we’re whistling in the wind here, as usual. As I’ve stated here a few times before, the average Joe6P Pigg is clueless as to how much a typical public employee has taken out of his gross pay in retirement contributions, which may also be deducted in combination with FICA tax!
I’ll use local agencies which I’m most familiar with for examples here and divide them by “Class C” groups (safety-worker units who are NOT eligible for SS) and “General” groups (incl all other public bargaining units, unclassified and unrepresented groups) who ARE eligible for SS. Bear in mind that the “General” groups have BOTH a retirement contribution PLUS FICA tax taken from their biweekly pay. Safety groups have only the 1.45% Medicare Tax portion (abt 19% of FICA tax) PLUS their retirement contribution taken from their biweekly pay.
Note: About 95% of current SDCERA workers are in “Tier A”.
Local public General workers’ contributions range from 5.52% to 14.88%, depending on age of entry and agency employed by.
According to these tables, the average local “safety” public employee has approx 14.04% taken from their biweekly gross pay (up to $106,800) for “retirement” contributions and the average “general” public employee has 10.4% taken from their biweekly pay PLUS FICA (on a usually smaller salary than safety workers). (Remember that unclassified “Mgmt” employees have a FICA cap at $106,800 annually.)
Note: These figures do not reflect any (minuscule) “retirement offsets” paid for by the employer which had to be negotiated at the bargaining table (not very likely in recent years).
[quote=sdrealtor] I asked what the employee pays not what the employer pays…[/quote]
As a “non-safety employee,” let’s use public servant “Kenneth R. Justice” (age 49) for an example here, shall we? His classification is Court Clerk III and he has 23 years in service. He’s been stationed in the Honorable Dia Bolical McGruff ‘s courtroom for the last 7.5 years.
Base biweekly pay: $2,378.04
Retirement contribution: -350.05
Current FICA deduction (incl Medicare): -134.36 ($181.92 as of 3/1/12)
Balance (from which state taxes and benefits get deducted): $1,893.63
[quote=sdrealtor] . . . I would gladly give up SS if I could self direct the money I contribute every year.[/quote]
sdr, may I suggest you now pick up (your ubiquitous) glass here, to sample – – go ahead … it’s a “small” 750 ml bottle:
to assist in your simultaneous “pondering” of the following:
The 7.65% FICA tax paid by both employer and employee includes the 1.45% Medicare Tax (6.2% to SS and 1.45% to Medicare). Both portions total 15.3%. In all of 2011 and the first two months of 2012, both the employer and employee contribution is only 4.2% for SS, result in a total 5.65% contribution including Medicare Tax. For instance, YOU, who claims to be “self-employed” would pay FICA only on your NET “profits” shown on your Schedule “C” of your Form 1040 AFTER you take all your numerous deductions from the “income” shown on your annual 1099 your rec’d from your broker (presumably office expense, room at your residence, cell phone, auto and gas expense, Board fees, MLS fees, licensing fees, continuing ed, etc, etc).
Don’t you have an “MBA” (to help you figure all this out)?? ;=D
[quote=AN] I would gladly do it too, if I can keep my 15% I pay to SS.[/quote]AN, an “employee” (such as yourself) pays 5.65% (in Jan 2011 thru Feb 2012) or 7.65% of your GROSS pay towards FICA. Go figure . . .
FICA contributions currently cap at an annual gross W-2 pay (or self-employed net “profit”) of $106,800 making the current maximum Social Security contribution $6,621.60. The current annual SS cap was lower in previous years.
FICA Limits 2012 — Likely To Return to 2010 Limits
2011 saw temporary tax cuts for employees; there was a 2% reduction of FICA taxes for all employees. Typically, FICA taxes are collected on 7.65% of earnings. Prior to 2011, the rate has been 7.65% since the 1990s, but with the tax break, the 2011 FICA tax rate for employees was reduced from 7.65% to 5.65%.
The FICA tax rate was reduced temporarily for employees by 2% for the year of 2011 and the reduced rate is scheduled to end March 1, 2012.
2010 FICA Tax Rates and Social Security Limits
In 2010, as already mentioned, the FICA tax rate was a total of 7.65% of the worker’s gross income. 6.2% of this went to Social Security and 1.45% went to MedicareThe Social Security tax could be collected on up to $106,800 of income making the maximum Social Security contribution $6,621.60. .
FICA Limits 2011
In 2011, the 2% tax break came from the portion of the tax that contributes to Social Security. This reduced the Social Security rate for employees only from 6.2% to 4.2%. The amount of taxable income remained at $106,800 so the maximum employee contribution was reduced from $6,621.60 to $4485.60.
FICA Limits 2012
The FICA tax rate was reduced temporarily for employees by 2% for the year of 2011 and the reduced rate is scheduled to end March 1, 2012. After that, the FICA limits for 2012 are expected to return to 7.65% of gross income, the same as they were in 2010.
Application of FICA Limits 2012
Fred is an employee at your company. His gross income is $75,000. What does the 2011 tax break and the likely return to 2010 rate mean to him? At the 5.65% rate, Fred payed $4327.50 in FICA taxes for the 2011 year. In 2012, if the rate returns to 7.65%, he will pay $5737.50. This means he will see a roughly $120 a month decrease in his take home pay.
Got a calculator handy?? If not, pull out your pocket protector and toss it!! It’s of no use . . .
And while you’re sipping (and noticing the pronounced blackberry notes of “MR Reserve 2006 Cabernet”), do an exercise comparing the “private sector” employees’ SS contributions to public employee contributions towards their much-maligned “defined benefit plan.” ; = >
And . . . no need to “rush.” How’s about you take two Exedrin and get back to us tomorrow morning with your “findings,” ‘kay??
The Piggs will be waiting with baited breath . . .
[quote=sdrealtor]…FYI, tomorrow I am picking up tax returns from another public servant I am doing a short sale for. I hope I can stomach them.[/quote]
Why . . . does this mean you have lost all respect for your next “squat-SS `victim’”?? Or perhaps you believe that they have a “questionable” hardship story? Which is it . . . exactly???
pri_dk and paramount . . . again, I implore you both to APPLY forthwith in effort to board this “gravy train:”
