State of Florida FICA Alternative Retirement Plan for OPS Employees
Questions and Answers for Current Other Personal Services (OPS) Employees
Question 1:
Why is the state adopting this plan and what kind of plan is it?
Answer:
On July 2, 1991, a federal law went into effect that, for the first time, required OPS
employees to participate in Social Security if they did not meet any of the exemptions in
the law or if they were not enrolled in their employer’s public retirement system. Because
OPS employment is not covered by the Florida Retirement System and the state had no
other eligible retirement plan in place for OPS employees at the time this federal law
went into effect, the state began enrolling these employees in Social Security.
Now the State of Florida has adopted a retirement plan that meets all the federal
regulations to be an alternative retirement plan that replaces mandatory Social Security
for OPS employees. It is called the State of Florida 401(a) FICA Alternative Plan and,
as a participant in this plan neither you nor the State will be charged 6.2 percent of your
OPS wages1 for the Social Security portion of the Federal Income Contributions Act
(FICA) payroll tax. Instead, you will contribute 7.5 percent of your OPS wages to a
retirement account that you personally own and, because your contribution will be
deducted on a pretax basis, the impact on your take home (net) pay should be small.
Question 2:
What are the advantages for me with this new plan?
Answer:
The new retirement plan is regulated by Section 401(a) of the Internal Revenue Code,
which allows you to defer federal withholding taxes on your contributions and any
earnings on your contributions, until you withdraw them. BENCOR, Inc., (BENCOR) will
provide and administer the plan, and will offer several investment choices. One of those
investment choices is an interest bearing “Guaranteed Pooled Account, which currently
has an annual percentage rate (APR) of 3.5 percent.
Under the new plan, you will continue to participate in Medicare (the Hospital Insurance
portion of FICA). That means the state continues to deduct 1.45 percent of your total
OPS wages (matched by the state) for Medicare coverage when you become eligible.
Question 3:
Is participation in the new plan mandatory?
Answer:
Yes, for OPS employees (temporary, seasonal, part-time, etc.) who are part of the
covered group, participation in this retirement plan is required and constitutes
membership in a public retirement system, as required by federal law.
Unless you meet the criteria for one of the exemptions in the federal law, you will be
enrolled in the new plan if you are an OPS employee working for the State Personnel
System, the Florida Department of the Lottery or the State Court System.
Question 4:
Which OPS employees are exempt from participating in this plan?
Answer:
The same OPS employees who are currently exempt from participating in Social
Security are exempt from participating in this plan. If you are unsure whether or not you
currently participate in Social Security, check your earnings statement online
(https://apps.fldfs.com/EIC/EmployeeInfoCenter/) or contact your agency payroll office
for clarification.
1
Social Security taxes are currently limited to the first $106,800 of your annual wages
State of Florida FICA Alternative Retirement Plan for OPS Employees
Question 5:
Is there a limit to how much I can contribute to the plan each tax year?
Answer:
Yes, based on our plan’s 7.5 percent contribution rate and the 2011 compensation cap
set by the IRS for all plan purposes ($245,000), an OPS employee would be limited to a
contribution of $18,375 (which is 7.5 percent of $245,000).
Question 6:
Does mandatory participation in this plan affect my (voluntary) participation in the State
of Florida Deferred Compensation Plan (Deferred Comp)?
Answer:
No, the Section 457 of the Internal Revenue Code governs the state’s Deferred Comp
and OPS employees may participate in both plans. Deferred Comp has its own
(separate) provisions regarding how much you can contribute on an annual basis.
Question 7:
Do I have to do anything to convert to the new plan?
Answer:
No, conversion occurs automatically with your paycheck of January 28, 2011, (if you are
paid biweekly) or January 31, 2011, (if you are paid monthly), with no action on your
part. With that paycheck, you will see your first deduction into the new plan.
Question 8:
How often are contributions taken?
Answer:
Just as before, you will see a deduction every biweekly or monthly pay period,
depending on your pay cycle.
Question 9:
Where can I get additional information about the new plan and its impact on me?
Answer:
In the very near future, the state will send a booklet to you that describes your available
investments and your withdrawal options upon separation from service. It also contains
an enrollment/investment election form for you to submit to BENCOR. On this form, you
will designate your plan beneficiary. Your money remains in the Guaranteed Pooled
Account unless you select from the investment options. Depending on your agency’s
method of distribution, some employees will receive this information at work, and others
will receive the information from BENCOR at their personal mailing addresses.
Once you review the information, if you have any questions regarding the plan’s
features, requirements, or impact on any other plan you might have, please contact
BENCOR directly, at the toll-free number, (888) 258-3422). BENCOR provides
customer service for this plan and is there to help you with any additional information or
enrollment assistance you might need.
Prepared By:
Department of Management Services
Division of Human Resource Management
11/10/10