Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers. Here’s the question of the day.
Question: I know pension plan contributions are generally not subject to income taxes. Are they subject to Social Security taxes?
Answer: In general, only employee deferral contributions are subject to Social Security taxes. Employer contributions are not subject to Social Security taxes.
Social Security taxes consist of
- The Old-age, Survivors, and Disability Insurance (OASDI) portion, which is 6.2%
- The Medicare portion, which is 1.45%
Both the employer and employee have to contribute these amounts—7.65% for each—to wages up to $110,100 in 2012. The Medicare portion only applies to compensation in excess of that.
Amounts distributed to an employee from a qualified plan are generally income taxable, but are not subject to Social Security taxes.
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