62-5 SPD:62/5 SPD.qxd - NYCERS

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SUMMARY PLAN DESCRIPTION - 62/5 TIER 4 MEMBERS VERSION APRIL 2012SOCIAL SECURITY PARTICIPATIONMembership in NYCERS requires participation in the Social Security Program. Once anemployee joins NYCERS, either through voluntary or mandatory membership, the employeemust pay the 6.2% Federal Insurance Contributions Act (FICA) tax (reduced to 4.2% for 2011 and2012). This tax, otherwise known as Social Security tax, is applied up to a maximum wage limit.The following table shows the maximum wage limits from 1937-2012:MAXIMUM WAGE LIMITS, 1937-2012Year Amount Year Amount Year Amount1937-50 $3,000 1981 $29,700 1996 $62,7001951-54 $3,600 1982 $32,400 1997 $65,4001955-58 $4,200 1983 $35,700 1998 $68,4001959-65 $4,800 1984 $37,800 1999 $72,6001966-67 $6,600 1985 $39,600 2000 $76,2001968-71 $7,800 1986 $42,000 2001 $80,4001972 $9,000 1987 $43,800 2002 $84,9001973 $10,800 1988 $45,000 2003 $87,0001974 $13,200 1989 $48,000 2004 $87,9001975 $14,100 1990 $51,300 2005 $90,0001976 $15,300 1991 $53,400 2006 $94,2001977 $16,500 1992 $55,500 2007 $97,5001978 $17,700 1993 $57,600 2008 $102,0001979 $22,900 1994 $60,600 2009-11 $106,8001980 $25,900 1995 $61,200 2012 $110,100*Increases in subsequent years will be included in the SPD Update.In addition, all employees since 1986 are required to pay 1.45% of earnings for the MedicareProgram. Unlike the FICA tax, there is no maximum salary amount upon which Medicaredeductions are based.Windfall Elimination ProvisionThe Windfall Elimination Provision may reduce your Social Security benefits. You may bepenalized by the Social Security Administration (SSA) if you are receiving a governmental pensionbased on years of service during which you did not pay the 6.20% FICA tax. You will likelybe impacted if:1. you were not a NYCERS member, but were employed in a position entitling you to NYCERSmembership; and2. you chose to contribute 7.50% or more of your wages to a Deferred Compensation Plan; and3. you did not pay the 6.20% FICA tax during this time period; and4. you subsequently joined NYCERS and applied to purchase (buy back) the years you workedand did not pay the 6.20% FICA tax.If you have 30 or more years of “substantial earnings” in positions in which you paid the FICAtax, you will not be subject to the Windfall Elimination Provision penalties imposed by the SSA.For more information on the Windfall Elimination Provision, visit www.socialsecurity.gov anddownload SSA Publication No. 05-10045.WWW.NYCERS.ORGMEMBERSHIP AND ELIGIBILITY3
NEW YORK CITY EMPLOYEES’ RETIREMENT SYSTEMDEFERRED COMPENSATION PLAN (DCP)The New York City Deferred Compensation Plan (DCP), administered by the NYC Office of LaborRelations, is a defined contribution plan. DCP benefits are based on the cumulative value ofemployee contributions including the return on investments made with such contributions.Members of the DCP select how to invest their contributions, and benefits are paid out accordingto assets available in the individual member's account.Employees may concurrently join NYCERS and DCP. Those who are not mandated into NYCERSmembership may join the DCP and not NYCERS. DCP members who contribute 7.50% or moreof their wages to the DCP are not required to pay the 6.20% FICA tax. Keep in mind, however,that Social Security disability, survivor and retirement benefits are determined according to theamount and duration of your FICA contributions.If you subsequently join NYCERS, you will be required to pay Social Security tax, even if you continueto contribute at least 7.50% of Wages to the Deferred Compensation Plan.If you do not join NYCERS or the DCP, you will be required to pay all required FICA contributionsafter one month of employment.MEMBERSHIP AND ELIGIBILITY4
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