FICA Alternative Plan
Ed Poppell, Vice President for Finance and Administration
As you are aware, the University is implementing a FICA Alternative Plan effective with the February 3, 2006 paycheck for employees that are not able to be covered by the university’s retirement plan and currently pay social security taxes (primarily OPS Non-Students). Please note that each OPS employee situation should be carefully evaluated in determining eligibility for this plan. Please see the OHR website at http://hr.ufl.edu/retirement/other/FICA.asp for more information on the FICA Alternative Plan.
Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA). Social Security is currently withheld at 6.2% of eligible wages and matched by the university. Participants in this plan will no longer contribute to the Social Security Administration. Therefore, neither the employee nor the employer will be required to pay a 6.2% contribution to social security. Instead, employees will contribute 7.5% of their wages into an investment account in their name. Medicare contributions at 1.45% will continue to be withheld and matched by the employer and Worker’s/Unemployment Compensation assessment of 1.1% will continue to be charged.
In addition to the required fringe benefits, a 6.2% assessment will be charged to the cost center on wages paid to OPS Non- Students from certain sources. This assessment will be charged against wages for the month at the beginning of the following month similar to the Worker’s/Unemployment Compensation assessment that is currently charged. The moneys collected will be used to pay for ongoing additional administrative costs of devolution from the State.
Impact on Contract and Grant Funds
The University’s implementation of the new FICA Alternative Plan will result in a change to the employer costs for fringe benefits that will be charged to UF’s contracts and grants projects in funds 201, 209 (except as noted below), 211, 214, 221 and 222 effective with the February 3, 2006 paycheck. The fringe benefit rate for OPS Non-Students charged to projects in these funds will change from 8.75% to 2.55%. This new rate includes 1.45% for Medicare and 1.1% Workers/ Unemployment Compensation.
Any Principal Investigator (PI) whose project budget in the funds noted above includes 6.20% Social Security (FICA) for any OPS Non-Student may rebudget excess funds resulting from this change, if rebudgeting is allowed by the sponsor. The PI is responsible for determining whether or not this change in fringe benefit costs will result in excess project funds. Please contact Contracts and Grants Accounting at 392-1235 if you have any questions.
Impact on Other University Funds
The fringe benefit rate for OPS Non-Students charged to all other funds will be 2.55% of wages plus the 6.2% administrative assessment. This will also include house staff wages charged to projects in Fund 209.
These new rates in the chart below supersede the rates established in the May 19, 2005 Deans, Directors and Department Heads memo issued by the Vice President for Human Resources.
OPS Non-Student – Employer (Grant) Cost of Required Benefits and Assessments:
Funds 201,209,211,214,221,222 All Other Funds Social Security - FICA 0.00% 0.00% Medicare 1.45% 1.45% Workers/Unemployment Comp. 1.10% 1.10% Administrative Assessment 0.00% 6.20% Total Employer Costs 2.55% 8.75%