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Program
Overview
3121 Plan Overview
Who Is
Offering The San Diego County Schools FBC 3121 Plan?
The Plan is
a partnership between San Diego County Board of Education Fringe
Benefits Consortium, Life Insurance Company of the Southwest (LSW),
and National Benefit Services, LLC.
What
Is The San Diego County Schools FBC 3121 Plan?
The 3121
Plan is a savings program for employees who are not eligible to
participate in the State Employees’ Retirement System.
How
the 3121 Plan Came About
The Omnibus
Budget Reconciliation Act of 1990 (OBRA) amended the Internal
Revenue Code and the Social Security Act to include employees of
state and local governments. The Act authorized the Secretary
of the Treasury to adopt regulations and provide guidance to the
Internal Revenue Service and Social Security Administration.
The Act amended Internal Revenue Code Section 3121, under which
Social Security participation became mandatory for all
employers.
However, the
Internal Revenue Code Section 3121 says that part-time,
temporary, and seasonal (PTS) employees are exempt
from the 3121 tax if they are provided a “comparable retirement
system”. In response, the 3121 Plan was created to meet those
requirements. This alternative provides a retirement plan for
PTS employees who are not normally covered like full time
employees. The adoption of the 3121 Plan provides an economic
benefit for the employer and their PTS employees.
How
The 3121 Plan Benefits The Employee
Social
Security Costs
Without the
3121 Plan, the employee must pay 6.2% after-tax into Social
Security and the employer must also contribute 6.2% of
pay.
Employee
Account
With the
3121 Plan, the employee may be required to contribute up to 7.5%
pre-tax (instead of 6.2% after tax) of gross compensation. The
district may choose to contribute a portion of the required
7.5%.
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Employee Benefits
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Mandatory pre-tax
contributions, which may reduce the amount of your
current income that is subject to tax
§
Possible District
contributions to your account
§
Tax-deferred savings,
which means you pay no taxes on your investment
earnings as long as they remain in the Plan
§
Interest earnings are
credited to employee
§
Annual statement
mailed to residence
§
No front end sales
charge
§
No back end surrender
charge
§
Money available to
withdraw upon termination
§
If you change jobs,
you may be eligible to retain your funds in the plan
until you request a withdrawal
§
No 10% premature
distribution tax
§
Rollover/Transfer
options
§
100% vested in
account |
For
a printable version of this information, click
here. |
