Some employers covered by URS have exempted from Social Security. Under U.S. Treasury regulations effective July 1, 1991, full-time, part-time, temporary, and seasonal employees of employers exempting from Social Security coverage, who don’t participate in one of the Utah Retirement Systems, must participate fully in an acceptable alternate plan such as a 401(k) or 457(b). Please note: Public safety and firefighter coverage and contribution rates may be impacted when employers change their Social Security participation status.
To qualify under this federal provision, an employer must ensure a federally mandated percentage of a worker's annual compensation is deposited into an acceptable alternate plan for the employee. This amount may be from employer contributions, employee deferrals, or a combination of both.
Retirees rehired before July 1, 2010, may receive a defined contribution up to 7.5% above the normal cost cap but the proceeds must be deposited into a URS 401(k) plan. Retirees rehired on or after July 1, 2010, may receive a defined contribution up to 7.5% to a URS 401(k) plan.
Further definition of employment under these categories can be obtained from Internal Revenue Service offices.
Notification for Jobs Not Covered by Social Security
The Social Security Protection Act of 2004 requires employers to provide a written notice to new employees not covered by Social Security who begin work on or after January 1, 2005. The notice is provided by the Social Security Administration.
The notice informs the employees they are not covered by Social Security, but are covered by another retirement benefit. The notice provides an explanation of the effect a retirement plan benefit based on earnings not covered by Social Security can have on an employee’s Social Security benefit, such as a reduction due to the Government Pension Offset (GPO) Provision or the Windfall Elimination Provision (WEP).
Employees covered by URS who don’t contribute to Social Security must be provided with the notice for them to read and sign. Copies of the signed form must be sent to our office and filed in the members’ records, as outlined in the Social Security Protection Act of 2004.
It is the employer’s responsibility to determine their obligations under the Social Security rules. Employers need to consider whether they are required to make contributions to a retirement plan on those employees receiving a URS allowance. If contributions to a URS retirement plan are required, it is the employer’s responsibility to determine the required rate up to a maximum of 7.5%.
This information is being provided as a service to you. If you have any questions on this matter, please call the Social Security Administration at 800-772-1213 or contact your local Social Security office.