Division of Retirement and Benefits Robert Gregg Section 218 Coverage – Social Security & Medicare

HistoryHistory Before 1951: No coverage 1951: Section 218 added Coverage available Positions not under retirement system 1955: Retirement systems included Until 4/83: Termination possible

HistoryHistory 4/1/86: Mandatory Medicare coverage New hires 7/2/91: Mandatory Social Security Unless qualifying retirement system Since 1986: Tax deposits/941s filed with IRS Intent is to protect workers and families

Get IRS Publication 963! Complex provisions Provides good explanations Resources

218 Agreements Coverage Groups Absolute Retirement system  Referendum required  Police and fire positions Exclusions Mandatory Optional

Alaska 218 Agreements Original and 183 modifications Significant variations Retirement positions generally not covered  TRS, PERS  Divided vote option Several entities covered, then terminated State positions

Alaska 218 Agreements Exclusions vary Election workers Students Part-time positions Elected officials Fee-based positions New hire notification SSA-1945

Your 218 Agreement Reference copy in agency files Contact state Social Security administrator for interpretation Kay Gouyton (907)

Determining Coverage Position covered under your 218 agreement? If yes, withhold social security and Medicare taxes Deposit withholding and employer match

Determining Coverage Position not covered by agreement Hired since 4/1/86?  If yes, withhold Medicare tax Covered by public retirement system? If no, withhold Social Security and Medicare taxes Unless excluded services

Qualifying Retirement System Used to determine if mandatory Social Security applies System that matches OASI Different standard than 457, 403(b) or 401(a) Details in rev. Proc

Qualifying Retirement System Defined Benefit Plan Minimum retirement payment of 1.5 X average of last 3 years pay X years of service Defined Contribution Plan Minimum allocation of 7.5% of pay Employer and employee funds count Earnings not included in 7.5% Reasonable earnings requirement

Qualifying Retirement System Employee must meet all standards of the plan to be a participant Length of service Dates employed Age Special rules for part time, seasonal or temporary employees Contact IRS for determinations

Additional Considerations Elected or appointed officials Election workers $1500 threshold (same for 2010) Police and fire positions “Volunteer” firefighters Rehired annuitants

Additional Considerations Students Rev. Proc Military differential wage payments Accountable plans

ResourcesResources Your 218 Agreement Alaska state Social Security administrator Kay Gouyton Robert Gregg SSA Government Employer Web Page IRS Government Employer Web Page

ResourcesResources Qualifying Public Retirement System IRS SSA Employer Web Page W2 Issues Tim Beard, Social Security Administration   (206)