I currently use you Maximize software and it has helped me make my original decision to file at FRA and also 20 months later to suspend until age 70, since I am now receiving a pension from TRS and the WEP will reduce what I would receive from SSA.
In Aug 2021 I was part of the RIF at Dallas College (DC) in Texas.
DC does not participate into Social Security and pays into the TRS of Texas.
At separation I received Vacation pay and 6 months of severance pay which is being paid monthly until Feb 2022.
DC did not report these amounts to TRS, did not contribute for these to TRS and is also not withholding any $$ for the FICA tax.
It appears to me that they should pay one or the other, but not get out of paying their 1/2 to either TRS or FICA.
Q1. Is there any way for me to get DC to pay their 1/2 of the FICA tax?
I understand that I would have to pay my 1/2 of FICA tax as well since DC did not withhold anything.
Q2. Normally for the contributing companies, these amounts are considered earned income, but can the amounts for Vacation pay and severance, paid by DC be counted towards earned income with regards to SSA?
These amounts would be helpful to offset the $0 amounts that I currently have AND ADD 8 quarters (4 in 2021 and 4 in 2022).
Q2. Is there a law that prohibits DC from paying their share of the FICA?
Hi. My expertise is limited to Social Security benefits, not the Texas TRS. Vacation and severance pay are normally classified as wages for Social Security tax purposes, but not if the employer who makes those payments is exempt from paying Social Security taxes.
The payroll offices of large employers are normally well versed on their tax withholding responsibilities, so I would suggest contacting them for an explanation. In any case, though, I can definitely tell you that you cannot voluntarily pay Social Security taxes on the compensation you are paid as an employee. The only way that you could receive Social Security credits for your vacation and severance pay is if that compensation is Social Security covered earnings under the law, and if your employer is required to withhold Social Security taxes on that compensation. And, if your regular wages from your former employer were exempt from Social Security taxes, your vacation and severance pay would be exempt as well.
With regard to the law on this topic, the original Social Security Act exempted all public employee compensation from Social Security coverage. Over the years there have been amendments that allowed public employers to voluntarily opt their employees into the Social Security program, but Social Security coverage is still not required for public employers that have pension plans of their own. For more information about this regulation, refer to the following Social Security publication: https://www.ssa.gov/policy/docs/ssb/v80n3/v80n3p1.html.
Best, Jerry
