FICA Information
Why do I have to participate in this Plan?
As a part-time, seasonal, or temporary employee of the State of Nevada, Nevada System of Higher Education (NHSE) or a government entity who is contracted with NDC sponsoring a FICA Alternative program, you are required to participate in the FICA Alternative Plan; this is a non-elective, mandatory contribution.
Governmental entities that currently are not contracted, but desire to offer a FICA Alternative Plan alongside their 457(b) Voluntary plan, must execute and maintain a separate Interlocal contract with NDC specific to the FICA Alternative Plan. Designated Representatives of governmental entities should contact the NDC Administration office to inquire how to get set up to offer the FICA Alternative Program to their employees if they are not already contracted to do so.
What is the FICA-Alternative Plan?
FICA is the Federal Insurance Contributions Act. The Plan is an alternative to Social Security coverage as permitted by the federal Omnibus Budget Reconciliation Act of 1990 (OBRA), and section 3121 of the Internal Revenue Code. By virtue of participating in the Plan, you, as a FICA Alternative employee, are not subject to tax on compensation under the Old Age, Survivors and Disability Income portion of FICA. You will be subject to the Medicare portion of FICA.
How much do I have to contribute from my paycheck?
You must contribute 7.5% of your gross compensation per pay period to the Plan. Your contributions are made on a tax deferred basis. This means that your contributions are not subject to federal or state income tax at the time they are made. You will be taxed on the value of your contribution (including any earnings) when you receive a distribution of your benefits from the Plan.
Unless your status as a FICA employee changes, you may NOT stop or reduce mandatory contributions to the Plan. No additional employee contributions are permitted under the FICA Plan. Enrollment and employee contributions are permitted and encouraged in the voluntary 457(b) Program while employed.
Who is the service provider for new and rehires?
Voya Financial is the current investment provider for all new employees and rehires.
Voya Financial
Northern Nevada: 1.866.464.6832
Southern Nevada: 702.990.3720
https://voyaretirementplans.com/
How is my money invested?
As required by OBRA, the Plan must limit its investment options to investments that provide a fixed rate of return, or Stable Value investment option. Your contributions are automatically invested in the Voya Fixed Account with a 2.25% credited interest rate from January 1, 2020 through December 31, 2024. The Voya Fixed Account is offered under a group annuity contract issued by Voya Financial and is backed upon the claims paying ability of Voya Retirement Insurance and Annuity Company.
How can I obtain account information?
Participants who have internet access can find current, comprehensive information about their accounts and make certain online Plan transactions by visiting the recordkeeper’s website. https://nevada.beready2retire.com/
Participants receive an annual statement of their account each January from the recordkeeper via US mail to the participant’s address of record.
When can I take my money out?
Distributions of your Plan account can only be made upon your:
- Severance from employment
- Death
- Attainment of age 70 ½ (whether or not you are still employed)
A severance from employment occurs when you voluntarily or involuntarily terminate. When you sever employment or die, your benefits will be payable to you or your beneficiary in accordance with the payment options provided under the Plan. You may elect to receive your distribution immediately upon severance of employment (regardless of age), or at a later date. Your benefits will become taxable when received.
All distributions at termination are subject to payroll and investment provider deadlines. No distribution can be made until all payroll activity is complete, which can take up to 4 to 6 weeks after your last day of employment.
What are my distribution options?
1. Leave the value of your account in the Plan until a future date (administrative fees may still apply);
2. Receive:
- periodic payments;
- fixed annuity payments;
- partial lump sum with remainder paid as periodic payments;
- a lump sum;
3. Roll over your account balance to an eligible governmental 457(b) (such as a voluntary 457(b) with NDC), 401(k), 403(b) or 401(a) plan or to an IRA.
Each distribution is subject to ordinary income tax unless it is rolled over to another eligible plan or IRA, or if it is an in-service transfer to purchase service credit. Ordinary income tax will apply once you begin taking distributions from the account you roll the money into.
Can I leave my monies in the Plan?
Yes, a distribution from NDC is generally taxed as ordinary income in the year it is received. Please note there are specific federal tax withholding rules that apply to all distributions from retirement savings plans. For more information about the tax treatment of the Plan, read the special tax notice provided by our investment providers before requesting a distribution. Tax rules can by complex; for this reason, participants considering a distribution from the Plan are strongly encouraged to consult a tax advisor.
Distributions are reported annually on IRS form 1099R, which is sent in January following the calendar year in which the distribution was issued.
Are there early distribution penalties?
Unlike other retirement plans, distribution from an IRC 457(b) plans, such as NDC, are NOT subject to any early withdrawal penalties, regardless of age.
Who should I designate as my Beneficiary?
You should designate a beneficiary to receive your money in the FCIA Plan in the event of your death. You may name more than one beneficiary and specify the percentage of the Plan balance that each beneficiary is to receive. A beneficiary may be a person, trust, or organization.
What happens to my account when I die?
Participants can and should name one or more beneficiaries. A beneficiary may be an individual(s), trust, estate, charity or corporation. When a participant dies, the named beneficiary(ies) should contact the investment providers regarding available options.