Additional Contribution to SS Wage Base

[titanium10k]

The company I recently started working for in their benefits package mentions "company contributes an additional 3% of your eligible income above the Social Security Wage Base." So I understand the SS wage base and this goes to SS benefits but how does this benefit me? Does it increase my SS income in retirement? If so I wonder how that increase is calculated to me in retirement?


Thanks

 

[skyactiv]

Where is Mr.Nice at?
Is this the company's way out of offering a 401K?
It could be a scheme for them to claim they overpaid and take it away from you while actually getting a refund from excess Social Security and RRTA Tax Withheld.

 

[PimTac]

I've never heard of this before.

 

[demarpaint]

I would check with US Social Security Administration about it.

 

[jalf]

3% often is a company's max contribution to a 401k match. You put in 3%, the company puts in 3%. Sounds like the language you quoted might be in reference to this. Talk to your company's human resources person for a better explanation.

 

[csandste]

Please re-post if you find out what this is from your HR department. This sounds screwy-- I'd say they were mis-naming their 401K but usually that's a match to your deduction, unless they make deductions automatic-- been plenty of calls to do that with an opt-out in order to increase participation.

 

[BigCahuna]

If I had to venture a guess on this question, I would say any extra money contributed to your account, will only allow you to collect benefits longer. I read somewhere the average age people live to while collecting is 84. So unless you have a wife, or dependent children, and you die, the SS admin keeps whatever is left in your account. One other thing I find strange is, If you start collecting SS and are still working, they still deduct SS from your paycheck. So if for example you get $100 from SS, and they deduct $25 a week from you paycheck, there's no benefit to be seen. It only becomes a plus is if you stop working .,,,

 

[toneydoc]

I highly doubt any company pays more to the SS base amount than they absolutely have to pay
Let us know what HR says

 

[Mad_Hatter]

Your HR Dept is a better resource for getting a correct answer on this.

 

[Rhymingmechanic]

It might be helpful to see the full sentence you quoted above. What are they contributing this 3% to?

 

[wdn]

"Social Security Wage Base " is a line on your W-2 tax statement that is your wage that is subject to SS withholding. Your company is taking 3% of that figure and paying it into the company's retirement account. That is a benefit that goes to you.

 

[csandste]

Originally Posted by wdn
"Social Security Wage Base " is a line on your W-2 tax statement that is your wage that is subject to SS withholding. Your company is taking 3% of that figure and paying it into the company's retirement account. That is a benefit that goes to you.


I'd like to see this confirmed but that would be my guess too. Confusing to say the least.

 

[slacktide_bitog]

Originally Posted by wdn
"Social Security Wage Base " is a line on your W-2 tax statement that is your wage that is subject to SS withholding. Your company is taking 3% of that figure and paying it into the company's retirement account. That is a benefit that goes to you.

In fact, you are not even allowed to actually contribute extra money to your Social Security account.

 

[Alfred_B]

Originally Posted by titanium10k
The company I recently started working for in their benefits package mentions "company contributes an additional 3% of your eligible income above the Social Security Wage Base." So I understand the SS wage base and this goes to SS benefits but how does this benefit me? Does it increase my SS income in retirement? If so I wonder how that increase is calculated to me in retirement?


Thanks


What do they contribute to? SS base is $128k, i.e. anything earned above that is not subject to SS tax.

So if you earn $148k, the company will contribute $600 to whatever they are contributing to.

 

[SeaJay]

This is how I understand the OP's statement.

The Company is paying to the Feds the SS tax rate on 97% of wages that would be normally subject to SS taxes. Instead of paying the Feds the normal tax rate on the 3% of wages (or about 0.2% of wages which is 3% of wages times the SS tax rate of about 7%), it is putting the entire 3% into a company maintained fund to be used for employee retirement benefits.

If you work there, you will be entitled to your normal SS benefits from the Fed plus benefits paid by the Company out of its retirement plan.

The company could save money if it didn't provide a retirement plan and instead paid the Feds the SS tax rate on 100% of its wages, rather than on 97% of wages.

 

[Yah-Tah-Hey]

That doesn't sound right.

 

[thooks]

Wow.

Reading comprehension and a decent base knowledge of walking around sense is gone today.

The company is contributing 3% of your SS taxable wages (which maxes out at $128k, IIRC) to your retirement plan