Social Security debt will be collected over 24 pay periods, says largest payroll processor
The government’s largest payroll processor said it would collect Social Security debts over 24 pay periods, starting with the one that began on Sunday, Jan. 3, and ending with the one ending on Dec. 4, at in light of the recent change in the law regarding collection of such a debt.
The advisory is the latest from the Defense Finance and Accounting Service, which handles payroll for civilian and military personnel in DoD, HHS, Energy, VA and some smaller entities, on the recovery amounts owed due to the suspension of social security deductions over the past four years. month of 2020.
Under an August presidential memo, the 6.2% Social Security or “FICA” tax was not withheld during a bi-weekly pay period with Social Security taxable earnings less than 4 $000. This probably affected the majority of federal employees, with the exception of the Postal Service, which had the option of opting out and did so.
The result is that affected employees must now repay sums ranging from several hundred to several thousand dollars, depending on their rate of pay. While this was originally to be paid by April 30, the recently enacted budget synthesis law for the current fiscal year extended it to December 31.
The DFAS notice says affected employees can see the amount to be collected by subtracting the OASDI accrued deductions figure from the OASDI accrued benefits figure on their most recent 2020 leave and earnings statements. Starting this month, these statements “will show the amount of 2020 Deferred OASDI collected during that pay period, as well as the balance remaining to be collected.”
The notice does not mention any possibility for employees to choose a repayment period other than 24 equal withdrawals.
It further repeats previously presented information stating that for those who retire or separate from federal employment in 2021 before the amount owed is paid in full, “the outstanding balance will be taken from your final salary. If there are insufficient funds to collect the full amount, you may receive a letter of credit with repayment instructions.
For those who separated in 2020 after the suspension began, he says, DFAS will pay the shortfall to the IRS and individuals will receive notices with instructions on how to repay DFAS.
Of the four major payroll providers, DFAS has always been the most open to providing information about the suspension of Social Security contributions. The others have not issued similar statements, but it is likely that their policies will be similar.
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