FICA Alternative Plan Overview
As a part-time, seasonal or temporary employee of the State of Nevada, you are required to participate in the State of Nevada FICA Alternative Deferred Compensation Plan (“Plan”), if you were hired on or after January 1, 2004. 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”). 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.
You will automatically be enrolled.
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 contributions (including any earnings) when you receive a distribution of your benefits from the Plan.
Unless your status as a FICA Alternative employee changes, you may not stop or reduce mandatory contributions to the Plan. No additional contributions are permitted under the Plan. Statements are mailed annually in January, showing a summary of all transactions within your account for the previous year.
As required by OBRA, the Plan must limit its investment options to investments that provide for a fixed rate of return. Your contributions are automatically invested in the Voya Stable Value Fund. The Voya Stable Value fund is a group collective investment trust that holds a diversified portfolio of stable value products.
Distribution of your Plan benefits can only be made upon your:
- Severance from employment
- Attainment of age 70½ (whether or not you are still employed).
A severance from employment occurs when you voluntarily or involuntarily terminate. A leave of absence is not a severance of employment. If you experience a change from part-time to full-time employment (or any similar change) you may be eligible to transfer your benefits under the FICA Alternative Plan to the State’s Deferred Compensation Plan. Otherwise, the Plan does not provide for withdrawals while you are still employed.
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 or defer payment to a later date. Your benefits will become taxable when received.
Loans are not available to plan participants that are employed by the Nevada State Higher Education System, any of the State Alliance Partners or participants of the FICA Alternative Plan.
For more information, please refer to the participant information booklet.
Participants are assessed a $0.55 flat per-account charge, withdrawn quarterly and shown as a line item on your quarterly statement. This helps to ensure that the Plan's recordkeeping, compliance and administrative costs are equally shared by all participants.
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