- How Does Civil Service Retirement Affect Social Security Benefits?
- Who Is Exempt From Social Security Tax?
- Taxable Amounts of Railroad Retirement Pensions
- Do I Get a Refund on Social Security Taxes That Are Withheld?
- Spouse Retirement Benefits
- What if I Don't Have Enough Credits for Social Security Benefits When I Retire?
Since 1983, almost all groups in the United States contribute to the Social Security system. Before 1983, members of Congress, the President and Vice President and all federal employees were exempt from Social Security taxes and benefits. Currently, the only prominent groups that do not participate in the Social Security system are railroad workers, covered by the Railroad Retirement Board, an independent agency of the U.S. government, some religious personnel and state and local government employees with their own retirement systems.
Railroad Retirement Board
Along with retirement benefits, the Railroad Retirement Board offers survivor benefits, unemployment, sickness and disability payments for railroad employees and their families. Created in 1935, as was Social Security, the Railroad Retirement Board is dedicated only to serving U.S. railroad employees for social insurance programs. Although an independent federal agency, the Railroad Retirement Board does have some administrative duties within the Social Security Act for some benefit money and interfaces with Social Security to administer retired railroad employees' Medicare insurance.
Although all federal employees hired since Jan. 1, 1984, pay into the Social Security system, those hired before that date can still be covered by the Civil Service Retirement System, created in 1920, before the current Social Security system existed. The 1983 law mandating Social Security coverage for federal employees allowed this group to make a one-time choice to stay in the Civil Service Retirement System or move to Social Security. The law also provides that those federal employees originally hired before Jan. 1, 1984, left government service and rehired thereafter must participate in the Social Security system.
State and Local Employees
Many state and local government employees still do not pay into Social Security. These groups are covered by other retirement plans. For example, teachers and educators in Texas are covered by the Texas Retirement System, but can also access some Social Security benefits. However, they are also subject to the Government Pension Offset, which reduces some Social Security benefits they otherwise could collect. Spousal and widow or widower benefits are also restricted. Almost one-quarter of the nation's state and local government employees remain exempt from Social Security.
Police and Firefighters
Some state or local police personnel and firefighters are exempt from Social Security, having retirement pensions funded -- sometimes insufficiently funded -- by the states, cities, towns or counties for which they work. Some states, such as Rhode Island, have encountered financial problems with their self-insured retirement systems because of unfunded liabilities and pension fund losses. Even those states that have funding problems cannot easily join the Social Security system; making lump sum payments for new Social Security members is a challenge some local governments cannot meet.
Clergy and Religious Orders
Members of the clergy and religious orders not taking a vow of poverty can elect to participate or not participate in Social Security benefits. Churches and church-related organizations can also elect not to include their employees in Social Security coverage since 1984 regulations were enacted.
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