December 22, 2004
A
New Social Security Reporting Requirement for Some Public Sector Employers
—
Effective Now
The Social Security Protection Act of 2004¹
contains a reporting provision relevant to public sector employers and
retirement plans. The new reporting requirement affects public sector
employers whose employees are not covered by Social Security.
Specifically, Section 419(c) of the law requires employers whose employees
are not covered by Social Security to provide in writing to individuals
hired on or after January 1, 2005, a statement describing the "maximum
effect" of non-coverage on their eventual Social Security benefits.
Obligatory Content
The disclosure must include a general description of the effect of the
Government Pension Offset (GPO) and the Windfall Elimination Provision
(WEP) on Social Security retirement benefits. The GPO and WEP are provisions
of the Social Security Act (SSA) that reduce retirement benefits for
retirees or their beneficiaries who receive pension benefits based on
non-covered employment.²
Proof of Receipt
Required
Employers are required to provide new hires with the designated form,
ensure that it is signed and returned as certification that the individual
is aware of the potential impact of GOP and WEP, and submit a copy to
the public sector retirement system, before employment begins.
Model Notice
The Social Security Administration has prepared Form SSA-1945, Statement
Concerning Your Employment in a Job Not Covered by Social Security.
It is available on the following page of the Social Security Administration's
Web site: http://www.socialsecurity.gov/form1945/SSA-1945.pdf
As with all issues involving the interpretation or
application of laws, public sector employers should rely on their legal
counsel for authoritative advice on the Social Security Protection Act
of 2004. The Segal Company can be retained to work with employers and
their attorneys to evaluate the impact of the law and comply with it.
¹
A 49-page PDF file of the law (Public Law 108-203), which President George
W. Bush signed on March 2, 2004, is available on the following page of
the Government Printing Office's Web site:
http://frwebgate.access.gpo.gov/cgi-bin/
getdoc.cgi?dbname=108_cong_public_laws&docid=f:publ203.108.pdf
(To return to the Compliance Alert text, click here.)
²
The GPO and WEP provisions of
the SSA are described on the following page of the SSA Web site: http://www.ssa.gov/gpo-wep
(To return to the Compliance Alert text, click here.)
| Compliance Alert, The Segal Company’s
periodic electronic newsletter summarizing important developments
affecting benefit plan compliance, is for informational purposes
only. It is not intended to provide authoritative guidance. On all
issues involving the interpretation or application of laws and regulations,
plan sponsors should rely on their attorneys for legal advice. |
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