FICA Alternative Plan

Overview

All school employees must contribute to a retirement plan of some type but substitute teachers, part-time employees, and summer workers do not qualify for the Texas Teacher Retirement System (TRS). Traditionally that meant that the district and the employee both had to contribute 6.25% (12.5% total) to social security. Unfortunately because their pay was so low and the corresponding contributions low they often see no benefit in future social security payments, if they even receive one.


The FICA Alternative Plan from Region 10 RAMS provides a solution that aids both school districts and employees who are not eligible for TRS. The contributions are invested through a trust account and at the end of the employee’s service with the district he/she is eligible to receive a lump sum of his/her entire account balance. The district benefits because the law requires a 7.5% contributions which can be deducted from the employee’s pay meaning that the district saves the 6.25% it would have paid into social security.

 

As of January 31, 2018 the RAMS FICA Alternative was utilized by 102 districts across Texas and the trust fund held $159 million on behalf of almost 276,541 substitute teachers and other part-time employees.

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