Jan 7 Check to Reflect Soc Sec Tax Reduction

Thousands of postal employees will have their Social Security employee tax rate decrease 2 percent in 2011.

The tax reduction is a result of the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” signed into law December 17, 2010. The Act temporarily decreases the Social Security employee tax rate from 6.2 percent (of the first $106,800 in earned income) to 4.2 percent for one year — but some employees will not see any changes in their tax rate.

Here are the new law’s effects:

Civil Service Retirement System (CSRS) employees — They do not pay into Social Security. The new law does not change their tax rate. There will be no change in their retirement deductions.

CSRS-Offset and Federal Employees’ Retirement System (FERS) employees — Social Security tax will be reduced by 2 percent, and there will be no change in their retirement deductions.

The Social Security tax rate change will be reflected in January 7, 2011 paychecks. The reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

For more information, contact the Accounting Help Desk at 866-974-2733, Monday through Friday, between 8 am and 8 pm.