FAQs

What is the FICA Alternative Plan?

Legislation passed as part of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90), mandating that substitute, temporary and part-time employees are required to participate in either FICA (Social Security Tax) or an alternative plan set up within the guidelines established by the Internal Revenue Service. The deductions for the FICA Alternative Plan (OBRA) are taken out of your paycheck in lieu of deductions normally made to FICA.

As a result of the legislation passed under House Bill 3459 in the 78th Texas Legislature, a 90-day waiting period is required for Teacher Retirement System of Texas (TRS) Pension Plan membership for eligible employees hired into a TRS-covered position on or after September 1, 2003. As permitted under Section 3121(b)(7)(F), DISD offers employees the opportunity to participate in the DISD 457(b) FICA Alternative Plan during the 90-day waiting period in lieu of Social Security.

You may apply prior service with a TRS-reporting entity toward the 90-day waiting period if DISD receives your service records prior to or immediately after your hire date. We will rely on the accuracy of your submissions. If the information received from TRS differs, we may have to retroactively adjust your deductions. We cannot guarantee that in this event we can obtain a refund for you of the amount you may have had deducted for Social Security.

Who is eligible for the DISD 457(b) FICA Alternative Plan?

You are eligible to participate in the Plan if you are an active employee and are not eligible to participate in the TRS Pension Plan.

What are the advantages of participating in the DISD 457(b) FICA Alternative Plan?

The 7.50% contribution to the DISD 457(b) FICA Alternative Plan will be deducted from your paycheck on a pre-tax basis, so you are not taxed on the gross amount. Funds will remain tax sheltered until they are withdrawn. Unlike Social Security withholding, if your employment with DISD ends, you may withdraw funds subject to the Internal Revenue Code distribution guidelines under a 457(b) Deferred Compensation Plan.

Please note that contributions to the DISD 457(b) FICA Alternative Plan are not eligible for TERRP matching.

How do I participate in the DISD 457(b) FICA Alternative Plan?

Enrollment in the Plan is automatic. Employees have the option to opt out of the plan. To opt out of the Plan, employees must complete the Election to Opt Out of the DISD 457(b) FICA Alternative Plan Form and return it to the DISD Payroll Department. The Election to Opt Out form will be mailed to your home shortly after the first payroll. You must elect to opt out within fourteen days from the date of notification if you do not want to participate in the Plan.

What if I currently participate in the FICA Alternative Plan with MetLife or TIAA-CREF?

If you currently participate in the MetLife 403(b) FICA Alternative Plan, you will automatically be switched to the DISD 457(b) FICA Alternative Plan through PARS on January 1, 2005. Your MetLife account will be frozen and you will be eligible to receive a distribution when you leave the DISD or have another event that qualifies for a distribution under the MetLife Plan.

If you currently participate in the DISD 457(b) FICA Alternative Plan through TIAA-CREF, you will be automatically switched to the DISD 457(b) FICA Alternative Plan through PARS on January 1, 2005 and your account balance will be transferred to the PARS Plan early in 2005.

Do I still pay the Medicare portion of FICA?

Yes, Medicare withholding will be made from your paycheck in addition to the 7.50% contribution to the DISD 457(b) FICA Alternative Plan.

Who is the administrator of the DISD 457(b) FICA Alternative Plan?

Public Agency Retirement Services (PARS) is the trust administrator of the DISD 457(b) FICA Alternative Plan.

Where are the funds invested?

The funds will automatically be invested in a Trust designed to obtain the maximum return on investments while minimizing investment risk. The investments in the Trust will be managed by a DISD advisory committee and TCG Advisors, LP. The initial investment portfolio will be held in 30% fixed interest investments and 70% equity investments.

How do I find out how much money is in my account?

You will receive annual statements from PARS outlining your account activity. You may also call PARS to receive your account balance at (800) 540-6369.

May I change my mind about opting out of the plan once I make my decision?

No. You have a one-time irrevocable opportunity to opt out of the 457(b) FICA Alternative Plan. The election to opt out of the plan and not receive the benefits includes any future period of eligible employment with the district.

How do I withdraw or rollover my money?

Upon termination of employment, attainment of retirement age, or in the event of permanent disability or death, you will have access to your account. You will also have access to your funds if you have a change of employment status at DISD to a position covered by TRS if there have been no contributions to the account for two (2) years and the account balance is less than $5,000. If the account balance is greater than $5,000, the account will only be eligible for distribution due to termination, retirement, death or disability.