Agenda - Council - 03/11/2014 - Laserfiche WebLink

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QUICK REFERENCE GUIDE FOR PUBLIC EMPLOYERS Nonqualified state or local government plans that do not meet the tests of 457(b) are ineligible, or 457(f), plans. There is no limit on the annual deferrals on these plans, but in order to defer taxation, all amounts must be subject to substantial risk of forfeiture. Distributions are generally subject to social security and Medicare taxes at the later of the time 1) when the services giving rise to the related compensation are performed, or 2) when there is no substantial risk of forfeiture of the rights to the amounts. 5. FEE -BASED PUBLIC OFFICIALS In general, if an individual performs services as an official of a governmental entity and the remuneration received is paid from governmental funds, the official is an employee and the wages are subject to Federal employment taxes. Examples of public officials include, but are not limited to, the President, governor, mayor, county commissioner, judge, justice of the peace, sheriff, constable, registrar of deeds, or building inspector. An exception to this rule applies to a fee -based public official. A fee -based public official receives his/her remuneration in the form of fees directly from the public with whom he/she conducts business. However, if the fee service is covered by a Section 218 agreement, the service is covered as employment. Section 218 coverage always supersedes other considerations. If a public official receives remuneration or salary directly from or through a government fund on the basis of a fixed percentage, and no portion of the monies collected belongs to or can be retained by him or her as compensation, then the remuneration is not a fee, but salary subject to all employment taxes. If an individual performs services in more than one position, each position is treated separately for purposes of determining whether the compensation for the service constitutes payment of fees to a fee -based official. For detailed information on this subject, see Publication 963, Federal -State Reference Guide, and Revenue Ruling 74-608, 1974-2 C.B. 275. 6. SPECIAL SITUATIONS FOR PUBLIC WORKERS Specific statutory provisions apply to various categories of individuals who work for government entities. Some common categories of these workers are discussed below. Elected and Appointed Officials With the exception of fee -based officials, discussed in section 4, elected and appointed officials are generally employees for Federal income tax withholding purposes. Under section 3401(c) of the Internal Revenue Code, these officials are subject to income tax withholding. Generally, these individuals are also common-law employees for social security and Medicare purposes under section 3121(d)(2). Any individual covered under a Section 218 Agreement 7