These participants include part-time, seasonal, temporary UC employees who are not eligible for primary retirement benefits and whose wages are not subject to Social Security taxes. Also included in this category are non-exempt UC student employees who do not satisfy certain course-load requirements and resident aliens with F-1 and J-1 visa status. This category does not include students whose wages from University employment are exempt from taxation under the Federal Insurance Contribution Act(FICA) and nonresident aliens with F-1 or J-1 visa status or whose wages are subject to foreign (i.e., their home country) taxes or contributions under a Social Security totalization agreement. Enrollment for Safe Harbor participants is automatic and begins on the first day of an eligible appointment.
Per the IRS Regulations:
- The Federal Insurance Contribution Act (FICA) is the federal law that requires employers to withhold certain taxes from the wages they pay their employees. As stated on the IRS website: “Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes.”
- In place of OASDI, employees who are not members of the UC Retirement Plan become "safe harbor" participants in the Defined Contribution Plan (DCP). University policy requires that all eligible non-career employees hired or rehired on, or after, October 19, 1992, contribute on a pre-tax basis, 7.5% of their gross wages to the DCP. These employees are also required to contribute 1.45% of their earnings to Medicare.
How do students qualify for the exemption:
- In general, a student must be working less than 80% and enrolled in a minimum of 6 units during the academic quarter in order to qualify for the exemption.
- During the Summer Session, the exemption will require registration and enrollment in:
- 4 units for Grad Students and 6 for Undergrad Students in either session (3wk, 5 wk or 7 wk)
- 8 units in a 10 week session
- Students who do not meet the half-time enrollment requirement will be required to contribute 7.5% of their earnings to the Defined Contribution Plan (DCP) and 1.45% to Medicare.
- Nonresident alien employees who hold F1 or J1 visas, but meet the qualifications for resident alien status for tax purposes, are subject to DCP/Medicare withholding, unless they meet the minimum course load requirement and have an appointment of less than 80% time.
Once a student is no longer employed at UC, they can request their DCP funds by calling Fidelity at 866-682-7787. If there is a question or concern of DC Safe Harbor deductions in error please submit a ticket through UCpath.