Tax Facts

3947 / Are contributions to a qualified plan subject to Social Security taxes?



Amounts that a regular (i.e., common law) employee elects to contribute under a cash or deferred arrangement under IRC Section 401(k), a section 403(b) plan ( Q 3760), and SIMPLE IRA plans are treated as wages subject to Social Security tax.1 Payments to, from, or under a qualified retirement plan are specifically excluded from the definition of wages under the Social Security law. Consequently, neither employer contributions to, nor distributions from, a qualified retirement plan are subject to Social Security taxes.2






1.  IRC §§ 3121(v)(1); 3121(a)(5)(H).

2.  IRC § 3121(a)(5).


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