Procedure03.02.160.a Payroll Deductions
Required Deductions: Deductions from each regular employee’s payroll check include social security, federal income tax withholding, state income tax withholding, and retirement deposits.
Social Security: Social Security participation is required by law of all College employees. Social Security benefits include retirement annuities as early as age sixty two (62), disability benefits for a permanent injury or sickness, and survivor benefits for dependents of a deceased employee.
Optional Deductions: Employees may have optional deductions for group insurance, annuity programs, SEANC, and the credit union.
Voluntary Supplemental Retirement Plans: The College offers voluntary supplemental retirement plans to provide a way for an employee to save money and supplement state retirement benefits by making contributions through payroll reduction and postpone paying tax on these contributions until after the employee retires. In accordance with the Internal Revenue Code (IRC), these plans have annual maximum contribution limits and, in some cases, contributions to one plan may affect contribution limits to another plan (i.e., 401(k) and 403(b) plans). An employee should consult with the plan administrator, the carrier representative or the Office of Human Resources for more information about maximum contribution limits and coordination of plans.
These voluntary supplemental retirement plans offer significant tax advantages including: money placed into a plan is not considered as taxable income for that year for federal and state income tax purposes, thus lowering an individual’s income tax liability. Money is only taxed when it is withdrawn. If it is withdrawn after retirement, the employee’s income will probably be less and therefore, may be taxed at lower rates.
In addition to the available benefit of a pre-taxed retirement plan, the College also has a more traditional retirement savings program, called the 401(k) Roth. More specifically, the Roth feature allows members to make some or all 401(k) contributions with after-tax dollars. If these members meet certain requirements down the road, the Roth benefits withdrawn in retirement—including earnings—will not be taxable for federal or North Carolina state income tax purposes.