Tax Considerations for Participants

All contributions by either the employer or the employee are exempt from income tax for the year contributed. Distributions from the Unitarian Universalist (UU) Organizations Retirement Plan will be subject to income tax in the year received and are not subject to Social Security taxes. Employer contributions are exempt from Social Security taxes (FICA or SECA).

However, voluntary contributions by non-ordained employees are subject to FICA (7.65% due from both employer and employee) and should be treated as other employee wages. This means that voluntary contributions by lay employees will be included as wages on the employer’s Form 941, with payment of the required Social Security FICA taxes.