Special Pay Plan
BENCOR’s Special Pay Plan is an employer-sponsored retirement plan for full-time employees. Under this plan, contributions of accumulated sick, vacation and other leave or incentive pay permanently avoid Social Security and Medicare taxes while deferring income tax until the funds are withdrawn. This means that participants and employers could see a 7.65% payroll tax savings on eligible plan contributions immediately.
As a participant, the Special Pay Plan was created to help ensure that your money remains yours after reaching retirement. With a participating employer, an account is automatically established in your name and upon retirement, your funds can be used as you choose. You have the option of taking a full or partial withdrawal, rolling your funds into another qualified account of your choice, or rolling other qualified accounts into your Special Pay Plan.
Benefits of a BENCOR Special Play Plan:
Meet Mary. After a fulfilling career in education, Mary has earned $10,000 in accumulated sick and vacation pay with her employer. By using the BENCOR Special Pay Plan, she could put an additional $765, or more, in her pocket. Here’s how:
WithOUT BENCOR
| Accumulated Savings: $10,000 | ||
| Social Security Tax (6.2%) | Medicare Tax (1.45%) | Federal Income Tax (25%) |
| $620 | $145 | $2,500 |
| Take Home Pay = $6,735 | ||
With BENCOR
| Accumulated Savings: $10,000 | ||
| Social Security Tax (6.2%) | Medicare Tax (1.45%) | Federal Income Tax (20%) |
| $0 – Saved Permanently | $0 – Saved Permanently | $2,000 (20% Required Federal Withholding Upon Distribution)* |
| Take Home Pay = $8,000 | ||
*Your actual tax rate may be higher or lower depending on your tax situation.
Special Pay Benefits for Eligible Employees:
- Permanently avoid up to 7.65% in Social Security and Medicare tax
- Income tax is deferred until you withdraw funds
- 100% vested in plan contributions
- May self-direct plan investments to meet individual objectives, selecting from a range of stable value funds & mutual funds
- Retired employees may take a full or partial distribution, or roll over funds into an IRA or another employer sponsored plan
- Funds can be rolled into your Special Pay Plan account from other qualified retirement plans