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FICA Taxes (OASDI & Medicare) on Pension Payments?
Old 09-13-2021, 04:40 PM   #1
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FICA Taxes (OASDI & Medicare) on Pension Payments?

I know income taxes still apply, but are OASDI and Medicare taxes taken out of pension payments? Or do these only apply to earned income from a job?

I saw this mentioned somewhere but now I can't find anything to confirm it.
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Old 09-13-2021, 04:46 PM   #2
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Not that I know of. FICA is often referred to as a "payroll" tax since it comes from, well...you know.

Further reading: https://turbotax.intuit.com/tax-tips...-tax/L3dLJUbLN
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Old 09-13-2021, 04:47 PM   #3
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Quote:
Originally Posted by mountainsoft View Post
I know income taxes still apply, but are OASDI and Medicare taxes taken out of pension payments? Or do these only apply to earned income from a job?

I saw this mentioned somewhere but now I can't find anything to confirm it.
No... no payroll taxes on pension benefits.
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Old 09-14-2021, 09:40 PM   #4
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Nope.
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Old 09-15-2021, 12:34 AM   #5
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My Dad receives a small state pension and there is no FICA taken out of it. He does have the option to have income tax withholding if he wants.
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Old 09-16-2021, 10:46 AM   #6
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We had the choice when we started our pension whether or not to have income taxes taken.
We chose to do that for both state and federal. No other taxes are paid on it.
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Old 09-16-2021, 12:36 PM   #7
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^^^ Same here. Other than the federal and state income taxes I choose to have withheld, no other taxes are taken out of my pension.

I also choose to have my Megacorp retiree health insurance premium taken out, but that is it.
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Old 09-17-2021, 12:02 PM   #8
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If you are eligible for a Supplemental Executive Retirement Plan (SERP) -- primarily this is through big corporates -- then this portion of your pension will be subject to OASDI and HI FICA taxes. And they will collect it up front, calculated from a present value of expected future SERP payments. This amount is then repaid from the initial SERP payments. Our experience is it takes about 6 months to pay off this up front FICA tax before SERP payments start showing up in your bank account.
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