All WRS Employers
Vol. 21, No. 15
December 20, 2004
Social Security Wage Base Set to Increase for 2005; New
Law Regarding Employees Not Covered by Social Security
As the designated liaison between the Social Security Administration
and employers with Social Security Section 218 Agreements, the Department
of Employee Trust Funds provides the following updated information
including Social Security and Medicare wage bases for 2005. This
information applies to all Wisconsin Retirement System employers
and all other public employers subject to a Social Security Section
- Social Security and Medicare Wage Bases and Rates for
Effective for all wages paid on or after January 1, 2005,
the Social Security (full FICA) wage base will increase from
$87,900 to $90,000. The Medicare wage base will not have a dollar
limit for 2005.
Although the wage base will increase, the employer and employee
tax rates will remain the same in 2005. The Social Security
(full FICA) rate remains at 7.65% (6.20% Social Security plus
1.45% Medicare) for wages up to $90,000. All wages over $90,000
are subject only to the 1.45% Medicare rate. The rate remains
at 1.45% for others who are subject only to Medicare.
- Earnings Exemptions for 2005
The maximum amount a Social Security beneficiary between the
ages of 62 through 64 may earn without any reduction in benefits
will increase to $12,000 per year ($1,000 a month). An increased
earnings limit will then apply beginning January 1 following
the calendar year during which the individual turned 64 and
will remain in effect through the end of the month in which
the individual turns 65 years and 4 months. The maximum earnings
amount prior to turning 65 years and 4 months, without any reduction,
is $31,800 per year or $2,650 a month. There is no limit on
earnings beginning the month after the individual attains age
65 years and 4 months.
John Doe will turn 65 on June 10, 2005. Through December 31,
2004, Mr. Doe’s earnings limit is $1,000 a month. For
the months of January 2005 through September 2005, John Doe’s
earnings limit is $2,650 each month. There is no earnings limit
beginning October 2005.
- 2005 Earnings Requirement for One-Quarter Credit for
In 2005, the amount of earnings required for a Social Security
credit (one quarter of coverage) will increase from $900 to
$920 ($1,840 will earn two quarters, etc.).
- 2005 Benefit Increase for Social Security
The Social Security benefit increase for 2005 will be 2.7%.
- Election Worker Exclusion for 2005
The earnings exclusion for election workers will remain the
same at $1,200 for 2005.
For more information, contact Dale Ferron, Department of Employee
Trust Funds, at (608) 266-0728 or e-mail email@example.com.
New Law Regarding Employees Not Covered by Social Security
Section 419(c) of Public Law 108-203, the Social Security Protection
Act of 2004, requires State and local government employers to disclose
the effect of the Windfall Elimination Provision and the Government
Pension Offset to employees hired on or after January 1, 2005, in
jobs not covered by Social Security. The law requires newly hired
public employees to sign a statement that they are aware of a possible
reduction in their future Social Security benefit entitlement. For
more detailed information about this law and to view a copy of the
statement concerning employment in a job not covered by Social Security
(Form SSA-1945), go to the following link: http://www.socialsecurity.gov/form1945.