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- Title
The Impact of Premium Conversion on Social Security Benefits.
- Authors
Avila, Stephen M.; Athavale, Manoj; Gatzlaff, Kevin
- Abstract
Through premium conversion, employees have the option of choosing to pay insurance premiums on a pretax basis, meaning that their contributions are exempt from federal, state, and local income tax as well as Social Security and Medicare taxes. Electing premium conversion reduces Social Security benefits. This paper analyzes the impact of premium conversion on Social Security benefits. Based on several different scenarios, the authors conclude that the value of the tax savings from premium conversion outweighs the loss of Social Security retirement benefits, but the loss of Social Security survivor benefits and Social Security disability benefits outweighs the value of the tax savings for an employee and family members who would qualify for them.
- Subjects
SOCIAL Security (United States); EMPLOYEE benefits; RETIREMENT income; RETIREMENT benefits; MEDICARE
- Publication
Journal of Financial Service Professionals, 2019, Vol 73, Issue 2, p62
- ISSN
1537-1816
- Publication type
Article