- Associated Press - Monday, September 28, 2015

FRANKFORT, Ky. (AP) - Most Kentucky public employees will see reductions in their paychecks next year as the IRS will begin applying Social Security and Medicare taxes to workers’ contributions to their retirement funds.

According to the Kentucky Finance and Administration Cabinet, an employee making $40,500 a year will see and additional $6.45 withheld in each of 24 paychecks starting in 2017, The Courier-Journal (https://cjky.it/1LJoV3R) reports. Depending on retirement contributions, some employees with the same $40,500 salary will see as much as $11.62 withheld per paycheck.

“It’s a tax, another way that the government - this time the federal government - puts pressure on the workers,” said executive director of the Kentucky Association of State Employees David Smith. “It might not seem like much to some people … but a single mother with two kids will see it as $13 less she can spend at the grocery store each month.”

The Kentucky Finance and Administration Cabinet said in a summary of the change that the additional annual cost will be approximately $5.7 million for state government agencies. The summary also says the additional contributions will positively affect Social Security benefits for employees participating in Social Security upon retirement.

According to the summary, the agreement applies to workers participating in Kentucky Employee Retirement System, County Employee Retirement System, State Police Retirement System, Kentucky Teachers Retirement System, Legislators’ Retirement System and the Judicial Retirement System.

Public school teachers will also be affected, but to a smaller extent because teachers only pay the Medicaid tax, not the Social Security tax. Additionally, the agreement will not apply to employees of the University of Louisville, the University of Kentucky or Northern Kentucky University, since they have separate retirement programs.


Information from: The Courier-Journal, https://www.courier-journal.com

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