Human Resources
Premium Conversion (pretax) Plan
|
|||
*
|
The term pretax, for purposes of the Premium Conversion Plan, means "before federal, state and FICA taxes". Your pretax premium amount will reduce the amount of wages reported to social security. The effect on your social security benefit will be proportional to the amount of total pretax premiums you pay. | ||
Example: a $504 tax savings in one year |
Without Premium Conversion |
With Premium Conversion |
Savings with Premium Conversion |
| Gross Income | $36,000 |
$36,000 |
|
| Expenses run through Premium Conversion | 0 |
-$1,800 |
|
| Taxable Income | $36,000 |
$34,200 |
|
| Federal Tax* | -5,400 |
-5,130 |
270 |
| State Income Tax* | -1,926 |
-1,830 |
96 |
| FICA | -2,754 |
-2,616 |
138 |
| Income After Taxes | $25,920 |
$24,624 |
|
| Expenses after taxes | -1,800 |
0 |
|
| Your Spendable Income | $24,120 |
$24,624 |
$504 |
This employee reduced taxes by $504 by utilizing the Premium Conversion benefit! |
|||
* Based on estimated federal tax of 15% , state tax of 6%, and FICA of 7.65%

