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Legal Environment

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Submitted By blazinvashawty03
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FICA stands for Federal Insurance Contributions Act, which is a taxation on income earned where the funds are used for federal programs that provide benefits for U.S. citizens and permanent residents when they retire, are disabled, or are the children of deceased workers. The FICA tax includes two separate taxes. Funds withheld for FICA are reflected on paycheck stubs and on the W-2. One is social security tax and the other is the Medicare tax which different rates apply for each tax. The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, matched at 12.4% total (IRS). The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. The Employee Retirement Income Security Act of 1974 (ERISA) establishes minimum standards for retirement, health, and other welfare benefit plans including life insurance, disability insurance, and apprenticeship plans. It protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. ERISA regulates and sets standards and requirements for conduct, disclosures, reporting and accountability, procedural safeguards, and financial and best interest protection (DOL). I have heard a lot of people make the statement that “Social Security is not going to be around in the future.” My personal opinion is that Social Security is going to be around forever. That is not something that the government will do away with. I feel that it is our job to figure out how much Social Security we need to ensure that we can fund our lifestyle in retirement. If you feel that the amount of Social Security will not fund you, that’s when you put more into your retirement fund. In due time, I believe the percentage that the employer matches will gradually decrease. The system would work much better if it were more people paying taxes then receiving benefits. As David Richmond stated,” You have to plan for it (social security), but don’t count on it.” Who know what the future holds, and how things can change at a blink of an eye. This topic has definitely opened my eyes, and make me think of what the future holds for me.

References
IRS. Topic 751- Social Security and Medicare Withholding Rates. 2014. Retrieved from http://www.irs.gov/taxtopics/tc751.html
United States Department of Labor (DOL). ERISA. 2014. Retrieved from http://www.dol.gov/dol/topic/health-plans/erisa.htm

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