June 24, 2025
The FICA Alternative Advantage: Cut Payroll Costs & Build Retirement Security
Capitalize on Federal Insurance Contributions Act Alternative to maximize value for government employers—and yourself..
In today’s workforce, part-time, seasonal, and temporary (PST) employees make up a growing segment of the labor force, especially across public sector organizations like school districts, municipalities, and state agencies. Yet, retirement solutions for this vital workforce often remain overlooked.
That’s a missed opportunity. For government employers, these workers represent not only a necessary part of operations but also a way to reduce payroll costs. For financial advisors, they represent an untapped group-sale potential. And for PST employees themselves—many of whom are excluded from Social Security coverage—it could mean the difference between financial security and uncertainty in retirement.
The solution? FICA Alternative Retirement Plans. These IRS-sanctioned programs provide cost savings for employers, financial incentives for agents, and real retirement value for employees.
Why government employers should care
Public sector employers can unlock up to 6.2% in payroll tax savings by offering a FICA Alternative plan. That’s because instead of paying into Social Security, employers and eligible PST employees contribute to a qualified retirement plan. These contributions go directly into the employees’ accounts—making it a win-win for the workforce and the employer’s bottom line.
Key benefits:
- Lower payroll tax obligations
- Direct employee contributions, not additional employer funding
- Enhanced recruitment and retention tools
A retirement path for PST employees
PST employees—including substitute teachers, crossing guards, seasonal maintenance crews, and temporary administrative workers—often lack access to any meaningful retirement savings vehicle. The FICA Alternative offers:
- Portable, vested retirement accounts
- Immediate ownership of their contributions
- Growth potential through tax-deferred savings
Rather than seeing 6.2% of their wages go to Social Security (which many may never qualify to benefit from), these workers keep that contribution within reach—building financial security from day one.
Group sale potential for you
FICA Alternative programs require mandatory participation for all eligible employees, meaning rapid asset accumulation and efficient onboarding. As a financial professional, this gives you a chance to:
- Earn commission on large, lump-sum annuity fundings
- Manage consolidated group-level premiums
- Serve as a strategic resource to public employers and their HR/benefits teams
Assisting on these plans enhances your value as a trusted benefits consultant and opens the door to broader relationships and referrals within the public sector space.
The following tools will help employers and employees understand the benefits.
IMPORTANT NOTE: FICA Alternative Plans are not available in all situations.
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