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Member Line 651 296-7460 (metro area) 1.800 652-9026 (toll-free) *Web site www.mnpera.org The PERACC > > p bras e The employer newsletter of the Minnesota Public Employees Retirement Association Social Security Extended to DCP-Covered Elected Officials The 2006 Minnesota State Legislature amended Minnesota Statutes, Chapter 355, which governs Social Security and Medicare coverage for public employees and elected officials. Among other things, the new law allows each local governmental subdivision to offer Social Security participation to its current elected officials who hold positions that are covered by the PERA Defined Contribution Plan (DCP) and excluded from the PERA Coordinated Plan. This option applies to Minnesota cities, counties, school districts, townships, and special authorities such as soil and water conservation districts. Background The following two groups of elected officials have not been able to contribute to both the DCP and Social Security on their elective service earnings: 1) officials elected to or assuming governing -body positions after June 30, 2002 and 2) officials (govern- ing body and non -governing body) whose earnings have never exceeded $425 in a calendar month. While these two groups are excluded from joining the Coordinated Plan, they have had a choice of either contributing to the DCP or paying Social Security; however, they have not been able to contribute to both. These elected officials have had to choose between the DCP and Social Security because their positions are not covered by a "section 218 Agreement" with the Social Security Administration (SSA). Under federal laws, the only way that Social Security coverage can be provided to employees or elected officials who are mem- bers of, or have the option for membership in, a governmental retirement plan is through a section 218 Agreement. This "voluntary" federal -state agreement estab- lishes the classifications of government positions that shall participate in Social Security. Until now, state law did not authorize a modification to Minnesota's 218 Agreement for the DCP elected officials retirement group,l Extending Coverage to Eligible Elected Officials Under the amended state law, a governmental subdivision may provide Social Security to current and future elected officials covered by the DCP through a modification to Minnesota's 218 Agreement. The law authorizes PERA to modify Minnesota's Agreement on a subdivision by subdivision basis. This means that we can execute a change in Social Security participation for elected officials of one PERA-covered entity and it will not affect any other entity. Nothing in the law requires a governmental subdivision to offer Social Security to its elected officials and no deadlines were established. A subdivision may, therefore, request a section 218 modification at any date in the future or never. continued on page 4 1 A 218 Agreement has been in place for the Coordinated Plan since 1968. Under that agree- ment, any person who becomes a Coordinated Plan member—or has the option to join—must pay Social Security taxes. For elected officials, Coordinated Plan membership is currently available only to individuals elected to non -governing -body positions that earn a salary of $425 or more in a single month. Persons elected to governing -body positions have been excluded from joining the Coordinated Plan since July 1, 2002- I