Social Security taxes will be deferred for many federal civilians and uniformed members through the end of this year.
There is no opting-out of the deferral and the taxes will be collected in 2021. This does affect any Federal or State withholding.
Once the payroll offices for civilians and military members program the deferral of payroll taxes certain employees’ take-home pay will increase for the remainder of the year. The deferred payments must be collected in early 2021 (spread out in January, February, March, and April 2021), in addition to regular payroll tax withholding for that period.
The tax deferral comes in response to a Presidential Memorandum on Aug. 8. This will affect about about 5,600 Coast Guard civilians and 38,000 active duty members.
What does this mean to you? The federal government will defer the Social Security (Old Age, Survivors, and Disability Insurance or OASDI) employee deductions for:
- Civilians whose gross Social Security wages are less than $4,000 in any given pay period
- Military members at or below $8,666 of basic pay only per month (Typically O-5s and below, and E-10s and below)
The deferral will not impact employees in retirement plans not subject to Social Security withholding (i.e. CSRS).
When will this start? Military paychecks for Sept. 15 and Oct. 1 will not change. The Coast Guard has started the process to update the pay system for military members to account for this unexpected change but it will not be accomplished until mid-October. The mid-October paycheck will begin the payroll tax deferment and include the September monies collected (for those eligible).
We will update civilians as soon as we have clarity about when their first paycheck will be affected.
Please be advised – Employees and members will still be liable for paying their deferred taxes from their final pay should they depart from federal employment or active duty prior to April 30, 2021.
The Coast Guard offers many financial resources to help you navigate this change. Some of the options you’ll find in the MyCG Financial Wellness sections include:
- Coast Guard Personal Financial Management Program
Remember, the Coast Guard has financial resources, including financial coaches to help you with this change. The Coast Guard is also expanding its personal financial management program, including adding staff in every district to help with your personal financial plan. The program also offers a financial management resource fact sheet and information on the Blended Retirement System (BRS), including a BRS comparison calculator.
- CG SUPRT
CG SUPRT offers one-on-one financial coaching amongst other support. It is available to active duty members, reservists, full-time civil service employees, and their dependents. Call 1-1-855-CGSUPRT (247-8778) or visit their site.
- Civilian employees – contact the ASKHR helpdesk (USCG.ASKHR@uscg.mil).
- Military members - contact CG-133 Pay and Compensation Division at (Compensation@uscg.mil).
- For additional details, see ALCOAST 329/20.