FICA/OBRA

WHO SHOULD READ THIS:
This FICA/OBRA exemption stuff doesn't apply to you if you're not receiving a paycheck from UMass.

ABOUT FICA, OBRA, AND THE EXEMPTION:
Periodically, someone from the main office will remind everyone to file for optional FICA/OBRA exemptions. Getting such an exemption means *not* paying into the mandatory retirement plan. Not everyone is eligible (see below).

FICA is another name for social security tax (also called payroll tax). Everyone who has a job and has been in the USA for more than five years is supposed to pay this tax. UMass automatically deducts it from each paycheck you receive, and it goes into your Social Security balance.

OBRA is a larger tax, also taken out of your paycheck, that goes into a giant pool of UMass employees' money. It's nominally a retirement plan. UMass holds onto it for you until you graduate or leave. The principal and the interest goes into a retirement account in your name with Great West. You can roll these funds over when you leave UMass into another similar employment retirement plan, or into an Individual Retirement Account (IRA). These are retirement funds that can be withdrawn when you retire, and based on IRS policies.You can also elect to contribute more than the mandatory amount.

A "FICA/OBRA Exemption" means that you don't want UMass to withhold any money from your paycheck. You might want this exemption if you're strapped for cash and need every penny of your paycheck. But not everyone qualifies. (Unclear: if you're OBRA-exempt, then you're not paying into your retirement account. But do you still have to pay the payroll tax?)

If you're on a fellowship that funds you, and you're therefore not an employee, then you may be able to withdraw your OBRA balance once you start the fellowship. Talk to UMass HR.

DURING THE SCHOOL YEAR:
You might be eligible for a FICA/OBRA exemption if you match all of the following conditions:

  • Taking less than 6 credits AND
  • On an assistantship (RA, TA) AND
  • Receiving a UMass paycheck AND
  • NOT paying Program Fee.


DURING THE SUMMER:
You might be eligible for a FICA/OBRA exemption if you match either of the following conditions:

  • Registering for Continuing Education classes (6 credits) AND will be receiving a paycheck during the summer OR
  • Registering for less than six credits, obtaining a full-time memo from the Dept. AND will be receiving a paycheck during the summer


HOW TO GET A FICA/OBRA EXEMPTION:
Talk to the Graduate Program Manager soon after receiving the aforementioned FICA/OBRA exemption reminder.

Boilerplate:
Please be advised that once deductions are made, the University cannot refund the FICA withholdings and the timing of the OBRA reimbursement will depend on the policies of the OBRA agent.

Certain Non-Resident Aliens may be exempt automatically (if they passed the substantial presence test, i.e., have not been present in the United States for more then four calendar years). If you have questions regarding your exemption status as a non-resident alien, please contact the Human Resources Payroll Office, 325 Whitmore, 5-6106.

LINKS:
GEO explains OBRA: http://www.geouaw.org/?p=979