Are employees of state governments hired before January 1, 1986, generally exempt from FICA coverage?

Employees of state governments who were hired before January 1, 1986, are generally exempt from FICA (Federal Insurance Contributions Act) coverage due to specific legislation passed prior to that date. Before this change, many state and local government employees were not covered by Social Security because they were often covered by their own public retirement systems instead. As a result, these employees do not pay into the Social Security system and do not receive credit for those years of service towards Social Security benefits.

The significance of the January 1, 1986, cutoff lies in the fact that after this date, most state and local government employees had to participate in FICA unless they fell into certain specific exceptions. This means that those hired before this date retained their exemption status, allowing them to avoid contributions to Social Security.

Other options might explore situations regarding retirement plans or employment status, but the fundamental rule concerning employees hired before the cutoff date clearly establishes their exemption from FICA coverage, making it a key aspect of Social Security taxation policies.