Are employer contributions for retirement plan payments defined as wages and subject to FICA taxes?

Employer contributions for retirement plan payments are not defined as wages and therefore are not subject to FICA taxes. FICA taxes, which include Social Security and Medicare taxes, are imposed on wages earned by employees. Wages, in this context, are defined as the earnings from the performance of services for an employer.

Retirement contributions made by the employer, such as those to a 401(k) plan or similar plans, are considered a separate benefit rather than direct compensation for services rendered. Consequently, these contributions do not count as "wages" for the purposes of calculating FICA taxes.

Understanding this separation is essential because it clarifies how employment taxes are assessed. For the purposes of FICA, only actual wages, which reflect the cash compensation that employees receive directly for their work, are taxable. Contributions to retirement plans fall outside this definition, reinforcing the view that benefits provided for the future do not attract FICA taxation at the time they are made.