Noncontributory Social Security Wage Credits for Military Service Should Be Eliminated

Gao ID: FPCD-79-57 August 8, 1979

Military service was brought under contributing social security coverage in 1957. Both military members and the Department of Defense (DOD), as their employer, pay social security taxes on basic pay.

Members whose basic pay is less than the social security taxable earnings ceiling are credited with additional covered earnings of up to $1,200 a year in excess of basic pay. Neither the member nor DOD pays taxes on these credits. The social security trust funds are reimbursed annually from the general fund of the Treasury for additional costs attributable to the noncontributory credits. GAO reviewed the rationale for providing noncontributory credits for service performed after 1956, examined their effects on current benefits, and estimated unforeseen costs that will result.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Kenneth J. Coffey Team: General Accounting Office: Federal Personnel and Compensation Division Phone: (202) 275-5140


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