|
Automatic Determinations
Contribution & Benefit Base
Wage-indexed Amounts |
Method for determining the base
The formula for determining the OASDI contribution and benefit base
is set by law. The formula is applicable only if a
cost-of-living increase becomes
effective for December of the year in which a determination of
the base would ordinarily be made. Because there is a cost-of-living increase for December 2012, the
formula is applicable. The formula states that the base for any year
Y after 1994 is equal to the 1994 base of $60,600 multiplied by
the ratio of the national average wage index for
year (Y-2) to that for 1992, with the result rounded to the nearest
multiple of $300. If the result is less than the current base, the base
is not reduced.
Base for 2013
Under the above formula, the base for 2013 shall be the 1994 base of $60,600
multiplied by the ratio of the national average wage index for 2011 to that for
1992, or, if larger, the 2012 base of $110,100. If the amount so determined
is not a multiple of $300, it is rounded to the nearest multiple of $300.
Calculation details
Amounts in
formula |
1994 base | $60,600 |
| 1992 average wage index | 22,935.42 |
| 2011 average wage index | 42,979.61 |
| Computation | $60,600 times 42,979.61 divided by
22,935.42 equals $113,560.79, which rounds to $113,700 |
| Higher amount | $113,700 exceeds the base for 2012,
so the base for 2013 is $113,700 |
|
