MMC Benefits Handbook
Taxes on Deferrals
Deferrals in this Plan can only be made on a before-tax basis. The amount you defer under the Plan on a before-tax basis comes out of your paycheck before income taxes are applied, so you are paying income taxes on a lower amount; however, you owe FICA taxes currently on amounts deferred and on the value of the Company Credits.
Deferrals and the Company Credits credited to your account are subject to FICA tax at the time such amounts are credited to your account.