It's the same as why you wouldn't measure your weight in ounces, but neither would you weigh something very light in pounds - you want a convenient number which is easy to interpret. PC is short for parsec and it's a unit of measurement equal to 3,000,000,000,000,000,000 cm!
Take your annual covered earnings (the earnings on which you pay Social Security payroll taxes), multiply it by that year's index factor and you will obtain your indexed wage for each year you have worked. Next, add up all these indexed wages and divide them by 35 to determine your average wage.
To calculate Social Security tax withholding on 401(k) contributions, your employer first determines your gross wages for the pay period. Gross wages are your earnings before deductions.Your employer subtracts Social Security tax from your gross wages and then deducts your 401(k) contribution.For example, you earn $450 for the weekly pay period and elect 6 percent toward your 401(k) account.pecifically, if Social Security tax applies, so does Medicare tax. Your 401(k) contributions are subject to Medicare tax of 1.45 percent, as of 2012.