HomeMy WebLinkAbout07/16/1996, C-3 - RESOLUTION TO IMPLEMENT PRE-TAX PAYROLL DEDUCTIONS FOR SERVICE CREDIT PURCHASES council "°fift-7_,(P_��
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CITY OF SAN LUIS OBISPO
FROM: Ann Slate, Personnel Director`
Prepared By: Karen Jenny, Risk Managerxk
SUBJECT: Resolution to implement pre-tax payroll deductions for service credit
purchases
RECOMMENDATION
Adopt a resolution implementing pre-tax payroll deductions for service credit purchases as
authorized by Internal Revenue Code section 414 (h)(2) and the California Government Code.
DISCUSSION
Employees who worked in PERS-covered employment prior to working for the City of San Luis
Obispo and withdrew their contributions, may purchase,or redeposit those contributions through
payroll deduction. PERS has recently announced the ability to make those deductions on a pre-
tax basis. Currently five employees are purchasing service credit, and those deductions are
taken after withholding for state and federal income taxes.
Adoption of the proposed resolution allowing the pre-tax deduction is required by PERS in order
for the City to participate in this program. The affected employees have been contacted and are
interested in participation.
FISCAL IMPACT
There is no cost to the City to provide service credit deductions on a pre-tax basis. The
participating employees will save the income tax currently payable on those deductions.
Attachment
Resolution
A_ 91/
Employer Code: 0319
RESOLUTION NO. (1996 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN LUIS OBISPO MPLEMENTTNG THE PRE-TAX PAYROLL DEDUCTION
PLAN FOR SERVICE CREDIT PURCHASES (CONTRIBUTION CODE 14)
WHEREAS, the Board of Administration of the California Public Employees'Retirement
System (CalPERS) at the April 1996 meeting approved a pre-tax payroll deduction plan for
service credit purchases under Internal Revenue Code (IRC) section 414 (h)(2); and
WHEREAS, the City of San Luis Obispo has the authority to implement the provisions
of IRC section 414 (h)(2) and has determined that even though implementation is not required
by law, the tax benefit offered by this section should be provided to those employees who are
members of Ca1PERS; and
WHEREAS, the City of San Luis Obispo elects to participate in the pre-tax payroll
deduction plan for all employees in the miscellaneous and safety CaIPERS coverage groups.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Luis
Obispo hereby resolves:
SECTION 1. That the City of San Luis Obispo will implement the provisions of IRC
section 414 (h)(2)by making employee contributions for service credit purchases pursuant to the
California State Government Code on behalf of its employees who are members of Ca1PERS and
who have made a binding irrevocable election to participate in the pre-tax payroll deduction
plan. "Employee contributions" shall mean those contributions reported to CalPERS which are
deducted from the salary of employees and are credited to individual employee accounts for
service credit purchases thereby resulting in tax deferral of employee contributions.
SECTION 2. That the contributions made by the City of San Luis Obispo to CalPERS,
although designated as employee contributions, are being paid by the City of San Luis Obispo
in lieu of contributions by the employees who are members of CalPERS.
SECTION 3. That the employees shall not have the option of choosing to receive the
contributed amounts directly instead of having them paid by the City of San Luis Obispo to
CalPERS.
SECTION 4. That the City of San Luis Obispo shall pay to CalPERS the contributions
designated as employee contributions from the same source of funds as used in paying salary,
thereby resulting in tax deferral of employee contributions.
SECTION 5. That the effective date for commencement of the pre-tax payroll deduction
plan cannot be any earlier than July 1, 1996, or the date the completed resolution is received and
approved in Ca1PERS, whichever is later.
SECTION 6. That the governing body of the City of San Luis Obispo shall participate
in and adhere to requirements and restrictions of the pre-tax payroll deduction plan by reporting
pre-tax payroll deduction when authorized by Ca1PERS for those employees of the above stated
Coverage Groups who have elected to participate in this plan.
Upon motion of seconded by
, and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this day of 1996.
ATTEST:
City Clerk Mayor Allen Settle
APPROVED AS TO FORM:
i y
FOR CALPERS USE ONLY
FPre-taxoll Deduction Plan Effective Date:
Approved By: Title:
MEMBER SERVICES DIVISION, Service Credit - Unit 830
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