HomeMy WebLinkAbout03 CALPERS SVC CREDIT 01-20-04AGENDA REPORT
Agenda Item 3
Reviewed: ~
City Manager
Finance Director , N/A__
MEETING DATE: JANUARY 20, 2004
TO:
WILLIAM A. HUSTON, CITY MANAGER
FROM:
ARLENE MARKS, HUMAN RESOURCES DIRECTOR
SUBJECT:
PRE-TAX PAYROLL DEDUCTION PLAN FOR CALPERS SERVICE
CREDIT PURCHASES
SUMMARY
Adoption of the attached resolution will allow the City of Tustin to make pre-tax payroll
deductions for eligible service credit purchases with CalPERS under Internal Revenue
Code section 414(h)(2) provisions.
RECOMMENDATION
Adopt Resolution No. 04-10 allowing City of Tustin employees to take advantage of the
pre-tax payroll deduction plan for service credit purchases.
FISCAL IMPACT
NONE: Cost is paid for by employee.
BACKGROUND
Currently, City of Tustin employees may make after-tax payroll deductions for the
purchase of CalPERS eligible service credit such as military service. The City of Tustin
can offer its employees the pre-tax payroll deduction option pursuant to the Internal
Revenue Code (IRC) section 414(h) (2) provisions. Offering this option will provide City
of Tustin employees, who elect to participate, with the benefit of deferring income tax
liability on CalPERS member service credit purchases.
Page 2
These IRC provisions allow employers to make the employee contributions through
payroll deduction for eligible service credit purchases for CalPERS members 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 a tax deferral of employee
contributions.
The pre-tax payroll deduction plan will be offered to all City of Tustin employees in
CalPERS coverage groups 75001 (sworn Police employees) and 70001(qualified non-
sworn employees).
This resolution will be effective on the first on the first day of the month following the
month in which the resolution is filed in the office of the Board of Administration, Public
Employee's Retirement System.
Arlene Marks, SPHR
Human Resources Director
Attachment: Resolution 04-10
RESOLUTION NO. 04-10
A RESOLUTON OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA,
ADOPTING 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 Tustin 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 CalPERS; and
WHEREAS, the City of Tustin elects to participate in the pre-tax payroll deduction
plan for all employees in the following CalPERS coverage group(s):
Membership Coverage Groups
75001
70001
NOW, THEREFORE, the City Council of the City of Tustin, California does
hereby resolve as follows:
SECTION 1. That the City of Tustin 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 CalPERS 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 Tustin to
CalPERS, although designated as employee contributions, are being paid by the City of
Tustin 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 contribution amounts directly instead of having them paid by the City of
Tustin to CalPERS.
SECTION 4. That the City of Tustin 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 referral 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 CalPERS, whichever is later.
SECTION 6. The governing body.of the City of Tustin shall participate in and
adhere to requirements and restrictions of the pre-tax payroll deduction plan by
reporting pre-tax payroll deductions when authorized by CalPERS for those employees
of the above stated Coverage Group(s) who have elected to participate in this plan.
Passed and adopted by the City Council of the City of Tustin at a regular meeting
held on the 20th of January, 2004.
TONY KAWASHIMA,
Mayor
ATTEST:
PAMELA STOKER,
City Clerk
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 04-10 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 20 day of
January, 2004, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNClLMEMBER ABSENT:
PAMELA STOKER,
City Clerk