HomeMy WebLinkAboutAgenda Statement 1986/08/05 Item 10b COUNCIL AGENDA STATEMENT
Item lOb
Date 8/5/86
ITEM TITLE Resolution /� rJ Implementing the provisions of
Section 414 (H) (2) Internal Revenue Code
SUBMITTED BY Assistant City Manager// -
REVIEWED BY City Manage 4/5 Vote: Yes No X
As part of negotiations with the Chula Vista Police Officers Association
(POA), the Memorandum of Understanding (MOU) agreed to implement Section 414
(H) (2) Internal Revenue Code, treating employee contributions to PERS as
deferred compensation for tax purposes. The IRS requires that the City
Council adopt the attached resolution in order to implement Section 414 (H)
(2).
RECOMMENDATION That Council adopt the resolution implementing the
provisions of Section 414 (H) (2) Internal Revenue Code,
treating employee contributions to PERS as deferred
compensation.
BOARDS/COMMISSIONS RECOMMENDATION: N.A.
DISCUSSION
The IRS, in a "private letter ruling" to PERS dated December 6, 1985, has
affirmed that employees' contributions to PERS may be treated as deferred
compensation for income tax purposes. In the case of those employees where
the City pays the employee contribution, adoption of this resolution will have
no effect. However, in those cases where the employee makes the contribution
out of his/her salary, adoption of this resolution will permit that
contribution to be treated as deferred compensation. This deferral will apply
to both Federal and State income taxes and can make a sizable difference in
take-home pay for many employees.
Although this provision was negotiated by POA, it seems appropriate to make
this available to any other employees that so desire and it is our
recommendation that this be the case.
FISCAL IMPACT: This will have no fiscal impact on the City.
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by L CAIN/ C,: uicil of
Chula Vista, California
Dated 5 16